Internet telephony: This most controversial technology pits industry analyst against
industry analyst, dividing them into two distinct groups: believers and non-believers.
Some say the technology will fill a small niche, forever destined to be a hobbyist's
plaything. Others say that, within the first decade of the next millennium, Internet
telephony will be a $10 billion industry. Wall Street has taken Internet telephony stocks
on a wild ride in the past 6 months, with stock prices fluctuating as much as 300-1000
percent. Few (if any) industries invoke such strong reactions as Internet telephony.
One reason for the analysts' differing opinions and Wall Street's inconsistent
investment pattern is a lack of good, solid reliable information on the topic. At Internet
Telephony magazine, our goal is bring to market regular publication of the
technology, terminology, implications, and products that compose the Internet telephony
Our parent company, TMC, is proud to offer you the first magazine focusing exclusively
on Internet telephony and the related convergence of voice, video, fax, and data.
WHAT IS IT?
It is important to understand how Internet telephony defines its market. In order to
better gauge this perception, we asked several pioneers in the Internet telephony arena,
"How will Internet telephony revolutionize telecommunications?" Their responses
We use the term loosely, as we see every network as an extension of the Internet. Put
simply, the basis of Internet telephony is telephony, transmitted on a network running IP
(Internet Protocol). This network can be a corporate LAN, a WAN, intranet, extranet, or
the Internet. These are very important distinctions, since as of yet, the Internet cannot
guarantee the Quality of Service (QoS) that we expect from the Public Switched Telephone
Network (PSTN). While it's true that for hobbyists and for those simply trying to avoid
some long-distance charges quality may not be of primary importance, it remains that
corporate America will not be willing to invest heavily in a technology that doesn't fully
deliver. We believe that questions surrounding QoS will become less and less of an issue
as the Internet backbone is upgraded with QoS in mind. We will concentrate much of our
editorial on the applications and equipment that allow IP telephony, video, and fax to
take place regardless of the underlying network infrastructure.
CIRCUITS & PACKETS
The PSTN currently uses circuit-switched lines to transmit telephone calls. These lines
transmit traffic in each direction at a fixed rate of 64 Kbps. This choice of bandwidth
was arrived at many decades ago and was a decision based on the latest technology at that
time. Note that regardless of what was being transmitted -- even silence -- the telephone
network still transmitted a total of 128 Kbps per call. This legacy circuit-switched
architecture, coupled with multinational government mandated rates, have limited
telecommunications options and kept telecommunications costs artificially high. Add to the
mix the monopolistic culture that these telephone companies have become accustomed to and
you see why telecommunications rates have not yet reached the low levels we were all
expecting. Thankfully, recent deregulation in the United States and beyond aimed at large
monopolistic telephone companies has produced a market more favorable to competition.
Another recent (and perhaps more important) development which has taken place over the
past decade is that every telephone user worldwide has been given access to a ubiquitous
data network through the Internet and intranets. This has led to the adoption of the
Internet Protocol (IP) as the standard protocol for data networking. Furthermore, Moore's
law has simultaneously provided the microprocessor industry with a hefty 100 percent
performance increase every 18 months at similar cost points.
The technology now exists that allows a packet network with the equivalent bandwidth of
a single 2-way telephone call (128 Kbps) to carry over 16 simultaneous compressed Internet
telephony conversations with no loss of quality! Compression has been used effectively in
the computer industry and fax industry for years. Only recently has it been making a big
splash in voice communications. As processors have become faster, more compression has
become possible on each end of an IP telephony call.
THE TIME IS NOW
All the elements -- phenomenal microprocessor performance increases; IP acting as the
ubiquitous packet network standard; a rapidly evolving telecommunications infrastructure
-- have created an atmosphere ripe for opportunity. This opportunity manifests itself in
many forms with many benefactors. It is advantageous to any one interested in transporting
voice, video, and fax information most efficiently.
The official birth of today's Internet telephony products began with the invention of
Internet telephones, client software that connected one PC to another over the Internet.
These products yielded poor performance but offered tremendous savings on long-distance
phone calls. Unfortunately, the perception of Internet telephony became one of low quality
albeit free telephone calls. That perception has stuck. The goal of Internet
Telephony magazine is to change that perception. The fact of the matter is that
Internet telephony calls running on a network that guarantees (QoS) can be of much higher
quality than telephone calls over the PSTN. IP telephony will eventually allow us to speak
over the telephone with the fidelity of CD quality sound if we like. We will pay for this
level of quality, but it will be available for those who want it. IP telephony voice
quality has come a long way and will continue to progress as the market matures.
