February 1999

BY RICH TEHRANI

This issue marks the one-year anniversary of INTERNET TELEPHONY magazine, and from my vantage point, this past year seems more like a decade. You've all heard the term, "Internet Time," to describe the speed at which technological breakthroughs occur, but the Internet telephony market is, for lack of a better expression, on fire! This market moves faster than even the juiciest government scandals spreading throughout the Internet community. I could easily fill this entire issue with the details of all the important industry activity we've seen in the past 12 months - from Cisco acquiring voice/data switch manufacturer Selsius Systems and programmable switch-maker SummaFour to Nortel purchasing Bay Networks for 9 billion dollars.

The level of excitement in the Internet telephony industry is orders of magnitudes higher now than it has ever been and there is just so much information that I would like to share with you. Unfortunately my enthusiasm to ramble endlessly must be dampened as I realize my Executive Editor is tasked with chopping down my words into neat little packages that fit in the allotted space and by the appointed hour.

The excitement in our industry comes from everywhere. So many companies are supplying products to the Internet telephony market - board vendors such as Natural MicroSystems and Brooktrout; industrial computer companies like Industrial Computer Source and Crystal Group www.crystalpc.com; SOHO products from Aplio and White Pine; conferencing products like NetMeeting; and development tools from elemedia and RADvision are just some of the vendors whose products make up our industry. In every case, these vendors are seeing tremendous interest and deployment of their Internet telephony products. I would love to elaborate on each of the above categories but visions of editors slashing whole paragraphs at a time to fit this Outlook in the allotted pages reminds me to maintain focus. And so, I will focus on Internet telephony gateway vendors for now.

These gateway vendors are the very core of the Internet telephony market - they embody the large-scale conversion of circuit-switched voice and fax into packet-switched voice and fax for eventual transmission over the Internet or an intranet. The gateway is the basis upon which the Internet telephony industry was built and since the advent of the PC-based gateway, a variety of other gateway types have been brought to market. Standalone proprietary gateways, router-based gateways, and PBX-based gateways are all vying with PC-based gateways for a piece of a market that is projected to be in the tens of billions of dollars in the next few years.

Internet telephony gateway vendors have an extremely diverse customer base too. Service providers consisting of CLECs, ILECs, IXCs, cable providers, and even utility companies are all candidates for Internet telephony gateways that will enable them to transmit packetized voice and allow for a variety of enhanced services. Enterprise users are also using these gateways to take advantage of transmitting voice and fax at much lower rates than they would otherwise pay for per-minute long-distance: In many cases these calls ride for free on available yet unused intranet bandwidth.

FRANKLIN TELECOM
One of these gateway vendors is Franklin Telecom of Westlake Village, CA. As the publisher of CTI magazine, I have been familiar with Franklin Telecom for a long time. In the Fall of 1997, around the time that TMC decided to launch INTERNET TELEPHONY magazine, I was invited to a Franklin shareholder meeting on Wall Street to hear their new product announcements and demo their Internet telephony gateways. During the meeting I had a chance to hear the quality of their Internet telephony gateways firsthand, and frankly, I was impressed.

Since that meeting, I've kept an eye on Franklin Telecom. I hadn't heard much out of Franklin until this past quarter, when they began filling bigger and bigger orders. As you can imagine, this makes me extremely happy as it just proves that the market is growing steadily. One of Franklin's largest categories of customers is the next-generation telco, and one of these telcos - USA Talks  - recently placed a million-dollar order with Franklin.

I had the opportunity to speak with Bill Irvin, president of USA Talks, and in the course of my conversation, Irvin sounded extremely enthusiastic about providing unlimited Internet telephony calls with near nationwide coverage for a flat fee of approximately $24 per month.

Irvin pointed out that the last mile is the most difficult problem to deal with in his (or any other) Internet telephony network and explained that USA Talks has some unique ways of getting around these sticky last mile issues. Irvin is also excited about the prospects of expanding his network internationally, which should come as no surprise - there is a great deal of opportunity for next-generation telcos outside the United States. I've always had a soft spot for the underdog and I love being part of an industry in which an entrepreneur can acquire venture capital and compete with the entrenched phone companies throughout the world.

