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March 2000

Glengarry, Glentelephony: Scotland Has More Than A Few VoIP Feathers In Its Bonnet 

BY LAURA GUEVIN

Go Right To: Poland Seesaws On VoIP Regulation 

Ethnocentrism. I know I've been guilty of it, but it seems only natural to focus on one's own country when covering a technology like Internet telephony, for which a lot of activity and development is happening right here in the US. The technological revolution knows no national boundaries, however, and research and development for voice over data spans the globe, reaching faraway places as unlikely as China -- which once outlawed forms of telecom that threatened the national monopoly. And while we in the US have certainly embraced the economical and social changes brought on by advancements in the telecom market, other countries are taking an extra step to stay ahead in the race. And it's only benefiting the Internet telephony market.

When I once thought of the small, quiet nation of Scotland, the words "technology hotbed" didn't immediately come to mind. And that's a shame, because technology has become a major focus in the Scottish economy, driven by government initiatives that connect education and industry to attract new and expanding businesses to this lovely country. As a matter of fact, Scotland already boasts production of nearly 80 percent of Europe's workstations, 32 percent of branded PCs, and 51 percent of Europe's notebook computers. Not bad for a nation whose total population is less than that of Greater London. Many technology companies have located or set up divisions in Scotland in recent years, and this is largely because of the efforts of Locate in Scotland, part of the country's economic development agency, Scottish Enterprise.

A SHIFT TO TECHNOLOGY
According to Andy McDonald, North American director for Locate in Scotland (LIS), the country decided in the 1980s to move away from heavy industry into electronics, biotechnology, and healthcare. Major companies like IBM, Motorola, Hewlett-Packard, and NCR had already made investments there, and these companies were viewed as a core magnet for attracting additional technology investors. A high quality of life, skilled and educated workers, and attractive business incentives have all been factors in drawing technology, and most recently Internet telephony companies, to this part of the United Kingdom. And let's not forget that the largest concentration of chip manufacturing and design companies in Europe, known as Silicon Glen, is located in central Scotland, encompassing the Glasgow and Edinburgh metropolitan areas. The Glen is home to major companies like Sun, Agilent, Microsoft, IBM, Mitel, 3Com, Compaq, and Oracle.

"One of the other major benefits we have in Scotland is the ability to support rapid startup of business in what is a very fast-moving sector," said McDonald. "On the access point, we have a very competitive telecoms environment, with BT (British Telecommunications) and Thus, for example, providing major bandwidth support for Internet applications." The vast Thus umbrella includes the popular Demon brand of Internet services as well as traditional telco services through Scottish Telecom. And in a major move toward global expansion in December, Thus became the first UK company to implement a multi-protocol label switching (MPLS) network through an agreement with Lucent Technologies. IP Navigator MPLS technology lets networks label and prioritize traffic, enabling services like Voice over IP (VoIP), virtual private networks (VPNs), and IP multicast.

STARTING AT THE BASE LEVEL
Scotland's technology development is not only focused on services, and quite a bit of research and development on system level integration is being performed there. The Institute for System Level Integration was formed in 1998 to undertake commissioned research of electronic design. An academic partnership of four major Scottish universities, the Institute focuses on studies of electrical/electronic engineering, computing science, and informatics (information science). The institute is part of the Alba Centre initiative, designed to bring together research and education with industry and development. Many leading companies are beginning to locate research arms within the attractive Alba campus, including Cadence Design Systems, and Epson.

The Virtual Component Exchange (VCX) is the other important part of this initiative. The exchange facilitates trading of intellectual property related to chip design for the development of mobile phones, personal digital assistants (PDAs), and digital cameras. Companies already involved in the initiative include Siemens, Motorola, Toshiba, ADTRAN, and Cadence.

Cisco Systems decided to take advantage of Scotland's skilled workforce in 1998 and hired a few engineers to work out of the company's sales office there. Edinburgh's reputation for initiatives in data networking lead the company to open a permanent office there last year, Cisco's largest research and development center outside of North America. John Harper, director of IOS engineering in Europe for Cisco, says the company's Scottish office is working on the same technology developments as its U.S. branches. Cisco's IOS Software is the platform for intelligent networking and applications that runs on the majority of the company's networking equipment. Some of the Edinburgh research activities include VoIP, the IPv6 standard, and high-performance switching.