The product that facilitates this excellent voice quality is known as an Internet
telephony gateway. An Internet telephony gateway is a device that has connections to both
a telephone network and an IP network. These gateways allow users to transport voice,
video, and fax traffic over an IP network with identical or better quality levels than the
PSTN at substantially lower cost. Internet telephony gateways can be used in an infinitely
large number of ways by a diverse audience.
Telephone companies now have the ability to transport voice traffic much more
efficiently than they currently go about it. These telephone companies can set up their
own worldwide managed network with gateways in major cities. They can now transmit
telephone calls worldwide without sharing the per-minute profits of the phone call with
other telephone companies as they do today. These same gateways allow ISPs, cable
companies -- in fact, anyone with the resources and drive - to become a telephone carrier.
All you need to get started in the business is a pair of gateways in locations that
otherwise require toll charges, some calling cards, and a healthy dose of advertising.
Worldwide long-distance revenues measure in the billions of dollars. The fuel for the
Internet telephony industry will be the savings of these revenues. Now, regardless of
which companies provide the service, they still must buy gateways! In other words, lower
long-distance rates will not slow the Internet telephony industry. The growth of the
industry will provide lower rates! Corporations can amortize their investments in Internet
telephony technology over the course of many years of long-distance savings, all of which
leads us to believe that we'll soon see tremendous growth and huge volumes of sales in
this industry. Internet telephony provides an irresistible opportunity for resellers,
developers, entrepreneurs, and has even created a new breed of telephone carrier. A new
breed of ISP, Internet Telephony Service Providers (ITSP) have been springing up,
providing networks of gateways connected to an IP network with QoS guarantees.
It is interesting to note that recent telecommunications deregulation has not really
increased competition as was expected. In fact, telecommunications companies are merging
and subsequently decreasing competition. As you can imagine, becoming a competitor to a
telephone company is no small undertaking. All of this is about to change, in part due to
the existing standards upon which the industry is built.
The Internet telephony industry has many standards. One of these, H.323, allows gateway
owners to eventually transmit calls between their networks. As you may recall, Automated
Teller Machines (ATMs) initially allowed customers to make transactions only at ATMs owned
by that bank. Eventually, these ATM machines became networked, allowing the user to bank
from any location on the network. As Internet telephony gateways begin to incorporate
H.323 and other standards, users will eventually be able to use local gateways to
transparently place and receive calls globally.
Corporations with multiple locations are inherently rich with high volumes of
inter-company communication, be it voice, fax, or video. This communication, once
traditionally carried by the PSTN, will begin to migrate (through the use of Internet
telephony gateways) onto existing fixed-cost, IP-based corporate intranets. This traffic
will, however, still use the PSTN as the mechanism of transport. By now it is obvious that
the packet-switched network of today is much more efficient than the decades-old
Not to be left out in the cold, Microsoft will soon provide TAPI 3.0, the universal
specification for Internet telephony, conferencing and multicasting in all of its
operating systems. QoS, a critical component of Internet telephony, will also be
implemented in future Microsoft operating systems. TAPI 3.0 will furthermore bring
Internet telephony into the realm of the Common Object Model (COM) framework, thus
allowing millions of developers to quickly develop Internet telephony applications. What
Visual Basic did to Windows programming, TAPI 3.0 will do to telephony programming. We
cannot even fathom the range of new telephony applications that will be soon be available.
Telephony today is at the point the PC market was in 1982. We did not realize what an
enabler the PC was at that time. We will look back at 1998 as the beginning of the IP
As an added attraction, the engineers of our in-house TMC Labs will provide Internet
Telephony magazine with in-depth and objective testing and reviews of Internet
telephony products. TMC Labs has gained widespread respect in the telecom, datacom,
and call center industries as the best place to look to before making purchasing
decisions. Most telecommunications publications provide superficial reviews of products:
TMC Labs pioneered the type of in-depth product reviews of computer-telephony
integration (CTI) products that have become so highly regarded in CTI magazine.
This same laboratory -- with its decades of telecom and datacom experience -- will provide
reviews for Internet Telephony magazine.
The most obvious conclusion drawn from the above is that Internet telephony provides a
mechanism that will bring our legacy telephony network into the realm of Moore's law with
phenomenal, regular increases in performance and flexibility. Opportunities are available
to the corporation, the service provider, and the individual on a grand scale.
Interest in Internet telephony is reaching a fever pitch, and there are few sources of
information that will help its varied audiences take advantage of this exciting new
technology. Internet Telephony magazine will provide its readers with the
information necessary to learn about and purchase the equipment, software, and services
necessary to reap the greatest rewards from Internet telephony.