As my research on the USA Talks network progressed, I contacted Peter Buswell, Franklin's President and CEO, who was equally excited about the future of the Internet telephony market. Buswell has been involved in the telephony market for decades - from voice processing to unified messaging and, most recently, Internet telephony. His experience in the marketplace is unquestionable and his opinions are important enough for me to share them with you. The following list is a summary of some of the most important points that Buswell makes regarding Franklin Telecom and the Internet telephony market.

• Franklin's customers have already installed over 100,000 nodes worldwide.
• Franklin has several more big prospects on the horizon.
• Franklin's installations make up over $2 million worth of equipment, and they are scheduled to install another $1 million in the first quarter of 1999.
• The bulk of Franklin's business is from "new age" telecommunications companies.
• The emerging capital structure for the industry is an issue, and Wall Street has to realize that an Internet telephony provider requires significantly less capital than a CLEC.

CONCLUSION
1998 was the year of promise in the Internet telephony market - this fledgling technology promised to revolutionize telephony competition, billing, enhanced services, and cost models. This promise led to field trials by ITSPs, CLECs, corporations, wireless companies, cable companies, and others. These field trials were - for the most part - successful and now an ever-larger portion of our daily telephony travels over IP networks without our knowledge. The quality and technology has become that good.

Franklin Telecom is just one gateway manufacturer competing for over a trillion dollars of global long-distance business. I could have substituted many other vendors for Franklin Telecom to get my point across. Namely, that this industry is growing fast, and there are a great deal of Internet telephony gateway vendors who are sharing Franklin's success.

These gateway vendors also share a common optimism and are beginning to see the past year's announcements and trials turn into large-scale bona fide deployments. We've witnessed a year of progress in Internet telephony - a year filled with strategic announcements, acquisitions, partnerships, deployments, and success stories. As these deployments become more commonplace, we can expect the coming year to see Internet telephony progress even more rapidly than the last, and the variety of options available to those wishing to implement Internet telephony to increase dramatically.

The inherent strength of the current telephone network is its ubiquity and adherence to standards. For example, you can purchase any telephone and it will work in any home - cordless, corded, Mickey Mouse, and multiline phones will all work no matter whose house you plug them into. This is the very strength that a standard brings to the table - the ability to allow customers to freely choose products based on the inherent strength of the product itself, without being locked into a single manufacturer in order to ensure compatibility. Standards propel any industry and conversely, a lack of standards routinely kills otherwise viable industries.

ISDN has suffered for years due to a lack of standards and even though ISDN standards are improving like never before, the whole technology has become stigmatized. A single standard at the outset and reasonable pricing would have made ISDN as ubiquitous in the United States as it is in many European countries, but instead ISDN has been reduced to a laughingstock in the trade and general press for almost a decade. (Let's hope that whoever is in charge of DSL rollouts in the U.S. is reading this Outlook.)

Many of the companies in the Internet telephony industry are familiar with ISDN's inability to adhere to a single standard in its formative years. This lesson has been learned well by most Internet telephony vendors, and they are determined that Internet telephony will not fall to the same fate as ISDN.

Evidence to support this assumption is the incredible number releases we receive on a constant basis from companies forming interoperability alliances and proposing new standards. Having grown up in the computer industry, I have never known computer vendors to support standards with the intensity and fervor of Internet telephony vendors. When I started programming on UNIX computers in 1982, the first operating system I used was ZEUS (Zilog Enhanced UNIX System). At that time there were more than 30 flavors of UNIX on the market. Talk of a single standard UNIX OS has gone on for years -you'd think we would have a standard UNIX a full 17 years later, but no. We now have another flavor of UNIX courtesy of LINUX. Lack of standards has crippled UNIX and allowed Windows NT to slowly take more and more market share away from these UNIX vendors. Perhaps another 17 years will tell if LINUX will become the ubiquitous UNIX standard.

If only Internet telephony standards were as easy to set as those for a single UNIX. We need standards compliance from the most basic Internet telephony phones to Internet telephony gateways to Internet telephony packet-based security to Internet telephony QoS to gateway interoperability to gatekeeper interoperability to billing systems to Intelligent Network and SS7 interoperability. Yes, there is a lot of work to be done, but it is being done, as the constant announcements coming across the wire will tell you.

Our own Larry Fromm, in his monthly column Industry Insight, suggests we may have too many standards, and he may be right, but I'm an optimist. I am glad that the interest in standards is great enough to warrant so many companies supporting the various standards initiatives with both manpower and dollars. In time, the cream will rise to the top and those standards that truly support interoperability on a wide scale will be adopted industrywide. For more industry views on the question of standards, please see this month's Round Table feature.

