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Publisher's Outlook May 2002

Rich Tehrani

Always Keep An Eye On What's To Come


[Go to Reflections On 30]

In March of this year, we presented a Special Focus feature on the state of Internet Telephony, focusing on the years leading trends. Vendors spoke out, identifying a number of technologies to watch and singling out several key trends, including an increase in the number of deployments of IP telephony-based technologies, and a general increase in the perceived level of quality, both factors which allow our industry to enjoy a growing measure of respectability and mainstream acceptance.

A month earlier, in February, we held our annual East coast-based Internet Telephony Conference and EXPO, and as is already well known, the event was a huge success. Even though the economy had yet to experience a discernible upwards shift, and the aftermath of September 11 was still affecting travel, our shows success was one of the early indications in my view that our industry was enjoying a greater modicum of success, and frankly was generating a much more positive attitude toward the days ahead. I recently attended the spring Voice on the Net show in Seattle, WA, and I have to say that the mood continues to improve, and the future keeps getting rosier. I will have more to report on VoN in next months Publishers Outlook.

But since the events in any sector of the technology industry change so rapidly, I have decided to take the pulse of several leading companies in our market, and see what they had to say regarding the future of Internet telephony. So without further delay, I present the future of Internet telephony.

ITXC (Ed Hirschman, Vice President and GM, Worldwide Exchange Service)

RT: What areas of our industry seem to be doing well right now?

EH: Today, carriers are accepting voice over the Internet as a way to increase margins and revenues quality is no longer an issue. In fact, 60 percent of the traffic over ITXCs voice over the Internet network comes from tier 1 carriers who demand high quality.

In addition, phone-to-phone calling over VoIP networks continues to grow. According to the TeleGeography 2002 report, VoIP will account for 10 billion minutes, or six percent of the worlds international traffic in 2001 up from the 6.2 billion minutes that TeleGeography had projected for 2001 last year. TeleGeography estimates that worldwide there will be over 160 billion minutes of international calling in 2001, up from over 135 billion minutes in 2000.

RT: Whats your best guess as to what the market will look like in two years? Five years?

EH: In two years, every major carrier will have implemented VoIP or will be connected to another carriers VoIP network. Flat-rate consumer-base pricing using VoIP will become more common, and could include free calling between selected deregulated countries.

In five years, there will be an independent movement in which carriers, enterprises, and residential fronts implement VoIP, and the networks will eventually link to each other. Voice over the Internet will continue to move networks to the edge and away from the traditional hub and spoke model. Interoperability between VoIP equipment will be seamless and a non-issue. The H.323 protocol will still be strong but we will see more commercial use of SIP applications. Consumer VoIP applications will take hold and be profitable for suppliers. Wireless carriers will use VoIP from the handset to as far as it will go native IP. Flat rate pricing models will be implemented in the wholesale level. The future will include all international voice calls on the Internet by 2010.

VocalTec (Arnold C. Englander, Vice President, Product Strategy and Planning)

RT: Are customers more accepting of IP telephony these days?

AE: Absolutely. The strongest indication we see is the growing percentage of VoIP traffic that is carried on a wholesale basis, under tight Service Level Agreements (SLAs), where the calling parties have no idea or any reason to suspect that their calls are VoIP.

RT: What does the future hold?

AE: VocalTec expects continued growth of VoIP as a percentage of total international telephone traffic. This VoIP growth comes and will continue to come from expansion in wholesale international long-distance networks and new networks in deregulating and developing countries. As we approach 2004 and 2005, this growth in VoIP will also come from the replacement of legacy TDM networks.

RT: Whats your best guess as to what the market will look like in two years? Five years?

AE: In two years, VoIP will be key to large-scale rural telephony in developing countries. In five years, VoIP will have raised the tele-density of countries like India by a factor of three or four (which, for India, implies almost as many new telephone lines as there are households in the United States). In two years, people will take it for granted that many of their long-distance calls are carried as VoIP (to surpass 50 percent within five years). As a result, the VoIP equipment market will be pushed to a level where only the fittest will survive.

RT: Are there any trends developing that might affect the industry as a whole?

AE: Yes, several. Deregulation and large-scale rural telephony in developing countries are two that come to mind. The rapid growth of wholesale long-distance VoIP that is held to stringent SLAs and resold as regular major-brand service is a third. QoS technologies, from MPLS to sophisticated QoS-based routing algorithms inside of softswitches and application severs, is a fourth. We think that the current telecom business challenges are masking the positive outlook suggested by (at least) these four trends.

General Bandwidth (Brendon Mills, President and CEO)

RT: What does the future hold?