"I guess Scotland is no different from anywhere else from a software development perspective," said Harper. "It's probably less competitive than Silicon Valley itself, since there are far fewer companies, but it is equally conducive to research and development." Another initiative designed to bring together academic and development environments is the Cisco Academy Training Centre, the first of its kind in Europe, opened at Edinburgh University in 1998. The academy is designed to teach students about data networking environments.

GROWTH OF A MARKET
Internet telephony services and the hardware that powers them play an important role in the Scottish economy, just as they are gaining prominence here in the States.

  • Analog Devices is a leading developer of DSPs, which are commonly used on VoIP boards. The company acquired Edinburgh Portable Compilers last year, a developer of software compilers for embedded applications. Compilers are an important tool for working with DSPs, and can simplify the design challenge for developers using advanced Analog DSP architectures.
  • Atlantic Telecom has seen a good amount of growth over the past few years. Founded in Glasgow in 1996, the company offers fixed radio access (FRA) -- an advanced frequency hopping radio technology -- in four of Scotland's cities. The company offers business and home services utilizing the technology, provided by InnoWave.
  • KSCL a telecom management software provider headquartered in Edinburgh, offers the Jupiter system of convergent billing and customer care. The company recently announced the Jupiter Solutions Alliance, a series of partnerships that will enable KSCL to offer other vendors' solutions to its customers under the Jupiter name. Next-gen billing solution companies involved in the alliance include Alcatel, Applix, and XACCT.

Other leading companies in the Scottish Internet telephony/telco space include Edinburgh-based Dolphin Software Systems, a custom developer of software solutions for the CTI industry; Pentland Voice Technology, developer of the DSCRIPT voice processing application; and Blue Sky Technology, a reseller of the INDeX voice and data platform from Lucent. Internet telephony gateway vendor Oki Electric Industry Co. also has a facility in Glasgow, mainly for the manufacturing and assembly of fax and printer products, as well as automotive electronics.

Andy McDonald believes that while Internet usage in Scotland and the rest of the UK is not as prevalent as in the US, the UK still leads Europe in its use of Internet services. "While corporate use of Internet telephony is becoming more commonplace, it is probably true to say that in the UK in general, the fact that we are only now moving toward the provision of free access to local calling or fixed price unlimited hours programs has had an impact. However, the technical research and development of the technology has moved forward with significant pace, both in the commercial and academic sectors."

Esther Dyson, interim chairman of the Internet Corporation of Assigned Names and Numbers (ICANN, www.icann.org), recently commented that many international governments fear American imperialism, particularly when it comes to the Internet. Two-thirds of the world's Web traffic comes from the US, and most Web sites are in English. If the recent technological growth in Scotland is any indication (as well as the analyst reports that predict that the number of international Web users will eventually surpass U.S. users), more international surfers and Web sites are on the way. And the active role the Scottish government is taking in attracting and retaining research, development, and manufacturing of technological products bodes well for this small but emerging segment of the international market. 


Poland Seesaws On VoIP Regulation 

Poland became the latest nation to enter the Voice-over-IP (VoIP) limelight in January, when Telecoms Minister Maciej Srebro said the country's leading mobile phone operator, PTC, was routing calls illegally over the Internet. PTC, a subsidiary of Elektrim and Deutsche Telekom, has been sending international calls over IP instead of state-controlled operator TPSA's network, cutting rates by as much as 50 percent.

According to current legislation, VoIP service is illegal, and infringes on TPSA's international calling monopoly. The Telecoms Minister's office said the VoIP service should be discontinued, and has threatened to take PTC's license away. But PTC has other plans, and said it will appeal the decision in court, possibly taking an appeal to the state's high court, the NSA (Supreme Administrative Court). The company had not decided whether it would shut down services at press time.

And now Srebro's office is saying VoIP can expand the country's telecommunications market, and it may allow such services if they are regulated by the government. Just a few days after reprimanding PTC, Srebro said the country is beginning deregulation of the telecoms market, with a goal of lower Internet access costs as well. The government will now allow Internet access providers to operate without permits, but will continue to require licenses for those offering data transmission services.

The Telecoms Ministry will also create a new department for Internet development strategies, which will bring together telecommunications providers to discuss regulated VoIP services in Poland. However, other government efforts may slow down the speed of adoption, and regulations are not expected to impact international calling until a new telecom law is passed. The Polish Parliament has been debating a law that would allow an independent telecom regulator to implement a plan for international telecom deregulation -- but changes are not expected to take effect until 2003 at the earliest. 







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