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November 1998

Building an IP Telephony Empire: What You Need To Know To Succeed


What makes long-distance calling such a killer Internet application? The answer is simple -- so much money to be saved, so much money to be made. It is a fact that calling on the 'Net offers tremendous savings over conventional long-distance calling. While the telephone industry continues to provide conventional services at a premium cost, IP telephony developers are weaving an international web of least-cost Internet services that continue to challenge the industry.

Telephone service providers, from AT&T to Herb's Home Switchboard, understand the market potential of these Internet services. Whoever successfully integrates emerging IP telephony technologies, such as Internet gateways and VoIP (Voice over Internet Protocol) servers, into the long-established PSTN infrastructure could easily capture the lion's share of the long-distance phone-service market. For the victor, offering such least-cost services to customers will increase customer traffic and lead to profitable growth, if the increased traffic is properly managed.

While the core technologies exist to allow calls from an ordinary telephone to be carried over an IP network, several challenges await those service providers vying to build an empire on IP telephony systems. For those wanting to ride the IP tidal wave to success, we offer a glimpse at some key obstacles and solutions to these obstacles that every phone service provider should consider when building an IP telephony network.

One of the most difficult tasks service providers face is finding a way to manage the billing for services provided to the customer. To stay competitive, service providers must continually add or tailor billing services to meet their customers' needs. However, implementing value-added billing solutions from new and improved payment options to real-time billing of value-added services, can be problematic. Here's why.

Service providers are not billing solution specialists, and they must look to third-party software developers or to their IP telephony systems manufacturers for new billing solutions each time a service is to be added.

Ready-for-market third-party solutions offer substantial savings in development time and costs over proprietary solutions, but few IP telephony systems presently support third-party solutions.

Those service providers who build their IP telephony systems on "proprietary" gateways, for instance, soon discover that proprietary software must be developed or modified each time a new service is to be added. This added development makes the time and cost of adding the new services prohibitive to the service provider's growth. The services are often added at a premium (non-competitive) price and on the hardware developer's time line, causing the service provider to lose significant market share.

"Open" IP telephony systems offer some significant advantages over the proprietary systems. Service providers who build their systems on a gateway with an open API architecture that complies with industry standards have the freedom to choose from ready-for-market third-party billing solutions. With this freedom also comes the flexibility to choose the billing solutions that are most complimentary to and interoperable with existing system applications.

Gateways with an open API architecture allow service providers the ability to choose solutions that are tooled for important IP telephony applications such as real-time network billing and customer management. Critical to the success of IP (i.e. network) telephony systems, real-time IP-based billing solutions will gather call records in real-time from multiple gateways, storing them in a centralized database network for billing.

Billing solutions incapable of real-time IP-based (network) billing require the service provider to collect and download local billing information from each gateway. This "in-gathering" of remote customer accounting information can be time-consuming, costly, and prone to errors.

On-line billing and customer management tools make implementing value-added services even easier for the service provider, and allow the customer to change services to fit their needs. Such tools give service providers the ability to package service options or market services that appeal to a variety of customers. (For example, a service provider might wish to package services giving free minutes on one service for heavy use on another.) In a net-wide management system, the billing solution should be linked to a service database that allows all value-added services to be tracked and billed in real-time.

This type of network management system also allows for marketing flexibility. Service providers may change service pricing in real-time, enabling updated pricing immediately). Without this type of solution, service providers are incapable of providing point-of-service upgrades.

One of the most important ways that service providers can give customers the best service is to allow both the customer and the customer service representatives access to information in real-time and the ability to control and adjust that information. The majority of the management solutions running on gateways today do not allow this type of access or control.

In the telecommunications world, "real-time" typically translates to 20 - 48 hour batches. However, due to the nature of the IP telephony business, service providers have the opportunity to work in true real-time, allowing for better customer service. Net-wide management systems are designed to provide real-time access to allow service providers a way to service customers quickly and effectively. In addition, these systems also allow customers to access their accounts at any time to view call records, update personal information, add new services, and the like.

