BY RICH TEHRANI

I played soccer in high school. I could always kick the ball farther than most kids my age, and since I never considered myself that good at baseball or football, soccer became my sport of choice. So when I was recently coaxed into playing on the TMC™ softball team after not having put on a glove in over 20 years, I reluctantly agreed. I attended practices and the mock games, and thought I was ready to play until I took part in the first few real games and reality struck.

One particular game began at 9 p.m., with me in the outfield under the brightest lights I have ever seen in my life. It seemed that in order to catch a ball, my eyes would have to track it against this blinding obstacle. Sure enough, every ball that was hit to me was lost momentarily as I searched in vain to locate the sphere heading into my corner of the outfield. I soon learned new respect for the pros. Eventually I would spot the ball, but each time I saw it, I was too far away to even come close to catching it. As you might imagine, we lost that game, and every time I took the field I secretly wished we had a TMC soccer team instead.

In any sport you play, it is important to keep your eye on the ball — and this is no different in the business world either. But how do you keep your eye on the ball in the Internet telephony industry — where a single week can produce 10 major acquisitions, the birth of seven must-know acronyms, and three standards you must live and breathe, as well as deploy before your next performance review?

In an industry that moves as fast as Internet telephony, it is important to spot trends early on so you can take advantage of the many opportunities the market’s new directions may offer. As I meet with Internet telephony and CTI companies, I’ve noticed some trends that will be important to your company and your career. Of course as I re-examine these trends, some of what I have written below borders on prediction, but as fast as this market moves, I wouldn’t be surprised if the predictions below become reality before you open the plastic wrap on this issue.

Telephony becomes a software application.
This is pretty obvious, but it hasn’t happened yet. There are a variety of reasons why it is inevitable that we will buy our future telephony applications such as voice mail and unified messaging on CD or over the Internet. As more and more mergers take place in the telecom space, it is inevitable that giants like Lucent, Cisco and Nortel Networks will own a lion’s share of the switching infrastructure of the future — which of course will be based on IP. Internet telephony standards will eventually gel, and as a result, switching hardware will become a commodity, and vendors will look to applications and integration as the way to make money. An example of a future application (albeit esoteric) I would like to have is video conferencing with 3D or surround sound stereo that allows me to see and hear people in a remote conference room as if they were around me.

The move toward service provider everything.
The service provider market is exploding with growth, whether it be competitive local exchange carriers (CLECs) like MCI WorldCom, application service providers (ASPs), or Internet telephony service providers (ITSPs). There is a firm belief that many of us (at home or work) would rather not deal with the nuances of hardware and software, but would much rather allow a service provider do the dirty work of installing and upgrading products while we just pay for what we need. Voice mail and unified messaging are prime examples.

Ridiculously inexpensive Internet telephony service providers are constructed from scratch.
The price per port of Internet telephony gateways is falling dramatically, as is the cost for broadband access. Soon you will be able to get together with friends and family and set up gateways wherever you have the need. You’ll be able to make free phone calls, wherever you have a gateway. Small corporations will also have their own Internet telephony phone and fax networks, and will save a bundle while they’re at it. Couple this with the fact that bandwidth is getting less expensive, and Internet telephony carriers will gladly resell you some of their excess bandwidth so you’ll be able to set up a worldwide Internet telephony network very inexpensively.

Radio and TV will all be accessed over the Internet.
For three years, I have held off buying a radio at work because I figured I could just listen over the Internet instead. Within the last six to 12 months, the quality and selection of available radio stations have proliferated dramatically, and the Internet is now a far superior way to listen to my favorite station. By the way, I am fully aware that you can’t listen to the radio over the Internet at your family picnic and other outdoor places, so no letters please. TV is a bandwidth hog and it will take a while longer for it to migrate to the Net, but bandwidth is increasing all the time so eventually this must happen as well.

Anyone can start a broadcasting company.
Without the need for price prohibitive transmitters, why not? If my cable company can provide me with a golf channel and a fishing channel, there has to be room for many other niche programs…Especially when you consider the worldwide audience the Internet provides. Why can’t presidential candidates broadcast their views continuously on their own stations (Web sites) so voters can have a more accurate depiction of what each candidate’s views are? This seems much more logical than politicians traveling in a bus around the country, kissing babies and shaking hands with strangers.

We will all have multiple mode IP/POTS/USB phones.
It’s just a matter of time. The PC as phone concept never took off because people are very comfortable with the phones on their desks. We can expect the next generation of phones to support a variety of network interfaces so that you can always connect to whatever network you need access to. I would bet AT&T and/or Microsoft will make a big splash with such a device, and although they won’t be first, they will get the credit. (What else is new?)

