November 1998

A Data/Voice Gateway Provider: Solving A Customer's Needs

There's been a lot of speculation recently about golden opportunities in Internet telephony. Predictions range from $2 billion to $8 billion by 2004, and some say a third of all voice traffic will be carried over the Internet by the turn of the century. Sounds like a great opportunity for modern day prospectors to make a fortune. But the question remains, "Is there really gold out there for independent entrepreneurs now?"

Johnny Brown of Cedar Rapids, IA, says, "Yes." President and CEO of J. M. Best Communications, Brown is seeing revenues double monthly in a business category that didn't exist just five years ago. "I see this market exploding," he says, "As my IT network grows, traffic grows along with it." His phone-to-phone Voice over Internet Protocol (VoIP) network now serves over 500 U.S. locations as well as international locations including El Salvador, Taiwan, Costa Rica, Mexico, Panama, Guatemala, Peru and Honduras. He's planning to add more locations every month through 1999.

HOW HE STARTED
A longtime entrepreneur and problem-solver, Brown started three companies previously and holds patents and copyrights on his own inventions. After establishing J. M. Best as a successful ISP, he looked for more opportunities. Internet telephony seemed a good fit with his existing business. He began researching the possibilities of becoming an Internet Telephony Service Provider (ITSP) through Internet searches and visits to trade shows.

His preliminary research led him to a product category that would get him into the ITSP business: Data/Voice Gateways (DVGs). He wanted a gateway product that could support phone-to-phone long-distance VoIP, but he was also looking for additional functionality that would allow him to run and grow his business.

HOW DVGs WORK
A DVG allows conventional phone-to-phone calls to be made over the Internet when a DVG is at or near the origin and destination of the call.

To begin, the end user dials a local number (which can be on a calling card) and enters a PIN number. An authentication server then verifies the PIN number and looks up the phone number on a table to locate the IP address of the remote DVG. As the conversation begins, Advanced Digital Signal Processors (one per voice channel) convert and compress speech into data packets and route them over the backbone or over the Internet or other IP network to the destination. The remote DVG then uncompresses the data packets back into speech and sends them out by dialing and connecting over the public telco (PSTN) or private telephone network. Since the calls at the origin and destination of the communication are local calls, long-distance charges do not apply, so service providers can profitably offer rates as low as 7 to 10 cents/minute for calls across the country or around the world.

Depending on the gateway product, up to 24 channels of voice traffic can be connected to each unit, using T-1 trunks or conventional analog telephone lines via FXO/FXS ports. An Ethernet LAN port may provide connection to the data network infrastructure. Some DVG units can be connected to each other, allowing the service provider to build a large network as the business grows.

PRODUCT PERFORMANCE ISSUES
With the sheer volume of players getting into the VoIP arena, there is a veritable glut of DVG products available. But, as Brown discovered, some solve inherent problems better than others do. Here are the issues he felt were most important as he researched the IT marketplace:

Quality of Service (QoS)
From the early days of Internet telephony, quality of voice transmission has been an issue. Latency (from routing delays), dropouts (when packets are missing in action) and jitter (the breaking up of speech when packets arrive out of sequence) are some problems that have held this technology back. However, new refinements are becoming available to improve quality to near (and in some cases better than) that of PSTN calls.

Scalability
Assuming you want your ITSP business to grow, you need a system that will grow with it. Some do this more easily than others. How many lines can each box support? Can you add boxes to the stack? Will you have to add special hardware as line capacity increases?

Authorization & Billing
It takes more than a DVG to run an ITSP business. In order to authorize customers and handle billings, you'll need a server to support a network of gateways and manage a centralized database of subscriber information. When calls are completed, Call Detail Records (CDRs) must be made and passed on to other operators/end users. A server must maintain mapping and configuration data for the network. A sophisticated invoicing application is needed for customer billing. Are these capabilities available in a DVG system package, or must additional hardware and software be purchased separately? If so, will they all work together as one dependable system?

Reliability
Is the DVG system redundant and fault tolerant? Is it modular for easy system changes if required?

Cost
Does the total investment allow you to become profitable in a reasonable time period and allow you to charge end users a competitive price for the service?

A SUITABLE SOLUTION
Brown chose to build his ITSP business with Franklin Telecom's Tempest system. For his particular requirements and goals, it was the best choice. Here are some of the reasons why.

Quality
The Tempest system incorporates new technology that allows the user to make real time adjustments on the telephone keypad to improve quality of a call on-the-fly. For example, a user can often improve the sound quality significantly by pressing a two-key combination. This allows the user to "turn down" latency during a call or to send more 30ms frames per IP packet, improving call sound quality.

Scalability
The Tempest DVG currently supports T1, FXO, and FXS lines, with each system handling 8, 12, or 24 lines. It can be scaled by adding more boxes to the stack. All are connected by a TCP/IP LAN. A T1 speed port on the backbone IP network can support at least 10 DVG units for a total of 240 voice ports per router (concurrent calls). The limit to the number of DVG units you can put on a LAN is a function of the size of the LAN and router.

Authorization & Billing
The Tempest Billing and Authorization Server, which supports credit, debit, prepaid, and other account types, enables real-time Web-based customer tracking as well as management of the subscriber database. It authenticates user codes (PIN numbers) and verifies that the account has sufficient credit. Then, it routes the call by the timeliest and most cost-efficient means possible.

This server runs on Windows NT with SQL Server and is highly scalable. It can support a very large network of VoIP Gateways, using state-of-the-art client/server architecture. Our proprietary software is designed to work with our hardware and is all part of the complete Tempest DVG system.

Reliability
The system is redundant and fault tolerant, comprised of plug-in modules, which can be removed/installed on-the-fly.

GOING FOR THE GOLD
Brown has put together a menu of services for his consortium members, typically other ISPs. The selection of services includes:

Billing
J.M. Best will route, monitor, authenticate, and terminate all voice/fax calls. They will issue "Minutes of Use" statements with all the information required by ITSPs to bill and collect from their customers. The company also provides billing settlements between ITSPs and other carriers.

Marketing
The optional marketing package helps the ISP enter the ITSP business with minimal work. J.M. Best provides a free service to its members to recruit new customers. It also provides calling cards, flyers, promotional materials, advertising and PR materials, as well as on-site marketing support.

Customer Billing
This package provides all billing services and collection and issues payments to ITSPs twice monthly.

Equipped with the Tempest system, Johnny Brown began building his VoIP business with his ISP end users. But, he now sees the greatest opportunity in expanding his J. M. Best network of other Data/Voice gateways domestically and internationally. Brown can be reached at [email protected] or visit the J. M. Best Web site www.jmbest.net.

For more information on Franklin's products and services, contact Peter S. Buswell, Franklin's President and CEO. Buswell is a telecom industry veteran who has helped bring many new telecommunications products to market successfully over the past three decades. He welcomes your feedback at [email protected].