BM: With service provider capital spending budgets cut to the bone, packet-based telephony will be rolled out pragmatically, on platforms that allow a bridge between legacy and next-generation architectures. This lowers risk, protects investments in existing infrastructure, and offers a means for a gradual migration rather than forklift upgrades.

RT: What areas of the industry seem to be doing better than others?

BM: Enterprise applications have clearly made more progress than the residential opportunities for packet telephony. Leveraging broadband networks as the transport mechanism for packet-based services to the residential customer will broaden the penetration of these applications.

RT: Whats your best guess as to what the market will look like in five years?

BM: We will begin to see the results of end-to-end IP applications, with IP QoS in place to support a suite of applications over high-speed networks. However, even five years from now, the majority of applications will rely on legacy infrastructure.

RT: Are there any trends developing that might affect the industry as a whole?

BM: Broadband in the local loop will enable the delivery of packet voice to residential customers this will exponentially increase the potential of the market.

Sonus Networks (Terri Griffin, Vice President, Marketing)

RT: What does the future hold?

TG: While the conditions in the telecommunications market remain challenging, we remain optimistic on the future of telecom. We believe that the telecom industry will continue to serve as a key growth driver for the global economy. Some segments of the market, such as optical transport, which has seen significant over-building of capacity, may remain in deep retrenchment, but for others, such as packet voice, the potential is excellent.

RT: Are your customers more accepting of the technology now as opposed to say, a few years ago?

TG: From a technology perspective, carriers are definitely more accepting of VoIP the products that were just emerging three years ago have been proven in the market and are continually being improved upon. The benefits of packet voice remain the same as ever improved economics, in both acquisition costs and ongoing operational costs, and new revenue opportunities through the delivery of new services.

RT: What do you think the market will look like in two years? Five years?

TG: We are still at the very early stages of the packet voice market carrier-grade packet voice solutions just began shipping nearly three years ago. In that period, we saw the next-generation carriers and competitive carriers deploying packet voice for applications such as trunking and Internet offload. Now were beginning to see the incumbents evaluating and trialing packet voice solutions for similar applications, and were also seeing carriers beginning to trial and in some cases, selecting, packet technologies for Class 5 applications.

Over the next two years, wed expect to see the incumbent carriers going further with packet voice architectures for a range of Class 4 and Class 5 applications. Wed also anticipate seeing growing adoption of packet voice among international carriers, both the PTTs and emerging carriers. Were also seeing newer entrants, such as cable operators and wireless carriers, testing packet voice solutions now, with deployment decisions coming later this year and into the next few years.

[ Return To The May 2002 Table Of Contents ]

Reflections On 30


Technology Marketing Corporation this magazines parent is celebrating 30 years in pursuit of excellence.

Founded in 1972 during an energy crisis spurred by war in the Middle East (some things never change) TMCs first publications were created to provide high-quality information on energy efficient, material efficient, and non-polluting technologies. In 1979 with door-to-door traveling sales costs on the rise in the face of continuing trouble in the Middle East, I knew that it was time for another pioneering effort. I decided to pick up the phone and try selling ads without leaving my office. After selling 15 pages of advertising that first week, I knew that a new industry had been born! In 1982 Telemarketing magazine was launched and the rest, as they say, is history.

Our pursuit of excellence that started 30 years ago has spawned a number of industry-leading publications and conferences: Telemarketing, CTI, Internet Telephony, Communications Solutions EXPO, Internet Telephony Conference & EXPO and our pursuit continues today as we provide the finest coverage available of emerging technologies such as PDAs (with Planet PDA magazine and Planet PDA The Enterprise PDA Event) and biometrics (with BiometriTech magazine and BiometriTech Conference & EXPO) that change our lives and the way we do business. With unparalleled editorial quality and a commitment to providing unbiased, objective content in every issue and on TMCnet.com, TMC has earned its position at the forefront of the technology publishing business and we intend to remain in the #1 position for every product and service we offer.

As I have indicated in numerous lectures around the country and in discussions with my TMC staff, nothing great will ever take place without true and dedicated teamwork by the staff of a company. I am proud not only of TMCs achievements, but also of the many outstanding team members who have contributed immensely to TMCs resounding success through the years. To say that I love them dearly is an understatement.

Id like to extend my appreciation to the many advertisers, exhibitors, sponsors, and subscribers of our publications, for without their support, we would not have been able to achieve any of the success that has come our way these past 30 years.

And so it is that with great expectations and enthusiasm, I look forward to the next 30 years!

Nadji Tehrani, Chairman, CEO

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