BY MARK COWTAN

The Internet has provided a showcase for streaming video and voice over IP (VoIP) as value-added applications. Now, the ever-increasing bandwidth available to Internet applications has set the stage for two-way videoconferencing. Carriers and enterprises alike are eagerly watching as two-way video emerges from the shadows of ISDN; taking advantage of the reach and ubiquity of Internet protocol (IP) and the emerging broadband Internet.

Voice, video, and data have long been expected to converge over IP-based networks. It has, however, always been presumed that IP networks would need far more intelligence than is currently built-in to handle multimedia applications and associated Quality of Service (QoS) demands. But expectations and reality on this matter have diverged, and two-way video is the beneficiary as technology lines up in its favor. Bandwidth in the Internet's core doubles every six to nine months, while the cost of high-speed Internet access plummets. New video technologies based on the International Telecommunication Union (ITU)'s H.323 standard are slicing the cost of end-point equipment. QoS and latency issues remain -- the Internet is still too slow for much more than jerky, postage stamp-sized videoconferencing -- but these quality issues can be fixed by dedicating more bandwidth. This can be achieved on a private corporate backbone, or by using a managed service on the Internet via new-breed Application Service Providers (ASPs) offering video portals. ASPs can match the quality of traditional ISDN at about one-third of the overall costs -- and with more benefits.

The ASP delivery model gives business users an efficient way to stage videoconferences from the desktop. Set up is as easy as making phone calls, and adding or dropping participants on the fly is done with a mouse click. This model gives service providers a profitable differentiator which could well be the Internet's next business killer app.

For virtually any business, high-quality, real-time, two-way video in the deregulated IP world is viable and affordable through ASPs. Bandwidth is plentiful (DSL already reaches more than 50 million homes and businesses) and high-speed synchronous options such as SDSL and VDSL are gaining popularity, with wireless broadband at speeds up to 155 Mbps in the last mile. Two-way video will flourish in the business marketplace when the price is affordable, the networking headaches are eliminated, and the quality of circuit-switched ISDN is matched.

SIMPLIFYING WHAT IS COMPLEX
Complexity has made enterprises reluctant to embrace IP video networks. Complexity is the same reason VoIP deployment initially lagged. Mixing IP video packets with data adds quality risks and networking complexity that IT managers hesitate to embrace (unlike circuit-switched video networks, using ISDN or ATM, which are essentially separate from data). Network security when deploying H.323 video on an enterprise network is a big concern, as it generally requires router upgrades or punching a hole in the firewall. Two-way IP video, therefore, is likely to follow the VoIP path of involving outsourced services from service providers. Service providers make ideal partners because they are increasingly strengthening their IP networks and are prepared to address and resolve the challenges mentioned above.

Note the similar growth paths of voice and videoconferencing over IP. VoIP saw limited success when enterprises had to buy equipment and deploy it on their own networks. Despite falling bandwidth costs, short-term savings of toll-bypass remained marginal when the costs of equipment, resources, and added management were factored in. And forget about replacing the familiar PBX with a software-based PBX -- few telecom managers, for example, would risk the liability of an injured employee that emergency services could not find for lack of a 911-compliant solution.

Yet VoIP is now successfully enabling new applications and making existing ones easier and less expensive. In fact, the quiet emergence of VoIP either as an enabling technology to enhance legacy services or in new applications is helping make VoIP gateways an expected part of the broadband infrastructure. Web fax and Web phone applications tied to directory services or buddy lists and integrated into online portals, for example, are gaining momentum. Meanwhile, companies are starting to enable their Web sites with VoIP functionality, linking call centers to online storefronts.

Critical to VoIP's early success was that investment decisions and network reconfiguration could be avoided by tapping into new-breed providers anxious to differentiate themselves. While traditional Internet Service Providers (ISPs) continue to focus on selling high-speed Internet access and gaining market share; ASPs are developing new solutions around core IP technologies so they may offer hosted services.

Of course, timing is everything. Service providers know that simply selling bandwidth won't cut it in the long run. Value-added services will help differentiate themselves from one another while preserving margins. Their enterprise customers, meanwhile, are seeing the value of outsourcing ancillary and mission-critical applications alike.

ADDING VIDEO TO THE EQUATION
Thanks to Web browsers, new video technologies, and the broadband Internet, videoconferencing has made the evolutionary leap to the ASP model. The indicator for mass adaptability is the migration from enterprises buying, installing, and maintaining complex systems themselves to the "pay as you go" alternative managed by service providers.

