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As with many of life's anniversaries, it makes sense to stop and reflect
upon the changes that have occurred over time. Likewise, as we embark upon
our fourth year of publishing INTERNET TELEPHONY magazine, I feel
the need to pause and survey the landscape that has been forever changed by
the mark of this young, dynamic, and very real phenomenon called Internet
telephony. Ever since we launched the industry's first magazine dedicated
solely to the convergence of voice, video, fax, and data, the naysayers have
abounded: "Internet telephony is not real!" "Internet
telephony can never happen!" "Internet telephony is a hobbyist's
toy, a plaything, and it will never amount to anything!"
Time has yet again proven the inherent challenge in predicting anything
accurately. In fact, this past year alone was full of enough company
launches, product/service news, and "revised" or
"upgraded" analyses to underscore just how wrong those naysayers
have been.
The market for IP telephony hardware has grown dramatically. The market
for Internet telephony services has undergone an equally dramatic upturn
since the technology's inception. And this is just the beginning. We are
poised to witness even greater growth rates in the future. I could start
spouting rehashed market research but I don't think I need to -- every
telecom and datacom company in the market is waxing poetic about the wonders
of IP telephony and everything it will do for us: enhanced services,
intelligent wireless assistants that give us the best of both the voice and
Internet worlds, lower-cost long-distance... You get the point. We're in for
a phenomenal ride.
WORLD VIEW
As we get set for this ride of a lifetime, I'd like to take a moment to
rebuke some of my friends from outside the United States, who suggest that I
often confuse the terms "The World" and "The U.S." While
it is true that many of the technologies and companies that we cover in this
magazine do have a U.S. bent, the technologies we write about are extremely
well suited for implementation throughout the world. Perhaps one reason for
this is that so many of the technologies that we think were developed here
were actually developed overseas. You could probably argue with me for
months on end as to whether Internet telephony is more of a U.S. wonder or
an Israeli wonder. And we'd both be right, regardless of who chose which
side. Countless U.S.-based Internet telephony companies have strong research
and development ties to Israel. And likewise, countless Israeli companies
have U.S. headquarters and marketing arms.
But no matter where a company is located, or where it does most of its
business, there is a real need in our industry to overcome the
interoperability headaches caused by the proliferation of the many
dissimilar protocols to be found throughout the international arena.
FastComm
I recently had a chance to visit FastComm,
a Virginia-based maker of IP telephony gateways. During the course of my
conversation, I came to realize that a growing part of FastComm's business
was providing protocol conversion equipment, which allows switches from
disparate countries to interoperate. Realizing how big a market this is and
how important this type of technology is to providing every country with
Internet telephony service, I asked FastComm's Michael Harmon to bring us up
to speed on the state of international telecommunications. I met Michael
last October at Internet Telephony Conference & EXPO, and he shares his
insights with us here. (If after reading this column, you have any questions
for Michael, feel free to e-mail
him.) Likewise, I invite you to check out the sidebar entitled Miami -- An
International Beacon For Convergence for some more information on our next
EXPO, which will make its debut on February 79 on the East Coast, in
Miami.
Please discuss some of the more recent
developments and opportunities available in today's international
telecommunications markets.
We are experiencing two major shifts in the international
telecommunications industry: First, the increased globalization of
traditional circuit switched networks, and second, the increased voice
traffic being transmitted over packet-based IP networks. When traditional
carriers attempt to provide long-distance services to foreign countries,
they need to convert their signaling protocols in order to become compatible
with the host country's traffic. The same is true for voice traffic that is
carried over data networks and terminated through a connection to the public
switched telephone network (PSTN).
One of the most interesting developments in international markets is an
increase in the practice of using PCs to make long-distance calls. PC-based
instant messaging and chat software programs, such as MSN's Instant
Messenger, are changing the landscape of how calls are set up and delivered
across international borders and between the traditional circuit-switched
networks and Internet Protocol (IP) networks.
A good example of this growing trend is the addition of Net2Phone's
IP-based telephony network to MSN's Instant Messenger software. In the four
months since this service was launched in July 2000, more than 44 million
long-distance, PC-initiated calls have been terminated on U.S. phones. The
result? Significantly reduced long-distance rates and satisfied end
customers.
Although the business of placing PC-based calls is well past its infancy
stage, the attractive economics of extending this method to international
long-distance service demonstrates a strong business case for stepping up
the integration of traditional PSTN networks with Internet protocol-based
networks.
Many countries throughout the world have yet to be introduced to PC-based
calling. A golden opportunity exists for providing PC-based calling services
to the local phone companies in these foreign countries. In many
international environments where the number of PCs per capita is much
smaller than in the U.S., providing an alternate, affordable connection to
the local phone systems through a country's PSTN represents a significant
untapped market for international carriers. Currently, over $57 billion per
year in revenue is derived from outgoing international traffic, using
primarily traditional means. According to a recent Ovum study, by the year
2005, IP telephony service providers (ITSPs) are anticipated to see their
revenues from IP-based outgoing international traffic increase to $1.2
billion.