From a customer standpoint, direct access to account information via the Web and IVR (Interactive Voice Response) provides an added benefit. It allows customers to conveniently view billing, change their options, review call records, and such. Perhaps of even greater value are the tremendous cost savings for service providers in allowing customers access to account information. By doing so, service providers can significantly reduce the number of calls to customer service centers.

It is impossible to provide quality IP service without a superior network management solution. If the gateway is designed with an open API architecture, service providers are then free to choose their management solution and find a tool that is capable of providing Quality of Service (QoS) for customers, global management of the network, fraud protection, dynamic routing, and superior voice quality.

Central to a good management tool is the ability to provide QoS that allows the customer to choose the options they desire. Few management tools can carry out the critical function of identifying the type of user and the options that the user has registered and paid for, and then determine how that service is carried out. Net-wide management systems integrate a centralized customer database with the network management device. Depending on the user and the services that the customer is registered for, the network management tool routes the call over the appropriate network.

In addition to providing QoS, another key component of the management tool is protection from fraud with an emphasis on prevention, rather than just mere detection. By managing the network in real-time, service providers can prevent dual use of the system, having checks and balances that can catch abuses while they are happening, rather than identifying them at the end of the month. This type of fraud prevention is not possible without the implementation of a management solution capable of running the system in real-time. In this environment, it is possible to know what each user is doing as soon as they sign on to the network. The centralized database also keeps PIN numbers from being used in different geographical areas.

Another function of a network management solution is managing a network of gateways on a global level. Without the ability to manage and connect an entire network of gateways, it is impossible to authorize and authenticate calls to be terminated on other gateways. It is also impossible to update all of the gateways within an entire network to accommodate the addition of a gateway, change a specific price plan, or add new services.

Finally, without superior voice quality there will be no customers and, therefore, no network to manage. If the network goes down or there is excess packet loss, information must be routed differently or directed to another gateway. Service providers must not only trust the DSP technology that is in the gateway, but find DSP technology capable of integrating with the network management system to make intelligent routing and jitter buffering decisions to ensure voice quality. Within the IP telephony gateway, some DSP hardware is capable of measuring the amount of packet loss in the network and instructing the gateway to make adjustments to compensate and improve overall voice quality.

The difficulties in providing value-added services stem from a lack of a common API architecture that allows third-party developers to create industry-wide applications, in addition to a lack of interoperability to run applications on multiple gateways.

The solution to this obstacle rests on the industry to use a common API that will allow third-party applications to port to many different gateways. The anticipated result of this would be a motivation on the part of third parties to create more applications to run on a host of different vendors' gateways.

Service providers who are gearing up for the future of IP telephony will certainly encounter their fair share of difficulties. As new IP gateway and network management technology becomes available, service providers must evaluate their systems to ensure they have the best of tomorrow's IP technology today. Choosing an IP gateway and net-wide management tools that are based on an open architecture will help position service providers for leadership in the emerging IP telephony marketplace. What the service provider needs to address is simply this: Do you have best of tomorrow's IP technology today?

Kevin Nethercott is vice president of SkyWave, Inc. SkyWave specializes in solutions for Internet communication and commerce, and offers a comprehensive suite of VoIP-enabling products. These products include the SkyGate 98, a complete IP telephony solution; SkyWare 98, an open-API Gateway server; the Gateway Controller Interface (GCI), an interface that enables a host application to control the gateway; and NetManager 98, for an overall network management and billing solution. Kevin Nethercott can be reached at kevin@skywave.ne.jp.

Jason Macres is vice president of marketing for DSP Research, Inc., a manufacturer and marketer of products that accelerate DSP and computer telephony development from design to production. DSP Research specializes in DSP development systems and MVIP-based solutions for computer telephony OEMs and VARs. Jason Macres can be reached at jason@dspr.com.


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