The value potential of two-way video communications is self-evident. It can reduce travel costs, foster better business relationships, and facilitate collaboration and distance learning. Travel is the third largest expense in most corporations, after payroll and information services (according to the National Business Travel Association), with the average travel cost per business traveler a staggering $9,000 per year. The real cost, however, is higher when you factor in lost productivity and mismanaged projects because key executives are on the road and unable to stay on top of priorities. Videoconferencing can alleviate some of those expenses and productivity losses.

As a result of ISDN-based video services having QoS issues, widespread acceptance of video as a standard business communication tool has been stifled. But equipment and services for videoconferencing have still become a multi-billion dollar industry. Some $6 billion in revenue is generated today by service providers alone, according to PEREY Research & Consulting, ranging from conference-bridging services to various associated ISDN costs. With broadband Internet now emerging, two-way video is ripe for the ASP delivery model. At the same time, service providers are coming to appreciate the enormous potential for videoconferencing to generate premium revenue streams.

CARRIERS: BE READY WITH BANDWIDTH
The recent merger of AOL and Time Warner shows that broadcast-quality (MPEG2) streaming video inevitably will be transported over the broadband Internet. Service providers have been scrambling since the AOL/Time Warner announcement to ally with content providers to ensure they'll be in the game. Two-way video is the obvious progression from streaming audio and video, and could become as big an opportunity as broadcast-quality, one-way video.

If IP-based, two-way video service is readily available, new-age carriers like competitive local exchange carriers (CLECs) and others will be able to introduce profitable offerings priced to compete with existing ISDN videoconference bridging services. They can then attract legacy ISDN users to IP videoconferencing and related streaming applications. The lower cost model and improved usability of an IP-based video service should stimulate widespread use of two-way video, from meeting rooms to the desktop.

The price point will erode as two-way video at 384 Kbps becomes ubiquitous and more service providers offer this type of service. But two-way video is destined for MPEG-2 and MPEG-4, just as low bit rate, one-way video is "super sizing" to premium, broadcast-quality video. Each successive increase in quality gives service providers the chance to sell wider pipes. Market share will be critical to success, and savvy service providers are already snaring first-mover advantage by partnering with two-way video ASPs and one-way video content providers.

These changes mean businesses will be able to easily conduct everything -- from phone calls to critical data communications, to call center management to video chats -- over the broadband Internet. Two-way video will become the centerpiece. ISDN and ATM technology are not standing still -- prices are coming down and the technology is getting better, raising their attractiveness as transport mechanisms. But video connectivity to the desktops will occur only over IP networks -- ISDN plumbing to individual desktops is not feasible. As a result, ISDN limits the reach of videoconferencing to conference rooms.

NEW REVENUE MODELS FOR SERVICE PROVIDERS
Companies may be increasingly interested in buying bundled services, similar to the mobile phone model, which include video-enabled PCs or video-enabling software with a set number of videoconferencing minutes per month. With this model, service providers can offer new value-added services and generate a new, multi-million dollar revenue stream.

A uniform interface on video portals will let end users make calls directly from their desktops over a broadband IP network. Self-service and browser-based, they will let subscribers designate who will be on calls and who won't -- all on the fly. Just click on names in a directory service to connect with your selected participants: Select three names and those three people would be set up; pick a dozen coworkers and those 12 would be dialed.

Under this new business model, gateway and bridging resources will be provisioned automatically, without requiring administration by the service provider -- unlike today's videoconference bridging services. And the user won't see any of the complexity that is (unfortunately) visible today. Through these same video portals, users will also have access  to an array of streaming video applications, some of which will be integrated with the two-way video applications. Stored video, such as a recorded employee meeting or third-party content, can be replayed at any time. Live video streams, such as a CNN news feed or broadcasts of live events, can also be received.

Outsourcing service will break down traditional acceptance barriers to the delivery of IP-based, two-way videoconferencing over broadband. It will invite millions of small and medium-sized businesses to share in videoconferencing, far beyond the elite tens of thousands who could afford it in the past. In fact, business-quality, video-over-IP is here. And it can finally become the everyday communications tool we've been waiting for.

Mark Cowtan is the director of marketing for FVC.COM. FVC.COM is broadband video networking provider, offering services and systems to enable service providers to deliver two-way video to their customers. FVC.COM's Click to Meet is the industry's first video services solution for high quality, two-way video calls and conferences over the broadband Internet using a Web-based video portal.