September 1998

BY MARK OZUR

A few years ago marked the beginning of fundamental change in the telecom industry. Heightened competition appeared on the horizon, sparked by liberalization and deregulation, driving telecommunications companies to seek ways to differentiate beyond basic services. This effort to differentiate has manifested itself in a number of ways, one of the more catalytic being the accelerated capital flows moving away from traditional circuit-switched voice networks to voice-over-packet network infrastructures. Initially, these infrastructures provide dramatic increases in bandwidth efficiency, but ultimately they enable new communications applications. Based on extensions to IP protocols, these applications will evolve in Internet time. Therein lies the potential for integrated enhanced services that are truly consumer-friendly and unified.

This industry shift is more than a mere paradigm adjustment -- the very rules of the game are changing. The industry is embarking on a new era in telecommunications best described as a discontinuity of epic proportions. Just as the adoption of computing exploded when computers both accelerated in speed and plunged in price, the Internet innovations witnessed in recent years will similarly explode across the entire telecommunications space. As the underlying technologies are adopted, including TCP/IP-telephony backbones, universal voice/data-capable access servers, and Internet-ready enhanced application platforms, the industry will experience an unprecedented revolution in the enhanced-services application space.

A December 1997 study from the Yankee Group estimates that IP may overtake voice in as little as four years, when measured as total volume over the backbone network. As this time frame would indicate, the public Internet, intranets, and extranets are quickly evolving into mainstream business communications tools.

WHY THE IP EXPLOSION?
The Internet and IP have become the defacto standard for innovation in content, commerce, fax/e-mail communication, and audio/video transmission.

Changing market conditions -- along with technological advances -- are the spark behind this rolling thunder of change. In particular, the widespread deployment of data networks has created a ubiquitous and universal pipeline. This deployment has been fueled in large part by a highly progressive regulatory structure for data services that facilitates entry into markets and countries. Such has not been the case for voice services.

Most recently, the European Commission, the governing arm of the European Union, announced that it would not regulate Internet telephony because it does not yet meet the same specifications as traditional telephony. There is a relatively low volume of voice minutes on the Internet backbone compared to public switched networks and therefore no compelling argument for treating Internet telephony the same as regular telephony.

Of course, this status is subject to change. In the above-mentioned Yankee Group survey of Fortune 1000 companies, 55 percent of respondents indicated that they were considering moving some of their voice communications to alternate networks. User perception is that the Internet will become more reliable and secure, and will deliver acceptable-quality voice transmission, thus inducing 41 percent of the large corporations to consider moving some voice services to the Internet.

IP also offers far greater cost-effectiveness than does voice. In many countries, the rates of voice services are not aligned with the actual costs, resulting in high-priced voice services; this is especially the case with international voice services. This scenario offers some of the sweetest, low-hanging fruit to innovative service providers. While cost is the primary motivation for deploying these new technologies, carrier differentiation and greater end-user value are also important. Once a large number of carriers deploy the technologies and the cost advantages diminish, carriers will focus on developing innovative applications using this new, open environment.

The advances in both IP and computing technologies have been major drivers behind the formulation of voice-over IP (VoIP) networks. Universal voice-capable access servers, Quality of Service (QoS) Internet backbones, terabit switches, and Internet-ready enhanced application platforms are paramount for the creation of IP networks that deliver voice services with telco-grade reliability, scalability, and availability. Significant improvements also have been realized in voice compression, prioritization, and the price/performance of digital signal processors (DSPs). For example, Dialogic's next-generation DSPs are designed to deliver a highly scalable, multimedia platform that is network-independent. Advances have made the transport of voice-over IP highly feasible and have allowed IP to rapidly become a cost-effective alternative for traditional voice services that were previously deployed only over the PSTN.

WHY IP ENHANCED SERVICES?
Several factors make IP the optimal protocol for enhanced services, beginning with the fact that IP is ubiquitous. It is the protocol of the Internet, intranets, and new QoS IP backbone networks being deployed by carriers worldwide. IP runs over the most extensively deployed network operating systems and hardware, and it is supported by the dominant data networks -- Ethernet, token ring, private line (T1/fractional T1s), ISDN, frame relay, and ATM. The fact that IP is so well established has significant implications for enhanced services:

Standards
New application standards are emerging to overlay IP, standards that enable a wide array of voice, video, and integrated multimedia services. These services include Internet telephony and audio conferencing (H.323), multimedia messaging (SMTP/VPIM), graphic conferencing (T.120), and desktop video conferencing (H.323). They can be blended into integrated applications and applied to collaborative computing, network gaming, distance learning, and interactive shopping, as well as such traditional telephony-enhanced services as voice mail, call management, and interactive voice response.

