Building an IP Telephony Empire: What You Need To Know To Succeed
BY KEVIN NETHERCOTT & JASON MACRES
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
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 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
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
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
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
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 firstname.lastname@example.org.