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Feature Article
June 2003

VoIP -- On The Path To Mainstream Success


Voice over IP continues to gain traction among service providers as the industry takes a stabilized and conservative approach to new service deployment. However, examples of commercially deployed VoIP services are still considered �case studies.� This article will examine some of the early implementations of VoIP services, in an attempt to discover what common characteristics are driving new services across the chasm from trial to widespread adoption.

What keeps VoIP from crossing the chasm?

The answer is simple: until now we have put the cart before the horse, and we have tried to convince ourselves that it will work. If we take an honest look at the telecommunications industry we see that real-time voice communications have been around for quite sometime. Additionally, we enjoy all the bells and whistles of voice services and consider them basic offerings. However, we did not start this way. Initially, we started with basic telephone services and basic dial tone. We were satisfied with mechanical and electromechanical switches that offered no features whatsoever. The next significant development in telephony was the introduction of digital switches, again with no features. After having spent time and investment dollars to solve the issue of basic service, we then began to add on the CLASS services (Three-Way Calling, Call Forwarding, etc). When we examine that pattern, a natural technology evolution of mastering one concept and then moving on to the next, it raises the question of why are we trying to skip basic IP dial tone, and go directly to offering IP bells and whistles? Let us not forget the relevance and lessons learned from telecom history and remember that services reside on a solid foundation of both technical and practical capabilities. That being said, there is no killer application -- the killer application is VoIP itself.

Gone are the days of developing new platforms, and experimenting with new technologies as normal business and product development models. Today we are a pragmatic industry out of necessity. Carriers realize the need for a practical and phased approach to VoIP deployments. They are kicking off the process by thinking about VoIP as a service, as opposed to looking at it as only the means to provide new services.

To do this means the ability to:
� Offer VoIP as a basic service.
� Secure VoIP services.
� Bill VoIP as a basic service.
� Add on enhanced services.

VoIP Basic Service
Offering VoIP as a basic service translates into providing the missing link between the VoIP islands that have developed over the last few years: enterprise VoIP islands and carrier or backbone VoIP islands. Providing managed native access to enterprises is the first step in establishing VoIP as a service.

There are some very clear economic advantages for enterprise customers to purchase basic managed VoIP services which include: decreasing enterprise costs by eliminating the need for expensive CPE equipment (e.g., VoIP gateways to translate from enterprise VoIP to ILEC PRI access), and PRIs (which cost much more than a regular T1, while having limited bandwidth utilization). Customer testimonials estimate that by using one vendor and integrating voice and data, they were able to save between $10,000 to $15,000 up front, while providing yearly savings on both phones and data were projected at $3,000 to $4,000).

There are also service advantages for the carrier as well as enterprise customers, as seen in the following comparison:


  • Managed T1 Provides up to 60 percent greater revenue than T1;
  • Inter-enterprise connectivity over Native IP;
  • Session Admission Control;
  • Session Detail Records;
  • Less customer churn.


  • Managed VoIP Cost 20 percent Less than PRI;
  • Inter-enterprise connectivity over Native IP;
  • Session Admission Control;
  • Session Detail Records;
  • Easier Moves/Adds/Changes.

In addition to the economic advantages, there are also significant technical advantages in replacing traditional PRIs with managed T1s for VoIP.

Securing VoIP
There is a basic level of security afforded to networking systems that are deployed in a VoIP network. However, this is less than absolute protection and when bridging VoIP islands it is imperative to be able to cross carrier and enterprise VoIP networks without compromising security or requiring costly equipment upgrades.

Security problems are severe enough to have limited the deployment of IP telephony services over leased lines or the Internet. VoIP presents several new challenges for firewalls, address translation, and security attacks. In order to offer VoIP services, carriers must cautiously think through network topology deployments, especially since we have been witness to a number of malicious attacks that have brought companies to their knees. Carriers that have done this realize that there is a new device required in their networks called Session Controllers. Session Controllers will seamlessly solve the security issues surrounding VoIP deployments.

Any service that uses IP as the foundation protocol needs to be secured and delivered in a way that the impact to existing infrastructure is minimal, such as no firewall updates or expensive CPE additions. After security mechanisms are transparently put in place, such as session controllers, there is one more step before carriers can legitimately start selling VoIP service.

VoIP Billing
VoIP billing is a rather significant barrier to deal with effectively. Service providers that haven�t figured out how to bill for VoIP calls will end up carrying the traffic for free. No service provider, young or old, can afford to do anything for free anymore. Which brings us back to the most basic reason why service providers are now interested in new VoIP usage and billing systems: their shrunken market caps and swollen debt loads are making them desperate for revenue.

In the past, part of the reason carriers have expressed low interest in VoIP billing may also be due to the lack of traffic information, or best effort attribute of the IP communication model. However, with new devices such as session controllers, VoIP sessions can be serviced and billed accurately. Session controllers will be a catalyst for VoIP by providing the ability to collect information on a session-by-session basis, which not only includes signaling details (Caller ID, time, etc.), but also vital data about the actual voice packets. Session controllers capture, collect and remember the vital statistics for every session such as the number of packets sent or received and the inter-arrival time between packets, just to name a few.

Carriers can now capture critical data previously unavailable to them and use it for billing and tariff purposes. This enables the service provider to accomplishing the second step in establishing true VoIP services.

Adding Enhanced Services
After the service provider has managed VoIP service in place, they are then in a position and prepared to add revenue-bearing services, such as IP Centrex, Unified Messaging, or any other VoIP service.

With the right framework in place, carriers will now have the basis of a billable VoIP basic service. Just as we enjoy new service opportunities with basic telephony, those same service opportunities can now evolve from VoIP � the sky�s the limit. Any hosted service can be provided, many new services can be developed, services can be customized, and third-party vendors can truly profit from the openness of the end-to-end VoIP architecture, creating a win-win situation for both service providers and end-user customers.

More so, after experiencing and enjoying the benefits of VoIP as the first real-time, session-based service, multimedia services will be a natural market evolution with services such as Collaborative Working and Gaming.

Enhanced VoIP services and multimedia services will, in the end, be the multipliers that will account for the exceptional VoIP growth we will see in the years to come. However, these services are not possible until the right foundation is in place.

While cost savings for both customers and service providers are driving near-term growth of VoIP, according to an Insight Research study, titled �IP Telephony: Service Revenue and OSS Expenditures for Voice over Packet Networks 2002-2007,� VoIP revenues are about to �explode� within five years, with VoIP revenues growing from $13 billion worldwide in 2002 to nearly $197 billion by 2007. To achieve that figure, VoIP services will grow at a compounded rate of more than 72 percent over the forecast period, a figure that would make packet-voice services one of the fastest-growing segments in telecommunications.

Micaela Giuhat, assistant vice president of product management at Netrake Corporation, is responsible for developing strategic planning, business development and market requirements for Netrake�s powerful Network Processing Platform. She brings with her more than 15 years of experience designing and developing technologies for voice and data networks in the telecommunications industry. For more information, please visit www.netrake.com.

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