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Publisher's Outlook
January 2001

Rich Tehrani  

Quick Look Back, A Global Look Ahead


Go Right To: 
Miami -- An International Beacon For Convergence

As with many of life's anniversaries, it makes sense to stop and reflect upon the changes that have occurred over time. Likewise, as we embark upon our fourth year of publishing INTERNET TELEPHONY magazine, I feel the need to pause and survey the landscape that has been forever changed by the mark of this young, dynamic, and very real phenomenon called Internet telephony. Ever since we launched the industry's first magazine dedicated solely to the convergence of voice, video, fax, and data, the naysayers have abounded: "Internet telephony is not real!" "Internet telephony can never happen!" "Internet telephony is a hobbyist's toy, a plaything, and it will never amount to anything!"

Time has yet again proven the inherent challenge in predicting anything accurately. In fact, this past year alone was full of enough company launches, product/service news, and "revised" or "upgraded" analyses to underscore just how wrong those naysayers have been.

The market for IP telephony hardware has grown dramatically. The market for Internet telephony services has undergone an equally dramatic upturn since the technology's inception. And this is just the beginning. We are poised to witness even greater growth rates in the future. I could start spouting rehashed market research but I don't think I need to -- every telecom and datacom company in the market is waxing poetic about the wonders of IP telephony and everything it will do for us: enhanced services, intelligent wireless assistants that give us the best of both the voice and Internet worlds, lower-cost long-distance... You get the point. We're in for a phenomenal ride.

As we get set for this ride of a lifetime, I'd like to take a moment to rebuke some of my friends from outside the United States, who suggest that I often confuse the terms "The World" and "The U.S." While it is true that many of the technologies and companies that we cover in this magazine do have a U.S. bent, the technologies we write about are extremely well suited for implementation throughout the world. Perhaps one reason for this is that so many of the technologies that we think were developed here were actually developed overseas. You could probably argue with me for months on end as to whether Internet telephony is more of a U.S. wonder or an Israeli wonder. And we'd both be right, regardless of who chose which side. Countless U.S.-based Internet telephony companies have strong research and development ties to Israel. And likewise, countless Israeli companies have U.S. headquarters and marketing arms.

But no matter where a company is located, or where it does most of its business, there is a real need in our industry to overcome the interoperability headaches caused by the proliferation of the many dissimilar protocols to be found throughout the international arena.

I recently had a chance to visit FastComm, a Virginia-based maker of IP telephony gateways. During the course of my conversation, I came to realize that a growing part of FastComm's business was providing protocol conversion equipment, which allows switches from disparate countries to interoperate. Realizing how big a market this is and how important this type of technology is to providing every country with Internet telephony service, I asked FastComm's Michael Harmon to bring us up to speed on the state of international telecommunications. I met Michael last October at Internet Telephony Conference & EXPO, and he shares his insights with us here. (If after reading this column, you have any questions for Michael, feel free to e-mail him.) Likewise, I invite you to check out the sidebar entitled Miami -- An International Beacon For Convergence for some more information on our next EXPO, which will make its debut on February 79 on the East Coast, in Miami.

Please discuss some of the more recent developments and opportunities available in today's international telecommunications markets.

We are experiencing two major shifts in the international telecommunications industry: First, the increased globalization of traditional circuit switched networks, and second, the increased voice traffic being transmitted over packet-based IP networks. When traditional carriers attempt to provide long-distance services to foreign countries, they need to convert their signaling protocols in order to become compatible with the host country's traffic. The same is true for voice traffic that is carried over data networks and terminated through a connection to the public switched telephone network (PSTN).

One of the most interesting developments in international markets is an increase in the practice of using PCs to make long-distance calls. PC-based instant messaging and chat software programs, such as MSN's Instant Messenger, are changing the landscape of how calls are set up and delivered across international borders and between the traditional circuit-switched networks and Internet Protocol (IP) networks.

