May 2003

The Top 10 Trends In VoIP

BY RICH TEHRANI

This past February we were rather impressed with the tremendous attendance and exhibit growth at Internet Telephony Conference & EXPO. The energy at the show was amazing and better than most shows I have attended lately. Many people told me that they were surprised at how positive and enthusiastic the attendees were in light of the fact that the general media has made a habit out of detailing the financial woes of the telecom space.

This is great news for the IP telephony space, which together with wireless and contact centers, is among the strongest sectors within telecom. It is interesting to note that there was broad representation from the enterprise market and service provider market. Developers (especially those of the SIP variety) were well represented at the show as well.

Strong service provider attendance was not a complete surprise to us. TMC Research has projected the service provider VoIP market is showing over 100 percent growth in 2003 through 2006. At that rate, the total market for calls placed on VoIP networks will exceed 100 billion annual minutes at the end of 2006. VoIP calls in 2002 are expected be just over 7.5 billion minutes. This is amazing growth and is being boosted by companies like Vonage, who have figured out how to generate volume retail sales in the IP telephony market.

I gave a presentation at this event about the top 10 growth areas in IP telephony and since I�ve received a number of requests for my presentation, I decided to write about the trends in this column.

THE TOP TEN

10) Hosted communications

The ASP market imploded before it really had a chance to prove its case. The reality is that there are many instances where the hosted model greatly reduces capital costs and affords corporations a �pay-as-you-grow� strategy to communications. Anyone that has used a Web conferencing application such as WebEx is familiar with hosted communications. This market will certainly grow but it is experiencing a speed bump as the VC money, which these startups rely upon, has dried up faster than Google returns search results.

9) IP Centrex

This is a corporate killer app and perhaps even a subset of number 10. The problem is that most phone companies aren�t good at selling things besides cheap minutes. No one is evangelizing this market and educating enterprises. If service providers want to survive, they better get good at understanding, marketing, and selling IP Centrex as it really allows corporations to have full featured telephony at rock-bottom prices. Communications ASPs are actually well advised to partner with service providers and offer bundled services that will be deemed as more reliable and being provided by a more financially secure company.

8) Linux telephony

Linux is bulletproof and cheap and the hardware keeps getting more powerful and less expensive. Linux telephony is a viable alternative OS for IP PBXs allowing corporations to experiment with a PBX without making any additional capital expenditure. Soft PBXs can be downloaded in minutes and then trialed on spare Linux machines. This is an amazing development and I believe it is very possible that Linux will be the primary OS for future PBXs. It�s only a matter of time until we see an abundance of open-source PBXs and add-ons as well.

7) Video Conferencing

Let�s face it, video conferencing has been �right around the corner� for 15 years. But we may finally really be there. IP telephony reduces the cost of video conferencing and better yet, cameras are being embedded in tablets and PDAs. Finally, most of what we want to show others isn�t at our desks anyway so it makes sense that mobile computing will be the driver for video conferencing. I firmly believe that we will see a merging of consumer electronic video equipment with WiFi networks resulting in video conferences on-the-fly from theme parks and other WiFi-enabled locations. You will eventually be able to broadcast to your family members live from Disneyland. This technology will migrate into offices over time. If you think about it, this bottom up approach to technology implementation is not that unusual: The bottom up model is what propelled the Web, PDAs, and -- to some degree -- Tablet PCs.

6) Telecommuting

Companies trying to cut costs can�t downsize and layoff indefinitely -- there comes a point where you start to cut into muscle and bone of your human resources, and cause irreparable harm. Rather, companies are finding that a new flexibility in where and when their employees work can also shave costs. IP telephony allows inexpensive remote access and communications to home workers regardless of where headquarters or the employee is located. IP communications makes this possible in a seamless and highly cost effective fashion.

5) Cable/DSL telephony

Cable companies have had the infrastructure in place for a few years to successfully implement cable telephony. The technology works amazingly well. I�ve been using cable telephony for years with a Cisco ATA 186 in my house and have always been impressed with how great a solution it is, especially when you note the low price. This Cisco device is an awesome product. Quality is not perfect: five to 10 percent of calls can be of fair or poor quality. Often, disconnecting and reconnecting solves this issue. Bandwidth issues and a lack of QoS are the problem, but I believe that the quality easily surpasses cell phones at the moment. The service makes too much sense for cable companies not to roll it out en masse out very soon.

4) Enhanced IM

IM clients are morphing into personal communications managers. First they began to link you to e-mail accounts and then telephony. Expect this trend to continue and we may see these clients becoming our primary communications portal.

3) SIP

SIP is becoming the dominant standard for endpoints and is the most popular new standard enabling interoperability. As a kicker, SIP allows developers to develop once and have their apps run on multiple SIP devices.

2) WiFi telephony

Marc Robins recently wrote the following about WiFi telephony in his Mind Share column. It was so good that I felt it deserves reprinting.

�With a profusion of innovative wireless LAN solutions making their way into enterprises of every stripe, it should come as little surprise that some very smart people see big opportunity in what was left out of the original WLAN equation.

As WiFi hot spots proliferate, momentum is building for the various applications that take advantage of the bandwidth and �anywhere, anytime� connectivity that Wi-Fi delivers. While wireless corporate e-mail access is still on the tip of everyone�s tongue as the big market driver, there is another application that is also on the top of the killer app heap -- and it is none other than tried and true voice communications.

It makes too much sense to simply ignore: As more and more professionals start toting their wireless handheld computers wherever they go; with enterprise-wide Wi-Fi solutions providing seamless access to e-mail and a wealth of corporate data; it is only natural to also want wireless access to corporate voice services.

I�ll go a step further -- It is high time for mobile, standards-based voice solutions that leverage the telecom infrastructure we have in place at our companies. In fact, it�s amazing to me that we are so behind the eight ball on this. Think about the phones you use at home -- chances are 99.9 percent that they are of the portable 900 MHz ilk. Now think about the phones you currently use at the office. Chances are 99.999 percent that they are tethered to your desk -- not very handy when you find yourself visiting your desk for a few minutes out of every workday. It�s time our most basic communications technology caught up with our work lives.�

1) IP PBX

The benefits of having a single wire to the desktop (if you even need a wire) coupled with easier management, enhanced functionality, and reduced phone and fax costs is too tempting to ignore regardless of the economy. 2003 is the year of the IP PBX and if you haven�t looked at these devices yet for your enterprise, you really should.

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