I've written about standards before and no doubt will write about them again. I would guess that while this issue is printing and mailing another two or three important standards initiatives will be announced. Here is a brief recap of the latest three that caught my eye.

• ITU Work Group Begins Evaluation of Addition to H.323 Recommendations
  The ITU's Study Group 16 announced that it has started analyzing a new Internet standard, currently referred to as H.gcp (please check case), which will become an addition to the H.323 family of recommendations. H.gcp will expound on H.323's capabilities to provision new services by enabling Internet gateway devices to be interfaced, with the signaling systems found in traditional telephone networks. Expect to see this standard emerge next summer. For more information please visit the ITU at www.itu.int.
• Packet Multimedia Carrier Coalition to Develop Interoperable Protocols
  The Packet Multimedia Carrier Coalition has been created to develop protocols that will enable interoperability between IP networks and the PSTN. Soon after development, the protocols will be submitted to the IETF and ITU standards bodies. Founding members of the coalition include Level 3, Frontier Communications, GTE, the ICG Telecom Group, Illuminet, IXC Communications, NEXTLINK Communications, NTT America, SBC Technology Resources, Sprint, TESS, LLC, Time Warner Telecom, and Williams. For more information please contact Level 3 via e-mail at [email protected].
• Vendors Join Interoperability Alliance with ITXC, VocalTec, and Lucent
  ITXC has announced that Ascend, Cisco, Clarent, Dialogic, Natural MicroSystems, and Siemens will integrate support for the iNOW! (interoperability NOW!) profile into their respective Internet telephony platforms. The profile, which is based on H.323 protocols and the H.225.0 Annex G, will detail how to achieve interoperability between gateways and gatekeepers from different vendors. As I wrote in my November 1998 Publisher's Outlook, Lucent and VocalTec co-developed the interoperability profile, with ITXC providing lab and field testing, project management, and marketing. iNOW! is scheduled to be released as you read this. For more information please contact: VocalTec, ITXC, or Lucent.

So, standards are alive and well and even flourishing - we need many of them and we need them to work together (standards interoperability standards?!?). Lets hope that all the companies setting standards are involved for the sake of furthering the Internet telephony industry by amicably working together and not forcing their way of doing things on the rest of the market.

The voice/data switch is a device that switches both voice and data and is capable of call control and other traditional PBX-like functions. These products allow a single wire to the desktop, carrying voice and potentially video as data. In some cases, a voice/data switch can also function as a network hub, a unified messaging server, or even a firewall. As for IP, these products typically take advantage of IP telephony but don't have to. CellIT, for example, uses ATM to the desktop in their voice/data switch but does not currently employ IP.

Six of the leading voice/data switch vendors will be objectively educating attendees on next-generation voice/data products at the Voice/Data Switch Learning Center at CTI Expo Spring 1999, which will be held in Washington, DC, from May 24-27.

At TMC our commitment to objectively educating our readers and attendees is unyielding. We continuously strive to provide you with information you need - information that is vital to you and from a source you can trust. Our editors and the engineers of TMC Labs toil endlessly to help VARs, interconnects, service providers, developers, and end users purchase products that best suit their needs. Innovation and relentlessly perfecting every detail of the ideal educational Expo experience for our valued attendees is what keeps CTI Expo ahead of all other shows.

CTI Expo promises the utmost in education and information you can use in bettering your company's future and the future of your career. Our learning centers are especially useful to a broad range of attendees as you can see from the following list we have prepared for your convenience.

Service Providers have been hearing about Internet telephony enhanced services for over a year and finally can come see a variety of products that will allow Internet telephony enhanced service provisioning directly in the switch itself. What could be more cost-effective and convenient? Open APIs that are also available for the CPE community ensure a wealth of inexpensive applications that can be easily and inexpensively ported to this platform.

Developers must come and see Lucent's new IPES system and other voice/data switch development platforms and learn firsthand how open APIs allow you to augment these powerful voice/data switches and offer an array of exciting new products that all future voice/data switch customers will be able to use.