For this transition to occur smoothly, service providers must be able to
integrate a seamless conversion of signaling protocols into their worldwide
networks, including the many country-specific signaling variants that make
each target country unique.
What are some of the challenges associated
with terminating and converting IP voice traffic in international locations?
There are several challenges associated with terminating traditional
long-distance and IP voice traffic in and between foreign countries. One
challenge is the sheer number of signaling variants in use around the world.
R2, a common international signaling protocol, is a good example. R2 was the
original international signaling standard. There are now more than 30
identified variants of the R2 protocol internationally, with new
country-specific variants surfacing on a regular basis. Another example is
the SS7 signaling protocol, which is superceding R2. There are more than 10
identified variants of C7, which is the international version of SS7. Very
few service providers are prepared to develop the signaling solutions that
are required to handle the differences in these international variants.
International committees such as the ITU-T and IETF are actively working
to develop standards for these signaling variants. MGCP, MEGACO, H.248, SIP,
SIGTRAN, H.323, and others are adding to the complexity of achieving
interoperability. Although the telecommunications industry is moving closer
to achieving compatibility between international and domestic data networks
as these new standards are adopted, solutions are needed now to allow
service providers to begin capitalizing on the untapped markets and to
achieve appreciable market share.
Can you give us a brief history of what
has led to the state of the current market for international signaling? Why
don't these systems work together?
In the early days of telephony, traffic volume was mostly local in
nature. As phone systems became more pervasive, the need to interconnect
them within a region became more prevalent. Each equipment vendor had their
own unique proprietary solutions for handling signaling protocols within
specific regions. As methods for meshing signaling protocols improved and
new regional and country infrastructures evolved, a demand was placed on
telephony vendors to provide the newest protocols and switching equipment.
This promoted continued growth, modifications, and competition between those
supporting different versions of signaling standards.
As international competition increased for local markets, some vendors
became willing to steeply discount their services and equipment in an
attempt to gain footholds in markets where they had little or no market
share. The need to interface "new" vendor equipment with some
elements of the existing vendor's equipment and signaling systems spurred
the development of further variants in equipment and signaling protocols.
The reason these systems are often incompatible today is because
international business relationships and communications traffic between
countries have continued to grow and change, requiring new types of
connectivity between countries. In addition, a new, worldwide infrastructure
is under constant development that inherently provides, as part of its
development, newer and more efficient standards for signaling protocols to
work within existing in-country systems.
What impact will incompatibility between
these systems have on equipment vendors and carriers?
The large-scale convergence of many telecommunications companies through
increased acquisition and merger activities has increased pressure on
vendors to make these systems work together. The challenge to the carriers
will be to decide at what point they want to realize a return on capital
investments made in existing infrastructures versus the need to make capital
investments in new equipment capable of handling conversions and
compatibility between these divergent systems.
Unfortunately, there are no traditional equipment vendors today that can
provide a plausible economic or technical solution for bridging the
incompatibility between their networks without making significant purchases
of capital equipment, based on untested technology.
Another challenge is the availability of technical resources within the
carrier's organization that can be dedicated to concentrate on providing
signaling software development and testing. This lack of availability often
results in slow development and release of signaling conversion software.
What are some of the possible solutions to
enable these disparate systems to interoperate?
Some equipment vendors might propose building the signaling conversion
right into the switching equipment itself. There are several disadvantages
in doing this, one being the extensive amount of time required to
incorporate this type of technology. Another disadvantage is the potential
for a slow-down in the switching performance due to overhead from
conversions to the existing processors in the switching equipment. A final
disadvantage is the need to incorporate as many variants as possible into
the switching platform to achieve sufficient market penetration for the
product. This could introduce added development delays, as well as
additional cost for superfluous software/conversion features.
Another solution that might be proposed is to place an intermediary,
third-party piece of equipment between the two disparate networks to connect
them. The equipment's sole purpose would be to efficiently provide the
translations between different protocols. This solution would be independent
of the existing vendor's equipment and provide a very cost-effective
solution to the end user.
Can you give some examples of cases where
intermediary equipment has successfully been used to provide protocol
conversion between disparate systems?
There are several examples of sophisticated ITSPs using a signaling
conversion gateway solution. One example is a company called NorthVoice,
which provides international roaming capability from any location in the
world. NorthVoice uses signaling gateways to provide service in South Korea,
Singapore, Australia, and Malaysia.
Another company, ECOCOM, places these same types of signaling gateway
devices in Eastern European countries to provide high-quality VoIP services
between Western Europe, Eastern Europe, and the United States.
[ Return
To The January 2001 Table Of Contents ]
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