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December 1998

As we stand poised on the edge of 1999, how do you feel the Internet telephony industry is doing as a whole? What events have shaped this past year, and what do you think that 1999 has in store for this exciting industry?

We asked several industry-leading vendors for their views on the Internet telephony industry. Their responses appear below.

Dr. Elon Ganor, Chairman, VocalTec Communications
The Internet telephony revolution is advancing at an unprecedented speed. On the eve of 1999, all the key players in the telecommunications industry have acknowledged Internet telephony as a major communications platform and are actively strategizing to become part of this revolution. Nearly every major carrier worldwide is exploring Internet telephony with plans for field trials and in some cases, such as Japan Telecom and Deutsche Telekom, commercially available services. This is a remarkable achievement given the recent development of this industry.

It was only in 1995 that VocalTec announced the first Internet telephony application, 1996 the first gateway, 1997 the first partnership with a major carrier, and 1998 the first gatekeeper for global service. Not even the rise of the PC era can compete with the pace of the Internet telephony industry. The first PCs were introduced by Apple and IBM in the late seventies and early eighties respectively, yet they did not become staples in the corporate and consumer markets for nearly another decade.

Galvanized into action by the pace of Internet telephony, leading data networking companies, such as Cisco and Ascend, and traditional telco providers, such as Lucent and Nortel, have all announced plans for this market. But the true success of this industry depends on the availability of mature full system solutions. VocalTec is committed to meeting this challenge. We are bringing to market interoperable, carrier-grade, end-to-end Internet telephony solutions that enable carriers to compete more effectively by offering value-added services targeted at specific markets.

In addition to our continued focus on the carrier market, we believe that 1999 will be the year that the corporate market begins testing and deploying new Internet telephony applications. Internet telephony offers corporations powerful communications tools that turn the world into a virtual conference room enabling employees working in offices across the globe to easily and conveniently collaborate. These applications are crucial in an increasingly global market where cost-efficiency and time-to-market differentiate the losers from winners.

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Kevin Kennedy, Senior Vice President, Service Provider Line, Cisco Systems
The past year has been one of important growth for the Internet telephony industry. In fact, 1998 could be called a watershed year.

More and more, both established and emerging carriers and competitive local exchange carriers moved into the Internet telephony space. Other carriers initiated plans to offer service within the next 12 to 18 months. Boosted by Quality of Service (QoS) improvements and reductions in latency, Voice over IP (VoIP) advanced from an experimental to a viable technology during 1998.

Looking towards 1999, the widespread adoption of Internet telephony will only accelerate. In fact, during the next year, the Internet telephony market should become comparable to the voice markets of other data infrastructures, such as ATM and frame relay. This growth will occur because:

  • Technology advances will continue to improve the quality of Internet telephony, which already rivals the voice quality of circuit-based transactions.
  • The cost to provide and use Internet telephony will continue to fall. During 1999, new concentration devices containing thousands of ports will further cut carriers' costs-per-port.
  • Technology standardization will enhance call control architectures, solidifying carriers' confidence in VoIP.
  • Carriers will be able to offer new services available only through Internet telephony, such as push-to-talk for Web-based applications.

In short, 1999 will be a seminal year in the development and growth of Internet telephony, as the technology becomes more usable, cost-effective and ubiquitous.

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Sarah Hofstetter, Vice President, Corporate Communications, IDT Corporation
The Internet telephony industry has emerged from a techno-geek, hobbyist, underground Morse code to a viable communications solution for consumers and businesses alike. Not only have the small players grown their customer bases significantly, but we've seen entry into the market from AT&T, Sprint, and even some of the PTTs. Fortune 500 companies are even getting onto the scene, and are deploying gateways in branches worldwide. Carriers and equipment vendors are using Internet telephony gatekeeper solutions, which shows that the telecommunications world has embraced the technology and is preparing for full convergence. IDT alone has routed more than 80 million Internet telephony minutes, and there's no telling how much bigger it's going to get. Price alone will not be the motivating factor to move all voice traffic onto IP. We're going to see more applications being routed over IP -- video, cable, television, multicasting, and unified messaging to name a few -- within the next year, which will allow for more flexibility and interoperability within all forms of communication.

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Martin Hall, CTO, Stardust Forums
I'll remember 1998 as the year a major industry shift occurred to develop voice-over-data products. The Ciscos, Lucents, Nortels, and AT&Ts of the world now fully recognize what only a select few companies realized before -- that the integration of voice and data is the future of communications. With the large investment being made in VoIP technology to develop new infrastructure products, new protocols, and new applications, the notion of true multimedia networks carrying voice, video, and data looks inevitable -- and sooner than many people first thought.

However, the main roadblock to Internet nirvana is the extreme difficulty in managing the available bandwidth to ensure that the applications needing real-time, minimum-delay performance, like Internet telephony, get it. We need more intelligence and QoS added to IP networks. Latency continues to be a real problem. Significant new business opportunities await the big companies and the visionary startups that successfully invest in active management technologies to satisfy the QoS requirements of the new Internet applications. I believe some of the most significant Internet technology achievements of 1999 will come in this bandwidth management and allocation area.

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T. Kent Elliott, President and CEO, Vienna Systems
The Internet telephony industry is in excellent standing to explode in the 21st century. The past year has been shaped by a mature growth in market expectations -- the industry today demands product scalability, interoperability, superb voice quality, and intelligent call and device control. There has been less focus on Internet telephony gateways and more focus on integrated VoIP routers, switches, etc. New interoperability standards are bombarding the industry with waves of confusion -- H.323, SIP, SPDC, and more are making it difficult for vendors to find one common standard for compliance. Service providers need increasing scalability to meet their growth needs, and thousands of ports are realistic for 1999. An intelligent call model is also going to be necessary for the industry in the next year, providing routing, authentication, and authorization features that many Internet telephony networks today lack.

Internet telephony as a technology has experienced a wider-spread market acceptance over the past year. A number of the large telcos, previously wary of Internet telephony, have initiated extensive test trials of Internet telephony with plans for full-fledged implementation in the coming year. No one in 1999 will ask, "What is Internet telephony?"

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