Interoperability
With the emergence of IP standards, proprietary "voice and video over IP" products will disappear, and there will be an explosion in open, interoperable products. With this explosion will come tremendous opportunities for a variety of companies (ISVs, VARs, and system integrators) to develop value-added services for corporate networks, the Internet, and QoS IP backbone networks implemented by competitive carriers.

Ubiquity
Uptake of IP-enabled services is ensured by the fact that millions of end-user devices that speak the same language as the IP network already exist and their number is growing rapidly. These include PCs, Web TVs, Web phones, and wireless Web handsets. Furthermore, fueling the growth of IP telephony on the end-user side is the fact that Microsoft is giving away software with built-in IP-telephony capabilities. (Microsoft has distributed over 50 million copies of NetMeeting, which includes H.323 and T.120.)

What all this means is that the foundation is quickly being built for rich telephony over IP services and for complementary IP-based enhanced services. A key issue for service providers is the kind of platform required for enhanced telephony services in QoS IP networks.

PLATFORM ARCHITECTURES FOR TOMORROW
To offer both basic enhanced services and innovative services in the new era of telecommunications, competitive service providers will need a platform architecture that is radically different from anything the industry has ever seen. In the past, service providers had to deploy purpose-built, proprietary platforms integrated to a single network and running a dedicated application such as voice mail. Now, providers need an open platform that is network-independent -- that is, able to integrate with multiple networks. At the same time, the platform should provide core enhanced services today and an application path into the future.

Beyond open systems, network independence, and application path, providers should look for solutions that are scalable and reliable. These two attributes cannot be overemphasized. IP telephony services that will compete with the PSTN have to scale up to support millions of users and have to be as reliable as the services in the PSTN. At the same time, solutions should be cost-effective and flexible. This means that the platform should be capable of deployment in either centralized configurations or distributed configurations with centralized administration. Configuration flexibility is essential to carriers facing changing cost structures due to the evolution of technology, competitive environment, and regulatory influences.

With a diverse customer base that includes businesses, mobile executives, entrepreneurs, families with small children, and senior citizens, service providers require enhanced services tailor-made for each group, as well as services that can be customized easily and introduced quickly. Providers should be able to decide upon and implement the levels of messaging and communications management that makes sense for their markets.

THE FUTURE OF ENHANCED SERVICES
The next generation of enhanced services can be the glue that binds customers to a specific service provider. Through enhanced services, customers will create a virtual home or office on the network, each one a busy center of activity personalized to suit individual communication preferences. For the service provider, such offerings will create an enduring customer relationship, generate traffic, and build brand awareness and loyalty. The ability to offer truly integrated applications that span networks will be the equalizer that will allow new service providers to compete and win against more established carriers.

Mark Ozur is the president and CEO of PulsePoint Communications. Founded in 1977 as Digital Sound Corporation, PulsePoint Communications is a leading provider of enhanced-services solutions for the telecommunications industry. Specifically, the PulsePoint Communications family of products enable network carriers to offer a wide range of communication-management and messaging services to end users - from basic voice mail and fax mail services to more advanced unified messaging services, and personalized, integrated applications that operate on any network. For more information, visit the company's Web site at www.pulsepoint.com.

One example of next-generation VoIP solutions is the PulsePoint Enhanced Application Platform -- it is carrier-grade and Internet-ready. The PulsePoint Enhanced Application Platform supports network integration to the PSTN, the Internet, and wireless networks, and it offers a rich application development environment for creating integrated, highly configurable Internet and telephony-based services.

The PulsePoint Enhanced Application Platform uses Microsoft's Windows NT operating system, Versant's open object-oriented database, Dialogic's DM3 DSP card, and a suite of rapid application creation tools based on Microsoft Visual Studio. These building blocks allow service providers to deliver rich segmented product offerings with unmatched speed and flexibility.