The countdown to deregulation is exciting for emerging
competitive long-distance carriers but often difficult. There are many
decisions to be made and options to choose -- building a fixed network or
deploying a VoIP network are two of those options.
Many emerging carriers, however, do not have the time or the capital
needed to build expensive and obsolete fixed networks between the time a
country announces deregulation to the time it actually deregulates. The
fastest and least capital-intensive option is voice over IP (VoIP).
In recent years, deregulation in telecommunications has opened markets
across the globe, allowing competitive carriers to compete in the domestic
and international long-distance market. Countries like India and Brazil in
2002, and Bulgaria and Romania in 2003, are changing from a monopoly-based
market to open market economies where consumer choice flourishes, where
retail rates go down, where teledensity steadily increases, and where new
opportunities through increased teledensity are prevalent. Bolivia is the
latest country to go through this change and one local Bolivian carrier
chose VoIP as its option.
As midnight approached on November 28, 2001, Boliviaï¿½s local telecom
service was handled by 14 telecommunications cooperatives, each a monopoly
in its territory. The countryï¿½s national and international long-distance
service was provided exclusively by Entel, the former state monopoly now
half-owned by Telecom Italia. At the stroke of midnight, all those
monopolies became competitors in each otherï¿½s territories and spheres of
Three carriers were ready to carry national and international
long-distance when the regulatory gong sounded on November 28: Entel, AES,
and Cotas/Teledata. Entel (Empresa Nacional de Telecomunicaciones) owns
the only national fixed-line network in Bolivia -- a legacy of its
monopolistic history -- and it continued to use that network after
midnight on November 28. AES Bolivia, a partner of an investor in the
largest of the 14 local cooperatives, has not completed the buildout of
its fixed network but was operational in a portion of Bolivia. Cotas/Teledata,
however, has taken the road less traveled. In fact, theyï¿½ve taken a road
not traveled at all until now: For their long-distance service, theyï¿½re
using voice over the Internet as their sole technology. They are the first
established carrier in the world to do so.
The flash-cut from long-distance monopoly to competition was not
without its bumps for all carriers. But Cotas/Teledata, who is partnering
with a wholesale carrier that operates a global VoIP network, could point
to real success. VoIP points of presence in Bolivia were established by
collocating IP telephony gateways in five cities -- Santa Cruz, La Paz,
Cochabamba, Sucre, and Tarija. That means that callers from outside
Bolivia can reach any phone inside the country through the partnering
wholesale carrierï¿½s worldwide VoIP network, and 90 percent of the phones
in Bolivia can use the network.
COTAS (Cooperativa de Telefonos Automaticos de Santa Cruz de la Sierra)
is the incumbent local carrier in Santa Cruz de la Sierra and its
department (Bolivia is divided into departments, corresponding to states
or provinces). Teledata is its data communications subsidiary. Cotas is
the second largest of Boliviaï¿½s 14 telecom cooperatives, serving 120,000
access lines. Like the others, it is owned by its subscribers. Like the
others, it is undercapitalized.
Unlike the others, Cotas/Teledata decided to provide its new, national
and international long-distance service over the Internet using the global
VoIP network of its wholesale carrier partner. Teledata holds the license
for long-distance service; Heilsberg, a German-based company, provided the
IP infrastructure in Bolivia; and the wholesale carrier operates the
domestic and international long-distance service for Teledata. The new
service is branded as 12Mundo (the prefix number that phone users must
dial to make long-distance calls through Teledata is 1-2). All Bolivians
now need to dial a prefix in order to choose any long-distance provider.
Typically, wholesale carriers who operate VoIP networks route calls
between carriers from around the world over the Internet. The customers of
those carriers make calls to people in other countries; the calls go to an
IP telephony gateway where theyï¿½re translated into IP; the calls are
then routed through the Internet to another IP telephony gateway in the
destination country, where they are translated back into standard
telephone protocol and are delivered to the callsï¿½ recipient as an
ordinary telephone call.
Whatï¿½s new in Bolivia is that the VoIP wholesale carrier is now
responsible for all of the domestic and international operations of an
established carrierï¿½s long-distance network. On November 28, all but the
Tarija PoP were operational. With those installations, the Cotas/Teledata
network is essentially built without additional capital investment by
By contrast, Entel, AES Bolivia, and every other carrier that wishes to
provide long-distance service without using the Internet, face a steep
demand for capital. Entel has a network, but must update and expand that
network to serve increasing traffic loads and to offer local service. AES
Bolivia is building a completely new, fixed-line network for domestic and
international long-distance service -- clearly, a tall order in a
mountainous country with few good roads. There are also many carriers
around the world that they will have to make agreements with to send and
Cotas/Teledata on the other hand does not have to make those
agreements. The wholesale carrier already has the agreements and can send
traffic to and from Cotas/Teledata without them having to get involved in
pricing, billing, etc., with carriers around the world. It also took only
five months for Cotas/Teledata to be able to compete because they use an
outsource VoIP network.
