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The International Market for Voice over Internet Protocol
Emerging VoIP providers, specifically PC-to-phone providers, are making their way into non-regulated and regulated markets to provide low-cost termination.
By ERIC SCHEELE
Co-Founder, TalkFree Telecom
In 1995, the very first IP telephony products made their appearance, marking the birth of Voice over Internet Protocol (VoIP) and concurrently dialing the first call of death of today�s Public Switched Telephone Network (PSTN). Considered then a �play-toy� of the techno geeks, these services carried voice almost as well as kids� �string� telco networks. Fortunately, today�s VoIP networks are vastly improved and are maturing at a quick pace. To even consider PSTN traffic as �yesterday�s technology� is hard to imagine, but the VoIP dominated market is arriving faster than most people think.
VoIP is simply a newer method to bypass higher-cost PSTN termination. The ultimate quest to save pennies and in some cases dollars per minute has always been attractive to the general public. This �low cost� lure potentially means large market opportunities for emerging telecom pioneers willing to invest in the blood, sweat, and tears of startup financial costs and the burdens that tend to accompany a developing technology.
Emerging VoIP providers, specifically PC-to-phone providers, are making their way into non-regulated and regulated markets to provide low-cost termination.
The staying power of VoIP is supported by a dual evolution within the space. Bandwidth availability and mediation devices drive a slow, elongated concurrent evolution of PC-to-phone and other VoIP termination services. These progressive forces, coupled with voice quality that is acceptable by today�s PSTN standards, creates outstanding opportunity in underserved markets and for many new players in the field.
According to Internet World Statistics (IWS)* in January 2005, only 12 percent of our world�s population had Internet access. Even considering the top twenty Internet advanced countries of the world, less than 24 percent of the population has Internet access. In light of these simple statistics, one can quickly surmise that not only are market opportunities available now with VoIP, but as the Internet continues its slow global sprawl, the future of new markets will be exposed.
Looking further into the numbers, only 1.3 percent of the worlds� people have a broadband connection. A broadband connection provides exponentially more opportunity for consumers and businesses to participate in a VoIP related market. As bandwidth makes itself available through Internet access provided by local ISPs, the bandwidth itself shifts from thin dial up connections to DSL, ASDL, cable broadband and eventually secure broadband wireless connections. The changes begin slowly at first and evolve to provide prolonged market exposure opportunities parallel to this evolution.
As bandwidth becomes available globally, mediation devices are maturing to carry VoIP transmission. In the PC-to-phone market, software enabled clients are playing an increasing role in the proliferation of VoIP. The soft client allows for low-bandwidth environments to successfully connect and terminate phone calls via the Internet.
Paired with the soft client, an analog or USB headset is very common. The headset provides an extension of the computer speaker and microphone that can dramatically increase the calling experience. The overall voice quality paired with these clients can be quite acceptable, but require a paradigm shift in communication that is more acceptable in underserved markets. The cost savings in many of these newly exposed markets compared to their local PSTN carriers will provide ample motivation to track the learning curve of technology use and can even become a staple of international communication needs.
Another option to pair with a soft client is a USB phone which eases the conformation to soft clients. A USB phone is simply a handset that physically imitates the traditional PSTN handset. With a built-in sound card, the USB phone increases call quality and puts at ease someone newly exposed to the soft client experience. These devices rely on the use of a soft client loaded onto a pc. As bandwidth grows, the reliance on the pc diminishes. There are a few devices that imitate a traditional telephone handset, operate under a dial up environment and bypass the soft client such as a dial up IP Phone. These devices tend to be adopted slowly due to higher consumer costs and require configuring not initially accepted in newly exposed internet geographies. They are gaining momentum in prolonged dial up exposed environments, but are to be considered a short term mediary device only to be suceeded by broadband devices as the technology is made available.
Devices such as IP phones and gateways are emerging that connect directly to a broadband connection and physically reflect the traditional rj-11 telephone. These devices provide excellent sound quality and termination. Many providers can configure these devices in house to ease the customers need to be technically savvy. Other devices such as rj-11 converters exist that provide a conversion between a broadband connection and traditional PSTN hand set. Accompanying many of these broadband devices are value added feature inherent to some incumbent PSTN networks, like caller ID, voice mail and conferencing.
These devices and others that will accompany the progressive advancement in underserved markets will be opportunities for deployment of various VoIP related companies at varying levels. Given the slow global evolutionary sprawl of the World Wide Web, as with the bandwidth, the curve for market entry is prolonged given the pace of development.
Reviewing current statistics about the world�s exposure to the internet reveals regulatory controls and varying factors incumbent to developing nations responsible for the slow curve of VoIP market opportunities. Regulatory controls are inhibitors to development. Regulatory strategies invoked by various global countries only slow the evolutionary curve. They do not extinguish the fact that as long as there is internet access and large gaps exist between PSTN termination and VoIP termination, viable opportunities are present in these markets. Limited may be the opportunities, but opportunities the same. In many cases, these market opportunities may be very high in consumer demand and are increased for companies willing to launch within these regulated markets.
Geographical barriers, economic regulations and controls slow the spread of bandwidth access to areas of developing nations. As a nation grows and the Internet makes itself available to the public domain, VoIP progresses and advances in a symbiotic relationship. These barriers can and eventually will be overcome. They simply allow longer deployment opportunities.
For those considering a marketed opportunity in international VoIP, interoperability issues between carriers becomes an added hurdle. Most protocols like H.323, SIP and MGCP were not necessarily built specifically for the sole purpose of carrying voice. Many of these protocols have been adapted out of the data networking space and are rather immature for the voice world. Due to the recent upswing in demand for VoIP services, these protocols have been thrust into action for voice networks. Especially common in H.323 networks, are possibilities of network confusion between vendors that find themselves with mixed compatibilities. Though many vendors claim compatibilities with other vendor gateways, the real life scenario can paint a different picture of interoperability. The net solution may call for a prescription to implement a gatekeeper or soft switch platform to bring the two carrier networks together. The result can have detrimental effects on the overall voice quality of the call. Software solutions are currently being tested and implemented into networks that allow various gateways to cooperate more smoothly or enhance the chosen protocol, eventually enabling a positive overall calling experience.
Many opportunities do exists for any VOIP related product to deploy itself in the expansive international world. Time is ripe for players to establish their channels early within the phases of many developmental nations. A market window has opened to overtake revenue streams currently existing with established channels due to recent availability of advanced codec licensing not inherent to the incumbent channels. As standards of protocols and vendor interoperabilities advance to conform to each other, greater efficiencies across future voice networks will allow new players to take full advantage of the cost effectiveness of this development and value added services that pair with advanced technologies. Larger incumbent carriers not willing to dedicate the financial commitments to forge the developmental hours to revamp their established networks may find themselves vulnerable to any upstart international market carrier.
* http://www.internetworldstats.com/dsl.htm
Eric Scheele is co-founder of TalkFree Telecom, a facilities-based international VoIP carrier providing the lowest industry pricing to channel partners and consumers. Mr. Scheele has launched successive affiliate web presences and participated in various venture developments for more than a decade. Mr. Scheele graduated in 1991 with Chemistry and Education Degrees with a minor is Biology and Physics from Kansas State University. In 1995, he obtained his Masters of Applied Science from Baker University.
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