June 2000

BY STEVE BAECHLE

Overshadowed by the ultimate yawn of the reactive "Y2K crisis," some leading-edge technologies actually made tremendous progress during 1999. Perhaps topping the list, Internet telephony secured a stronghold in corporate America, finally growing beyond its initial usage by service providers as a cheap way to shunt minutes between local loops.

But even as users are embracing Internet telephony in significant numbers, the service provider industry is already looking ahead to the "next generation." For it is the next generation of IP telephony features and services that will deliver on the true promise of IP telephony. It is the next wave of services that will finally make the transition of trusty voice applications off reliable old networks and onto state-of-the-art packet architectures not only desirable, but a competitive necessity.

If we're lucky, the evolution of Internet telephony will feel to users like continuously getting more and more of a good thing. But the service providers will need to continue investing in infrastructure, while expanding and changing implementation models to accommodate more advanced applications. Within three years, both sides may look nothing like they do today.

The goal: Seamless communication.

The issue: Seamless change.

WHO SAYS YOU CAN'T HAVE IT FAST, CHEAP, AND GOOD?
To avoid lapsing into the seemingly terminal price wars plaguing the long-distance market today, providers must achieve what may never have even been attempted before in telecom, or most other industries for that matter: They must deliver more for less and do it faster. Why? Because customers using multiple services are less likely to go elsewhere.

Already, Internet telephony has us halfway there with the bargain basement pricing it enables. Now the real fun is beginning. As we move forward, Internet telephony will introduce possibilities for efficiency and performance never before seen. So what are these applications that will drive the next-generation Internet telephony market?

An example of just such a service is unified messaging. There is an obvious shift in the progress of voice and data applications to Web-based systems. These systems will fuel the long awaited mass adoption of unified messaging. With the help of Internet telephony, voice, data, Internet, wireless, and eventually video will finally converge into an affordable, ubiquitous system.

In some ways, IP will enable a resurgence of voice. For example, if you're driving along Rte. 66 trying to get your kicks while simultaneously checking messages, you can't very well stop to write phone numbers in your PDA (unless it's rush hour). With true integration of voice and data, you won't have to. Everything will be either voice or data enabled at any time. You'll be able to listen to your messages on your PDA, then order it to perform some action with your contact lists and/or to-do lists. You'll be able to initiate a return call without pushing buttons. The same Internet that made speed-typing essential to survival will take us back to the point where being able to talk is enough to schedule a meeting.

Consider the real implications for the truly unified mailbox. Remember when checking messages used to mean one phone call? Now for many of us, it means at least three: Home, the office, and the cell phone, not to mention work and personal e-mails. And we still lose every other fax sent to us. Just imagine being able to retrieve and respond to them all at once, with one phone call or a single Web session.

Imagine listening to e-mail on the phone or voice mail on the PC, without stopping what you're doing. Imagine being overseas and being able to access your voice-mail system via a Web browser with a local call from your hotel room to an ISP instead of a long-distance call through the operator. Or, worse yet, a "multi-million-dollar call" from a cell phone.

That's where Internet telephony is taking us. The question is: How do we get there?

A BUYER'S MARKET
As with the initial adoption by service providers, enterprise users are flocking to Internet telephony today to save money. As "killer applications" go, substantial cost-savings never loses its charm.

Fortunately for users, the lion's share of the expense falls to providers. Sure, users will have to swap out the old PBXs for IP-enabled models, or for intelligent access devices, or Centrex systems that effectively take the place of the PBX altogether. But this can translate into lowered capital, reduced burdens on IT staffs, and even the effective outsourcing of management of the system to the providers.

For their part, providers have to reshape and redistribute the network's intelligence. Within three years, gateway intelligence as we know it today will be de-emphasized in favor of carrier-grade centralized intelligence and distributed feature creation. In a way, the IP telephony network will follow the same path as the traditional telephony network, except that the centralized intelligence won't be a $2 million "Big Iron" Class 5 switch, but rather a network of robust intelligent modules that allow rapid-fire introduction of features and customer-specific applications.

Providers and manufacturers face steep interoperability challenges on both the user and carrier sides, both of which contain goals not only for the network infrastructure but the business infrastructure, particularly with regard to billing and payment.

Step one, though, is helping users optimize existing investment in PBX systems while at the same time leveraging IP. This mandates adding support for signaling protocols such as QSIG for seamless interconnectivity among PBXs, along with increased support for still-evolving protocols establishing guidelines for interoperability among gateways -- H.323, MGCP, and others.

Then, besides getting along with the PBXs, service providers and gateway infrastructure manufacturers must begin to look beyond the PBX. As soon as interoperability standards mature sufficiently, vendors and providers would do well to be ready with a host of IP-based features. For starters, the ones we rely on today -- basic services such as call forwarding, call waiting, three-way calling, etc. Naturally, the business infrastructure poses an equal challenge: Carriers will have to provide customers a single, accurate, timely, and customized bill.

Finally, after the implementation of basic features we expect to find when we pick up the phone and dial "9," the future is virtually limitless. Wireless. Internet. Wireless Internet. It is here that the interplay among carriers comes to the forefront. For Internet telephony providers to grow global, seamless passage of calls among provider networks must materialize, with settlement and billing systems comparable in quality to those of circuit networks today.

"IT" IS WORTH IT IN THE END
Consumers used to take it for granted that they could have things good and fast -- and pay for them -- or fast and cheap, and settle on lesser quality. But good, fast, and cheap? That's a tall order. Today's carriers know they have to pull it off and are counting on Internet telephony to help them become true Integrated Communications Providers (ICPs). All the while staying profitable even as they deliver exponentially greater value to end users.

Steve Baechle is vice president, business development, for Cirilium Corporation. Cirilium was formed in 1999 to combine the industry-leading experience and reputations of Hypercom Corp. and Inter-Tel, Inc. The company offers turnkey solutions to Internet telephony service providers, and a well-defined vision that will drive this emerging market sector. For more information, visit Cirilium's Web site at www.cirilium.com.