Cotas/Teledataï¿½s partner has even put the machinery in place to make
sure the quality of service on the network is the highest possible. As it
is, many of the partnerï¿½s regular clients are tier one carriers whose
own customers donï¿½t know their calls are traveling over the Internet,
and couldnï¿½t care less.
In this new project, the stakes will be higher and the expectations
greater. For the first time, the wholesale carrier is remotely monitoring
a domestic network of an established carrier from its network operations
center (NOC) in the U.S. The wholesale carrierï¿½s technicians monitor the
Cotas/Teledata network 24 hours a day, seven days a week. The wholesale
carrier is upgrading the reliability of its hardware and software --
turning up the pressure on its vendors to meet the higher standards
required for managing such a network. It has provided dedicated monitoring
and alarm tools designed especially for its Bolivian project, and is
training Heilsbergï¿½s personnel for in-country quality-of-service
For Cotas/Teledata and its partners, the opening of the Bolivian
telecom market is heavy with opportunity and significance. This is the
chance for them to grow from a regional carrier offering local service to
a major national carrier. Its decision to use the Internet as the main
technology allows it to skip the expensive and time-consuming task of
building an entirely new network.
For the global marketplace, Bolivia is an example of how a carrier in a
country whose telecom market is just making the transition from monopoly
to competition can become operational in months with little or no capital
investment. If the model works in Bolivia -- if the public Internet, aided
by a VoIP carrierï¿½s gateways, proprietary technology, and routing
expertise, becomes a key part of ordinary voice communication -- then it
will work in other deregulating countries like India, Brazil, Bulgaria,
and Romania as well. c
Jennifer Cannell is corporate marketing specialist at ITXC Corp.
ITXC Corp. is a global wholesale telephone company sending calls to and
from over 136 countries. It operates one of the worldï¿½s largest voice
networks, ITXC.net, and carries an average of over 6 million international
long-distance minutes a day. For more information, please visit the
company online at www.itxc.com.
Every year around this time, in order to address our readersï¿½ interest in the international market for Internet telephony, I send a short questionnaire to several of the leading firms in the Internet telephony industry, asking their views and opinions on the state of the global market. With the current state of global financial markets, I was curious to know: ï¿½What is the state of Internet telephony in the International arena?ï¿½
I hope that this short Q&A feature sheds some light on what vendors who are ï¿½in the trenchesï¿½ see as notable themes in the international market for Internet telephony.
ï¿½ Greg Galitzine
International Internet telephony has surpassed all reasonable
expectations over the course of the past year, with international VoIP
penetration doubling and major Internet telephony providers such as iBasis
and ITXC becoming top twenty global carriers. Even as the
telecommunications sector and the overall economies in North America and
Europe began to slump, Internet telephony moved decisively into the
mainstream of global telecommunications, with Tier 1 carriers adopting
VoIP for international service in every region of the world.
This yearï¿½s shift can be seen as a trend that began a couple of years
ago. In 1998 and 1999, iBasis was among the first to provide commercial
VoIP service to large carriers, focusing on providing service to Asia.
Regulators in the region were quick to see the potential of VoIP and moved
to offer VoIP licenses to both incumbent and competitive carriers. Within
a year, many major carriers in the region had begun to outsource
international traffic to VoIP providers like iBasis and ITXC, including
China Unicom, China Mobile, China Telecom, China Netcom, Jitong
Communications, NTT, The Communications Authority of Thailand, and
In 2001, Internet telephonyï¿½s momentum was perhaps most visible in
Europe, where past concerns over quality and brand protection gave way to
strong, strategic endorsements of VoIP by large European carriers, such as
Cable & Wireless, Telenor, and COLT. With carriers convinced of both
its quality and its potential for reducing transport costs, as well as the
overall service support costs for international traffic, outbound
international VoIP traffic from Europe grew 140 percent in 2001, led by
the UK and France, according to Probe Research.
If 2001 was a bad year for Internet telephony stocks, and the North
American and European economies, it has, nevertheless, been a good year
for Internet telephony. According to both TeleGeography 2002, and Probe
Research, VoIP penetration of international voice traffic doubled from
2000 to 2001. There are a number of factors behind this growth -- the
relatively low cost and availability of carrier-grade VoIP technology, the
completion of Tier 1 quality Internet telephony networks such as that of
iBasis, and the imperative for traditional carriers to cut costs in todayï¿½s
more competitive, challenging markets.
