January 1998

BY DERREK SCHARTZ

Internet (IP) telephony is coming of age, and it stands to become the strongest area in computer-telephony integration for distributors and VARs in 1998. No longer the exclusive realm of hobbyists eager to embrace any new technology, it has become a viable alternative for a variety of applications, including fax transmissions and international callback services routed through the Internet, interoffice phone calls sent over corporate intranets, and Webenabled call centers permitting Web surfers to connect directly to corporate customer representatives through a company’s Web site (Table 1). These applications not only present important business opportunities for developers who build custom applications; they also hold great promise for distributors and VARs who can sell turnkey solutions to their customers, along with value-added integration services.

FACTORS BEHIND THE DEMAND
The great appeal of IP telephony, and the principal factor fueling demand, is the promise of lower long distance charges. IP telephony applications give users the ability to bypass toll carriers and to converse or fax over an essentially free TCP/IP connection.

The potential demand for IP telephony is vast. According to some estimates, U.S. businesses spend 41 percent of their telecommunications costs on fax transmissions, translating into $30 billion annually for all businesses and $15 million for the average Fortune 500 company. Even by setting up an IP fax solution strictly for office-tooffice fax communications, those figures can be cut dramatically. This is a compelling incentive for organizations to invest in IP telephony applications.

IP telephony is also attractive because it promotes the efficient use of established data networks. Unlike traditional telephony networks that require the expensive dedicated resources associated with circuit switching, IP telephony involves sending voice and fax communications over packet-switched networks such as the Internet or corporate intranets. This makes it possible to share the resources of computer network infrastructures already in place, maximizing an organization’s return on investment. Finally, the market for IP telephony solutions is growing because some of the early drawbacks have been addressed. Voice quality is improving, thanks in part to new error correction algorithms that minimize the effect of lost packets and buffers that help provide a constant voice stream. Latency (time delay) problems still affect communications transported over the Internet, but they have little or no impact on applications routed through WANs or intranets. Bandwidth constraints are being partially overcome by new techniques that reduce the bandwidth required to transmit voice packets. All of these factors are converging to plant the seeds for a steady rise in IP telephony deployments.

RESOURCES
For further information, distributors and VARs can consult vendor Web sites, including: (1) www.dialogic.com, (2) www.vocaltec.com, (3) www.netspeak.com  and (4) www.nmss.com. The latter is the site of Natural MicroSystems, developer of the Fusion Internet Telephony development platform. Product recommendations, specifications, and solutions for specific applications can be requested from individual vendors, distributors of computer telephony components or computer telephony systems integrators.

Like other IP telephony solutions, this offers the important advantage of bypassing interexchange carriers for lower costs. By avoiding the traffic problems of the public Internet network, it also offers fewer latency and bandwidth problems, in turn resulting in better voice quality than typical IP telephony voice communication solutions.

In addition, clients will require value-added services such as integration of the system with their phone networks, installation on their LANs, networking of the gateways themselves, and deployment of remote administration solutions when desired.

Overseas telephone companies responded to this competition by lowering their rates, so international callback providers are now using the Internet to shave additional pennies off their fees. The same Taiwan-toCleveland call can now be routed to a gateway in the destination country via the Internet at no charge except the nominal flat rate levied by the ISP; the only fee would be for the much less expensive domestic leg of the call. With the advent of this Internet model, some providers are now saying that international callback in the literal callback sense is essentially dead.

This strategy helps companies generate incremental Web-based business by making inquiries or purchases easier than ever, particularly for global customers unwilling to pay for international calls. Webenabling corporate call centers also lowers corporate phone costs by diverting calls from 800 numbers, and it leverages a company’s existing Automatic Call Distributor (ACD) infrastructure by enabling sales agents to take Web inquiries at the same phone where they receive conventional calls. No callbacks or additional phone lines are necessary.

*A typical four-port voice system might include an Alliance Systems Alliant 4/IPn voice processing PC, a 200MHz Pentium with 64MB of memory, a 1.6GB EIDE hard drive and Windows NT Workstation 4.0; a 10/100 Network Interface Card; two Dialogic D/21H Analog Voice Cards containing two ports per card and providing a network interface the circuit switch telephone network; VocalTec Telephony Gateway Version 3.1; PCAnywhere/32 for Windows NT; and billing and analysis software. To add two-port fax capabilities, you might add two Hayes Accura 33.6 fax modems; software fax support is provided by the current release of the VocalTec Telephony Gateway.

**A market leader in this category of plug-in is VocalTec's Surf&Call, designed for use with VocalTec's Telephony Gateway.

Derrek Schartz is vice president of Alliance Systems, Inc., which distributes computertelephony products, supplies high-performance voice processing computers, and integrates customized computer-telephony systems, including IP telephony solutions. For more information, visit the company’s Web site at www.alliancesystems.com.