A good example of this growing trend is the addition of Net2Phone's IP-based telephony network to MSN's Instant Messenger software. In the four months since this service was launched in July 2000, more than 44 million long-distance, PC-initiated calls have been terminated on U.S. phones. The result? Significantly reduced long-distance rates and satisfied end customers.

Although the business of placing PC-based calls is well past its infancy stage, the attractive economics of extending this method to international long-distance service demonstrates a strong business case for stepping up the integration of traditional PSTN networks with Internet protocol-based networks.

Many countries throughout the world have yet to be introduced to PC-based calling. A golden opportunity exists for providing PC-based calling services to the local phone companies in these foreign countries. In many international environments where the number of PCs per capita is much smaller than in the U.S., providing an alternate, affordable connection to the local phone systems through a country's PSTN represents a significant untapped market for international carriers. Currently, over $57 billion per year in revenue is derived from outgoing international traffic, using primarily traditional means. According to a recent Ovum study, by the year 2005, IP telephony service providers (ITSPs) are anticipated to see their revenues from IP-based outgoing international traffic increase to $1.2 billion.

For this transition to occur smoothly, service providers must be able to integrate a seamless conversion of signaling protocols into their worldwide networks, including the many country-specific signaling variants that make each target country unique.

What are some of the challenges associated with terminating and converting IP voice traffic in international locations?

There are several challenges associated with terminating traditional long-distance and IP voice traffic in and between foreign countries. One challenge is the sheer number of signaling variants in use around the world. R2, a common international signaling protocol, is a good example. R2 was the original international signaling standard. There are now more than 30 identified variants of the R2 protocol internationally, with new country-specific variants surfacing on a regular basis. Another example is the SS7 signaling protocol, which is superceding R2. There are more than 10 identified variants of C7, which is the international version of SS7. Very few service providers are prepared to develop the signaling solutions that are required to handle the differences in these international variants.

International committees such as the ITU-T and IETF are actively working to develop standards for these signaling variants. MGCP, MEGACO, H.248, SIP, SIGTRAN, H.323, and others are adding to the complexity of achieving interoperability. Although the telecommunications industry is moving closer to achieving compatibility between international and domestic data networks as these new standards are adopted, solutions are needed now to allow service providers to begin capitalizing on the untapped markets and to achieve appreciable market share.

Can you give us a brief history of what has led to the state of the current market for international signaling? Why don't these systems work together?

In the early days of telephony, traffic volume was mostly local in nature. As phone systems became more pervasive, the need to interconnect them within a region became more prevalent. Each equipment vendor had their own unique proprietary solutions for handling signaling protocols within specific regions. As methods for meshing signaling protocols improved and new regional and country infrastructures evolved, a demand was placed on telephony vendors to provide the newest protocols and switching equipment. This promoted continued growth, modifications, and competition between those supporting different versions of signaling standards.

As international competition increased for local markets, some vendors became willing to steeply discount their services and equipment in an attempt to gain footholds in markets where they had little or no market share. The need to interface "new" vendor equipment with some elements of the existing vendor's equipment and signaling systems spurred the development of further variants in equipment and signaling protocols.

The reason these systems are often incompatible today is because international business relationships and communications traffic between countries have continued to grow and change, requiring new types of connectivity between countries. In addition, a new, worldwide infrastructure is under constant development that inherently provides, as part of its development, newer and more efficient standards for signaling protocols to work within existing in-country systems.

What impact will incompatibility between these systems have on equipment vendors and carriers?

The large-scale convergence of many telecommunications companies through increased acquisition and merger activities has increased pressure on vendors to make these systems work together. The challenge to the carriers will be to decide at what point they want to realize a return on capital investments made in existing infrastructures versus the need to make capital investments in new equipment capable of handling conversions and compatibility between these divergent systems.

Unfortunately, there are no traditional equipment vendors today that can provide a plausible economic or technical solution for bridging the incompatibility between their networks without making significant purchases of capital equipment, based on untested technology.