With the networks now in place, and service quality virtually
indistinguishable from that of the PSTN, the challenge facing Internet
telephony providers in 2002 will be to continue to manage their operations
efficiently, while keeping pace with the rising demand for services.
Maintaining a strong focus on efficiency and quality will enable the
Internet telephony sector to ride out the telecom storm, and become the
transport of choice for all voice traffic within the next ten years.
Ofer Gneezy is president and CEO of iBasis.
Internet telephony is going through an important refocusing phase. This
highly competitive sector, where most players have seldom and often
unperceivable product differentiations, needs to rethink their entire
approach. The qualitative and stability aspects (packet loss) of the past
left many early adopters with a deep-rooted negative impression.
Overcoming these negative perceptions will require a reevaluation of
the entire market with a focus on the potential opportunities unfolding
outside North America. The task at hand will surely be a difficult one to
tackle, what with the standard American approach and distribution channels
being of little assistance in many Asian and European states.
It is often not enough to have a name; for instance some European and
North American industry leaders just canï¿½t cut it in key Asian markets.
While some may try for years at the cost of millions, some others are
instant winners only because they were introduced by the right people.
While most think they adapt easily to various business procedures they
fail to pay basic attention to linguistic and cultural specifications --
with potentially devastating consequences.
At VoiceAge, we are paying close attention to the emergence of all
wireless and wireline applications in Asia. 3G standards for both narrow
and wideband will redefine the way we communicate by enabling true
We also think that the industry will set the record straight by finally
offering packetization products that are specifically designed for
Internet telephony applications. The result will greatly enhance the
quality of the experience by increasing packet loss capacity from its
current three percent tolerance to 10 percent without having to change
It is obvious that the industry will approach this latest undertaking
with the utmost vigilance, the room to maneuver will be virtually
non-existent but those few that will make it, will make it big.
Paul Goulet is marketing communications manager for VoiceAge
The market for VoIP and the enhanced subscriber services it requires is
already strong outside the United States and shows signs of rapid growth
worldwide in the next two to three years. China and a number of other
nations are in the early stages of government-driven efforts to replace
outdated telephony technologies. Many countries are pushing aggressively
to bring the first broadly available telephone service to some regions.
The fastest solution is to deploy wireless networks interconnected by
VoIP. With wireless, thereï¿½s no need to hardwire houses or businesses,
which is often impractical in densely populated cities. Simply erect
towers and deliver cell phones. VoIP is the most economical and practical
way to deploy wireless and connect it to the broader telecomm
infrastructure, including domestic long-distance and international access.
The ability to send and receive e-mail is also receiving a great deal
of attention. This is where the Voice E-mail feature of IPeriaï¿½s
ActivEdge system becomes a powerful advantage. The Voice E-mail feature
allows subscribers to use any telephone to create and send Voice E-mail --
a standard e-mail with a recorded voice attachment. The recipient can play
the audio back over PC speakers, a headset, or access the message using a
telephone and listen to the voice playback. Subscribers can also use Voice
E-mail to have e-mails read to them over any telephone -- no PC required.
When the subscriber accesses the account using a PC, all sent and received
voice and text messages are displayed on-screen just like e-mails --
because they actually are.
VoIP brings dramatic cost advantages and improved quality for
telephony. However, the real value of VoIP for many nations is the ability
to deploy advanced services that would otherwise be delayed for years.
Making e-mail universal and portable is a great advance for much of the
worldï¿½s population and one of the driving forces behind bringing
together the telephone and the Internet in the new network.
Stevan Vigneaux is vice president of Corporate Marketing at IPeria,
Internet telephony represents a major aspect of the broader market of
converged communications. Polycom is an international company focused on
providing voice, video, and integrated data communications solutions for
converged networks. We view the overall opportunity associated with IP
telephony as international in nature. Currently 30 percent of our revenues
are international in our voice communications line of business at Polycom
(Voice Communications). However, as the IP telephony part of our business
is in this early market, we are just getting started internationally, as
most of todayï¿½s business is in North America.
There are interesting and diverse factors that affect the international
market. As the overall IP telephony market is entering a growth phase, the
projections by region do vary. IP telephone unit shipments are expected to
exhibit approximately a 100 percent growth rate in Europe, for example,
over the next five years (according to IDC). Yet, there are still hurdles
to overcome. The issues commonly cited are interoperability, reliability,
QoS, and cost. These are driving towards satisfactory levels, but many who
consider the solution for their business will want to see more validation
that these issues are being resolved -- to some extent the success of the
IPBX market in North America is the proof case.