Interconnects selling PBXs, you have been hearing for years that CTI will change the way you work and the products you sell. The voice/data switch learning center at CTI EXPO is the only place you can see six of the leading voice/data switch vendors without being pressured by a sales pitch. You can actually spend time with these vendors in a low-pressure environment without being hassled or barraged with sales information if you don't require it.

Computer VARs know that there is a huge opportunity selling CTI products and these resellers have made up a major part of the CTI Expo attendance this past year. The voice/data switch is a great product to get started selling. Telecom and datacom are indeed merging and the voice/data switch represents telecom in almost a pure data or packetized format, with which you are most comfortable. Now is the time to get into CTI by coming to CTI Expo and learning how to sell the next-generation PBX - the voice/data switch.

Corporations - from SOHO to Fortune class - will one day use voice/data switches to handle all of their voice and data traffic. For SOHO users, the voice/data switch is attractive due to its centralized administration, management, cabling requirements, as well as its lower cost. Fortune-class companies will use voice/data switches for the same reasons, with the added benefit of easier centralized management as well as the ability to provision new enhanced services that boost productivity and efficiency.

CTI Expo is THE industry event. No other trade show in any related industry can claim close to 300 exhibitors and over 15,000 attendees in its first year. CTI Expo is one of the fastest-growing shows anywhere. Our dedication to you, our valued readers, is what will ensure that CTI Expo is the only show you need attend in the fields of computer-telephony integration, Internet telephony, and call center solutions.

But don't just take my word for it! Please take a look at our list of testimonials from exhibitors and attendees alike at and judge for yourself.

Mark your calendar today with CTI Expo, May 24-27 in DC at the Washington Convention Center, and to stay current on the latest updates, be sure to register for free at www.ctiexpo.com.

We are very excited and proud to have industry veteran Marc Robins join the TMC team as Associate Group Publisher. Marc has been in telecommunications consulting and publishing since 1983. In 1988, Marc founded Robins Press, a leading publishing and consulting firm specializing in voice and fax processing, call center technologies, and computer telephony. Robins Press has published a number of industry books in speech recognition, voice mail, and IVR.

Marc's career recently evolved from publishing and consulting into a full time position at Linkon Corporation, a leading provider of Internet telephony boards on the UNIX platform, specifically Sun machines. Marc served as Linkon's Director of Marketing and was instrumental in positioning Linkon as a leader in the newly formed Internet telephony industry. It is this real-world experience that makes Marc a wonderful addition to the TMC team. Marc's industry experience makes him rather unique, allowing him to see the market from a different perspective than typical journalists.

In publishing, as in most other disciplines, an experienced team with a proven track record in a given industry is what differentiates the leaders from the rest of the pack. TMC already has a tradition of maintaining an editorial team with decades of experience in the industry and we happily welcome Marc Robins to this team.

Feel free to drop Marc a line welcoming him at mrobins@tmcnet.com.

When TMC launched CTI magazine, we made a decision to publish only the most in-depth and objective reviews of products in the emerging field of computer-telephony integration. By hiring engineers who seek to expose product weaknesses ranging from difficult installations to buggy GUIs and limited feature sets, CTI magazine was the first industry publication to effectively cover the telephony market like a computer magazine.

Over the last few years, the office space we had allotted to TMC Labs has become more and more crowded with PC PBXs, Internet telephony gateways, legacy PBXs, industrial computers, and a host of voice and fax boards. Furthermore, over the course of the past year, TMC Labs has taken on the added responsibility of supplying both Internet Telephony and Call Center Solutions™ magazines with monthly reviews.

As TMC Labs' responsibilities grow, so must we expand the resources that support TMC Labs. We have outgrown our current office space and must expand into new offices. In the upcoming months, TMC Labs will be moving into another office in Norwalk, CT, a few miles away from our 1 Technology Plaza headquarters.

With more room to move and even more state-of-the-art testing equipment, you can expect TMC Labs to continue its dominant role of providing you with the most in-depth and objective reviews of products in the fields of computer-telephony integration, Internet telephony, and call center solutions.

We always love to hear from our valued readers. If you have any comments about TMC Labs, please feel free to drop me a line at rtehrani@tmcnet.com or e-mail our Executive Technology Editor, Tom Keating (tkeating@tmcnet.com) directly if you prefer. Tom has done a wonderful job in building and growing TMC Labs from its humble beginnings, and if you find the reviews in TMC publications helpful or have suggestions that will help us improve or publications, feel free to drop him a line and let him know.