Another challenge is the availability of technical resources within the carrier's organization that can be dedicated to concentrate on providing signaling software development and testing. This lack of availability often results in slow development and release of signaling conversion software.

What are some of the possible solutions to enable these disparate systems to interoperate?

Some equipment vendors might propose building the signaling conversion right into the switching equipment itself. There are several disadvantages in doing this, one being the extensive amount of time required to incorporate this type of technology. Another disadvantage is the potential for a slow-down in the switching performance due to overhead from conversions to the existing processors in the switching equipment. A final disadvantage is the need to incorporate as many variants as possible into the switching platform to achieve sufficient market penetration for the product. This could introduce added development delays, as well as additional cost for superfluous software/conversion features.

Another solution that might be proposed is to place an intermediary, third-party piece of equipment between the two disparate networks to connect them. The equipment's sole purpose would be to efficiently provide the translations between different protocols. This solution would be independent of the existing vendor's equipment and provide a very cost-effective solution to the end user.

Can you give some examples of cases where intermediary equipment has successfully been used to provide protocol conversion between disparate systems?

There are several examples of sophisticated ITSPs using a signaling conversion gateway solution. One example is a company called NorthVoice, which provides international roaming capability from any location in the world. NorthVoice uses signaling gateways to provide service in South Korea, Singapore, Australia, and Malaysia.

Another company, ECOCOM, places these same types of signaling gateway devices in Eastern European countries to provide high-quality VoIP services between Western Europe, Eastern Europe, and the United States. 

[ Return To The January 2001 Table Of Contents ]

Miami -- An International Beacon For Convergence

The growth of the international communications market, especially as relates to Internet telephony, was an important factor in the decision to launch INTERNET TELEPHONY Conference & EXPO Miami, which will take place February 7-9 at the Hotel Inter-Continental Miami. We have also had many requests by our East Coast readers for an event on their coast.

Maybe it's the location, maybe it's the high-quality product that our EXPO attendees have come to expect from TMC, but this is perhaps the most positive response I have ever seen to a first-time conference. Keep in mind that I've been in the trade show business since 1986. I simply can't say enough about how positive the buzz has been, and I'm thrilled by the advance attendee registration numbers to date.

Similar to our West Coast show, this Conference & EXPO will offer tracks that are appropriate for service providers and enterprise decision makers as well as developers and resellers. And, for the first time in TMC's history, we are pleased to present an International and Latin America track heralding the burgeoning international communications market.

We expect all the industry players to display their latest products and services, and as of this writing, the Exhibit Hall was on track to sell out by show time. Word to the wise: At both of the last Internet Telephony Conference & EXPOs in San Diego, the show hotel sold out far in advance. We expect the Inter-Continental in Miami to sell out in advance as well. Remember, this is prime vacation season in Miami, so plan accordingly and make all your reservations immediately. Check out the official Web site. All the latest show updates and developments are constantly being posted to the site.

TMC's ConvergeNET will once again be a primary attraction at this event. Remember that the biggest barrier to IP telephony acceptance is a lack of interoperability, and ConvergeNET is the world's first, largest, and longest running showcase of demonstrable IP telephony interoperability. Since the industry is constantly changing, I have prepared an early estimate of what ConvergeNET at Internet Telephony Conference & EXPO Miami will comprise. The following companies are expected to demonstrate their interoperable solutions at the show.

Active Voice 
Agilent Technoloies 
MCK Communications
Plaintree Systems
Quicknet Technologies
Quintum Technologies 
Science Dynamics 
TSI (TelStrat International) 
Way2call Communications 

As always, please check our Web site for the latest updates to the ConvergeNET and exhibitor lists. Please register online immediately, and while you're at it, register for your hotel accommodations as well, and you'll be able to take advantage of numerous opportunities to save. See you at the show!

[ Return To The January 2001 Table Of Contents ]

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