We will never be out of touch.
Through the use of a variety of devices and software, we will be able to log into a universal network from wherever we happen to be. This network will consist of a database with your IP address and your personal information. Whenever someone tries to call you — regardless of whether it is on your cell phone, home phone, or office line, the call will forward to your location through IP telephony. Using the Web, you will have a rich interface that allows you to do more with your phone calls — such as transferring, conferencing, etc. — than you do today.

Whether you are a service provider or soccer player — a softball all-star or a reseller, you need to always keep your eye on the ball or you’ll fall behind. I hope this column gives you the insight you need to stay ahead in the competitive world of Internet telephony. Hopefully it will give you a head start implementing this revolutionary technology, and as a result, you’ll have lots of free time to practice your favorite after-work sport. Just do me a favor and don’t forget to practice under some bright lights before the big game.

A few weeks ago I received an e-mail from a subscriber to this magazine telling me that he had invested all his money in Net2Phone, IDT’s Internet telephony service subsidiary that went public in July of this year. I hate giving stock market advice in the industry because many times the stock market is more emotional than logical, making it impossible to predict. Something struck me about this e-mail, and I decided to respond anyway. I pulled up the chart and noticed that the IPO price of Net2Phone was $15 and on July 29, the issue opened at $20.75. The day I looked at it, it was up to $26 and the chart looked great… Almost straight up. So I responded to the e-mail and mentioned that I can’t predict the future, but in the five-year time frame he had given this stock, I thought it would be a winner.

Then, this morning I saw an interview on CNBC with Jim Courter, the president of IDT — the parent company of Net2Phone. Mr. Courter was one of the keynoters at CTI EXPO™ Spring in D.C., and once again gave a great talk about the growth of the industry. During the interview the word Internet telephony was thrown out a few times, and each time telephony was pronounced correctly (t -le-f -ne). If that wasn’t enough of a shocker, I then noticed that the yearly high for Net2Phone’s stock was $89.25, a 500-percent increase in less than one month over the IPO price. Aside from learning when I should have invested in this new offering, I realized that you can indeed choke on coffee.

There has simply never been a better time to be purchasing telecommunications services or be in the telecom industry. Although Wall Street can be fickle, they have assigned a market capitalization (the total number of a company’s shares multiplied by the current price per share) of over $2.25 billion to Net2Phone as I write this column, and that is just in the first month after the IPO!

SO HOW DOES THIS WORK?
The biggest factor influencing telecommunications is the Internet, and more specifically, Internet telephony. As always, you can expect more hands-on and live demos of Internet telephony products and services at CTI EXPO™, December 7-9, 1999 in Las Vegas than any other show.

As you have no doubt read, TMC™’s ConvergeNET™ will be a live operational IP telephony network at the show allowing all Internet telephony exhibitors to demonstrate interoperability among their systems. Demonstrable interoperability is crucial to assuring that disparate IP telephony solutions truly work together as advertised. As of this writing, the interest in ConvergeNET™ has been extraordinary… We can’t wait to orchestrate open packet telephony convergence at this event. Come and see if the vendor you may be considering takes open systems seriously.

If you have been following Net2Phone’s news, you no doubt know they have recently released Net2Fax, an Internet fax service, and Click2Talk, a call center Web “call me” button service. As many of you are well aware, these are enhanced services and Internet telephony lends itself nicely to the creation and sale of such services. If you are looking to purchase the equipment necessary to get into the business of selling enhanced services, what better place to visit than CTI EXPO™, where we will have a next-gen telco in a booth, showcasing some of the latest enhanced services for your perusal.

But beyond the added attractions, you should definitely come and see the products responsible for this revolution of voice and data convergence. Some of the most interesting products to see are the Internet telephony gateways that will be littered amongst the 400 exhibitors on the show floor. CTI EXPO™ has become quite a large trade show in a short amount of time. If you are a reseller or interested in purchasing products for an enterprise, don’t miss the voice/data switches or IP-PBXs that allow you to bring your telecommunications in to the 21st century. With next-generation IP enabled telephony devices you can set up virtual PBXs and ACDs over LANs, VPNs, or the Internet as seamlessly as you set up remote access for your users. Disparate locations are no longer a barrier to seamless telecom… Finally, these devices allow telecom to become datacom.

There is a tremendous amount more to share about CTI EXPO™ and my enthusiasm for this market only grows as I see the positive results of companies such as Net2Phone — companies that decided the revolution of Internet telephony was something worth pursuing — and now they are on the leading edge. The real strengths of Internet telephony will be in the services you can provide, and to date there are precious few services being rolled out. Services are the next wave of communications, and if you’re thinking about getting into this market, the time is now and the place to start is at CTI EXPO™, December 7-9, 1999 in Las Vegas. If you sign up now, you will save $25 on Exhibit Hall admission. I hope to see you there.