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First Quarter 1998

How Will Internet Telephony Revolutionize Telecommunications?

We asked several vendors for their views on the Internet telephony industry:

Patrick Fetterman, Market Segment Manager, IP Telephony,
Natural MicroSystems
Most people talking about IP telephony today are really talking about just one application of this technology -- long-distance replacement or toll bypass. Making "free" telephone calls over the public Internet or over corporate networks has created great excitement among the press. In reality, toll bypass is only the tip of the IP telephony iceberg. The true advantages of IP telephony come from treating voice as another form of data, and will result from fundamental changes in network architecture. While no one will claim that packet-switched networks will completely replace the circuit-switched Public Switched Telephone Network (PSTN) in the next five to ten years, the advantages presented by IP telephony are clearly recognizable today.

First, IP telephony dramatically improves efficiency of bandwidth use for real-time voice transmission, in many cases by a factor of 10 or more. This increase in efficiency is the real long-term driver for the evolution from circuit-switched to packet switched technology.

Perhaps more importantly, though, IP telephony enables the creation of a new class of service that combines the best characteristics of voice communications and data processing, such as Web-enabled call centers, collaborative whiteboarding, and remote teleworking. By combining real human interaction with the power and efficiency of computers, an entirely new world of communications is opening up.

Michael J. Sargent, Vice President Marketing, Inter-Tel, Inc.
IP Telephony is one major driving factor in the ultimate evolution to packet-switched transport from circuit-switched. Currently, IP telephony is being driven because of toll bypass arbitrage opportunities. There is a lot of money to be made out there, particularly due to the high cost of international calling. Ultimately, combining IP voice with other information over the "universal language" IP networks of the world (both public and private) will allow users the seamless use of terrific enhanced services - like voice-enabled Web pages, voice/video/application whiteboard conferences, and more. These services are much more readily delivered over packet networks. Plus, business users and consumers will receive these enhanced services from a wide range of new delivery systems, such as cable providers and power companies.

Dr. Elon Ganor, Chairman and CEO, VocalTec Communications LTD.
Internet telephony is a category that has grown from a hobbyist's toy to a global market expected to reach nearly $2 billion by the end of 2001. Many people perceive Internet telephony as simply voice applications or "free" calls. This limited view fails to consider the convergence of voice, data, fax, text, and video in point-to-point and multi-point applications communicating over mixed circuit- and packet-switched networks. Because these applications are outside of traditional telephony and beyond the Internet, VocalTec feels a broader, more dynamic market called IP Communications has emerged and will continue to rapidly evolve.

End-user applications and gateways between networks have received much attention recently. However, the most important development for 1998 will be the addition of software-based intelligence to control the operation of networks and applications. Intelligent agents will give carriers and users more options for meeting a variety of performance, cost, or application-specific requirements, with examples that include least-cost routing, and failover, or follow-me calling. It's just the beginning for IP Communications and a marketplace that will rightfully be the focus of great attention.

Laurence J. Fromm, Vice President, New Business Development, Dialogic Corporation
Circuit-switched telephony is the last great proprietary communications protocol to be swallowed by the Internet Protocol. As IP has built critical mass - the whole product infrastructure - it has subsumed any number of proprietary communication protocols (IPX, AppleTalk, SNA, and the like). Circuit-switched telephony is next.

Separate circuits for real-time, full-duplex audio communication (i.e., telephony) made sense when they were deployed. By just as Moore's law and the rise of the telecoms has rendered many architectures and business models obsolete, so too do they for circuit-switched telephony. With IP network bandwidth doubling every year, with increasingly intelligent endpoints becoming increasingly cheaper, and with the massive, well-funded, highly competitive Internet community addressing needs for real-time communications and security, there is less and less need for a separate network for real-time audio communications.

Adding real-time audio communications to IP networks had advantages in both cost and features. Regarding costs, organizations and service providers can now deploy and maintain a single network for their communications needs. Because this network is IP-based, the market for equipment, services, and bandwidth is competitive, rapidly evolving, and standards-based. As for features, adding audio to our other communication means, including video and audiographics, enables richer communication. Another advantage is that standards-based IP solutions can be readily extended to offer a wealth of new communication applications.

Over the next several years, these factors will inexorably drive full-duplex, real-time audio onto IP networks, diminishing the need for circuit-switched telephony.

Peter Alexander, Executive Director, Marketing, Cisco Systems
The emergence of Internet telephony is important in that it signals two key beginnings; the beginning of the end of circuit-based infrastructure, and the beginning of the Internet's ascendancy as the general-purpose communications infrastructure for the 21st century.

While the megatrend of global migration from circuit-based to packet/cell-based infrastructure is widely recognized, the migration can never be completed until the primary traffic of the circuit-based infrastructure, voice, can be carried better over packet. Circuit switching has been used for everything from leased lines to private TDM backbones, but has seen most applications migrate to ATM and IP for reasons of efficiency, flexibility, and performance. Voice remains the ongoing raison d'ĂȘtre for circuit switching. Make voice over the Internet as good in quality, as reliable, at least as cheap, and throw-in some cool, added value like quality/cost selection or real-time billing updates, and it's all over.

Ask the casual user for their two biggest issues with their Internet service, and they'll directly or indirectly respond with quality of service and reliability. These are the two biggest capabilities the Internet must provide to be viewed as -- and then become -- the general communications infrastructure for the 21st century. Internet telephony will precipitate the development and finance the deployment and the profitability of these capabilities through service demand and service revenues. And as voice is just about the most sensitive application, solving these issues essentially solves them for all other applications. The rest is just a matter of bandwidth.

Internet Telephony signals the coming of age of the Internet.

Kathy Meier, General Manager, Internet Communications,
Lucent Technologies
A revolution is taking place in how voice calls are routed over the network. Customers are now moving from dedicated Public Switched Telephone Network (PSTN) to packet-based IP networks. The PSTN is rapidly becoming the "IP network of the future" because it's a global phenomenon touching corporate enterprises, network service providers, and next-generation telcos.

The reason corporate customers and ISPs are moving to this new paradigm is because of cost savings and the efficiencies of a converged voice and data network.

This first revolution in Internet telephony is called phone-to-phone voice communications. The goal is to give customers seamless, universal access to the telephone from anywhere in the world with the same dialing patterns they have today. In addition, Internet telephony gateways with powerful DSPs and speech codecs are enabling customers, service providers, and telcos to deliver a richer voice-over-IP environment.

The next phase is the maturity of the Internet telephony market. Soon, customers and ISPs will be able to use more powerful multimedia applications for the Internet. Companies such as Lucent are also focusing on providing better voice quality performance, reliability, and telco-grade products that will enable interoperability between corporate and ISP networks. Work is already being done to improve the quality and decrease the latency for voice, music, and video over the intranet and Internet with innovations from Bell Labs' elemedia venture.

Lucent will be an industry leader in pioneering the revolution of Internet telephony for voice networks by moving customers to the IP network without sacrificing the performance and reliability of the phone call.


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