There are regions where the overall opportunity is paced by the fact
that they do not have legacy infrastructure to be replaced (i.e., the
deployment of all new infrastructure carries with it the assumption that
it will carry telephony). This is true for many areas, including parts of
Eastern Europe and Asia. Here some people will never have communicated on
circuit switched networks, but will start with IP and go from there. This
is an exciting concept, where people will have the ability to have
telephony, plus the richness of video conferencing and data sharing at
their disposal from the start of their communication experience. The
ability to do more will become apparent in the times ahead.
Gordon Simmons is vice president of Strategic Relationships at
Adir Technologies markets IP network platform management services in
North America, Asia, and Latin America. We also have a beachhead in
Europe. Approximately 60 percent of our revenue comes from outside North
America, although the percentage can vary markedly from quarter to
Unlike the substantially homogenous IP data market, where bits are bits
and a router is a router, VoIP products marketed internationally must be
customized to meet the regulatory and market requirements unique to each
region. Dial plan requirements are a simple example of that rule, and many
products developed for North America cannot support the wide range of
subscriber number formats required to serve international markets.
In order to effectively do business outside of North America, both
in-country employees and integration partners are required. The
integration partners provide the customer relationships, understanding of
local feature requirements, and local-time technical support thatï¿½s
required to effectively market VoIP geographically. In order to maintain
share of mind with the integrator, however, Adir maintains a regional
manager who serves as a back channel to our product management
organization, ensuring that customer needs are accurately represented.
Of course, reconciling the myriad requirements of different regions is
a constant challenge, as is coping effectively with cultural differences.
Working with integration partners is also challenging. Your goals and
theirs must be well aligned so that the customer gets a consistent view of
the solution. Staying aligned requires constant maintenance, which results
in substantial travel on the part of senior sales, marketing, and
International markets provide terrific opportunities for VoIP vendors,
however, particularly Asia and Latin America. Compared to North America
and Western Europe, where teledensity measures about 80 lines per 100
people, in Southern and Central America teledensity is merely 8 lines per
100 people and the incumbent access providers have not moved aggressively
to satisfy demand. In fact, in Mexico, more homes have access to cable
television service than telephones, and cable system operators there are
eager to offer voice over cable solutions, unlike their North American
As carriers build out their backbone infrastructures, they want to
install only one technology: IP, which allows them to efficiently offer
voice, video, and data services. Thus we see companies like China Unicom
building very large VoIP networks because it is both more cost effective
and future proofs their network.
Michael R. Rich is president and chief operating officer of ADIR
Unlike the United States, which has been a major source for IP
telephony calls going to other countries, regions such as Asia Pacific,
Africa, and even to a certain extent Latin America view IP telephony as a
more than viable alternative to circuit-switched voice. Many countries do
not enjoy the level of communication infrastructure common in the U.S. For
those countries, it is easier and cheaper to deploy IP networks than to
extend insufficient or build-out new circuit-switched networks. For the
end user consumer, this means the ability to take advantage of
cost-effective voice and data service bundles. Consumers are willing to
sacrifice quality for availability and lower costs.
In our experience, the demand for solutions to take advantage of IP
telephony has been heavily dependent on government regulations within each
country. As an example, with the creation of the Internet-based voice
and/or data license in Singapore the demand for IP telephony service
solutions soared. In less than six months more than 70 companies had been
licensed to provide IP telephony services. Both wholesale and resale
models offer attractive scenarios for local operators. The Asia Pacific
region as a whole is rife with opportunity as more and more providers
enter the IP telephony service market.
When Digiquant established its presence in the Asia Pacific market, the
company discovered how incredibly important it was to work closely with
local business partners. Digiquant also found that its domain expertise in
telecommunications in general -- and IP/IP telephony specifically -- made
the software infrastructure provider a valuable resource for both
operators and emerging providers looking to launch IP services throughout
the Asia Pacific region.
Unlike many software solution providers founded in the U.S., Digiquant
has a large international footprint. The company began its operations in
Europe, expanded to Asia Pacific, and then entered the American market.
To date, many of the major operators in Asia Pacific are using
Digiquantï¿½s solution to manage IP telephony and data service bundles,
including China Unicom, Telekom Malaysia, SingTel, TOT, HTE, CAT, and
Indosat among others. In the U.S. where carriers use IP telephony
transparently to offer cheap international and long-distance calling,
Digiquantï¿½s IMS solution is actually used as the foundation for many
carriersï¿½ international calling card services.
Throughout the international community more and more operators are
positioning for the competitive boom expected in various countries as
deregulation opens individual markets in the coming months of 2002.
Morten Seifert is global product manager for IP Telephony at