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Mind Share
September 2001

Marc Robins

A Little Bit O' This And A Little Bit O' That



The high tech and telecom economies might be in the doldrums, but none of this seems to be affecting the volume of news items that comes across TMC's transom. The last couple of weeks have been no exception -- some companies are releasing some innovative and timely products and services, while others are starting to come forward with big customer wins and intriguing case studies. Here is a sampler of some of the more interesting tidbits I've recently come across.

When In Doubt, Blame It On The Bells
Two new free, online reports, produced by Bruce Kushnick and the Baby Bell-pounding New Networks Institute blame the Bells for causing the current telecom "recession" and aim to serve up some controversial, and even compelling, bits of information. They certainly made for entertaining, thought-provoking mid-summer reading.

The first report, entitled The Bells Caused The Current Financial Recession: The Fiber-Optic Fiasco And America's Copper Dirt Road, lays out a series of related events and actions on the part of the Bell Companies that have contributed to the tech sector crash and will hamper the sector's recovery and the roll-out of broadband services. NNI claims that the Bell companies have failed to roll out their broadband services as promised, and have engaged in longstanding anticompetitive behavior in the face of regulations and laws obligating them to open up their monopolies to competition.

This behavior, according the researchers, has scared away investment and diminished the growth prospects in the tech sector. The study asks some tough
questions, such as "Did America just spend $50 billion in higher phone charges for the same 75-year old copper network?" and "Is America going to end up a third-rate technology nation?"

The second study addresses the beleaguered CLEC market, and likewise pulls no punches. In The Bells Harmed The CLEC Industry: Bell Funded Study By Brooking's Crandall On CLECs Is Flawed, NNI takes the position that the Bell companies' anti-competitive behavior and lack of enforcement has been the major impediment for competitors to offer local phone and DSL/Broadband services, not the Competitive Local Exchange Companies' (CLECs) business plans as some would suggest. Enjoy.

Linux IP Telephony Market Gains Momentum With New Offerings
Windows XP may have grabbed more than its fair share of mind, what with the promised inclusion of collaborative computing and Internet telephony features in Microsoft's new OS. For those of you who champion the open source movement, take heart -- there is a growing momentum in the Linux realm, with two more products available to add to the burgeoning selection of PC-to-PC Linux-based offerings.

Free Phone is a new application available for Linux and Unix multimedia-ready (soundcard, speakers, and microphone installed) computers that can be used to make PC-to-PC VoIP calls. Free Phone, developed by the French research firm INRIA, is based on the real-time transport (RTP) protocol, which is gaining support as a standard for Internet-based voice and video communications. A notable feature is something its developers call "packet reconstruction," which supposedly provides decent voice quality even in the event of packet loss. To download a copy of Free Phone for Linux, use ftp://ftp-sop.inria.fr/rodeo/fphone/fphone-linux-static.gz.

If you're a Linux user interested in making a conference call over the Internet, (a la "Net Meeting"), there is a new tool called the Robust Audio Tool, developed at University College in London. This piece of software, also based on RTP, supports Internet-based audio conferences with two or more users, and runs on Unix, Windows NT, and FreeBSD, as well as Linux. To download Robust Audio Tool, go to http://www-mice.cs.ucl.ac.uk/multimedia/software/rat/download.html.

Light The Candles -- All Two Billion Of Them!
This past week, ITXC Corp. routed its two billionth minute of paid voice traffic. ITXC began service in April of 1998 and passed the one billion minute milestone late in 2000. Almost all of its traffic consists of phone-to-phone international calls that ITXC transmits over the Internet using patented and patent-pending proprietary routing technology to achieve carrier-grade quality.

Callers call from one phone or fax machine to another in the ordinary POTS fashion. Often, callers have no idea that their carriers hand calls off to ITXC for transmission over the Internet and local call completion by an ITXC affiliate somewhere in the world. More and more often the major first tier carriers of the world use ITXC.net, the company's 117-country voice network. Tier 1 traffic has increased from 3.6 percent of total traffic in the second quarter of 2000 to 29.1 percent of traffic in the second quarter of 2001.

One of the indicators of quality is the average length of a call. A new 2001 FCC report entitled Trends in the International Telecommunications Industry indicates that the average minutes per message on calls in 1999 coming from the U.S. and going to a location outside the U.S. is 5.4 minutes. The average length of a call on ITXC.net as of July 10, 2001 was 6.4 minutes.

By most accounts, ITXC is the largest provider of wholesale voice over IP service. And apparently it is also the telco industry's model citizen -- get this -- according to the company's Chairman and CEO, Tom Evslin, ITXC has not issued any debt securities and has no substantial debt of any kind! The fact that ITXC can pull this off is a great commentary on the capital-efficiency of building a network using the Internet for infrastructure.

IBM's New Telco Push
Shaken by earnings shortfalls, and the resulting massive staff cutbacks, many telecommunications companies are cutting spending in an effort to restore profitability. While telecoms should be cost conscious with their IT infrastructure spending, cutting too deeply will hamper the company's ability to compete in this tough market. The Federal Reserve has recently stated IT is vital for productivity, and that there is a strong correlation between IT capital accumulation and labor productivity.

IBM's Global Communications Sector is offering telecoms strategies for reducing cost structure. A strong IT infrastructure is critical in helping telecoms reduce costs in an area that's proving to be expensive for them: implementing new broadband services for their customers. IBM works with companies to improve internal processes and identify alternative vendor billing systems. IBM ties together hardware, software, and services into a packet that makes it less expensive for telecoms to connect their customers to new services.

Examples of some additional IBM offerings to lower costs and improve IT efficiency include Asset Management, where telecoms can sign multi-year contracts and purchase complete solutions from IBM at a discount; Selective e-sourcing, which helps reduces operating costs for telecoms, while improving availability, security, and capacity; and Innovative Financing. For one customer that wanted to embark on a new project but was short on cash and computing power, IBM purchased outdated equipment from the customer, upgraded it, and leased it back at a cost matched to expected income from the new project.

Marc Robins is vice president of publications at TMC and associate group publisher for INTERNET TELEPHONY magazine. Marc has been covering the communications industry since 1980, and his column takes a look at some of the more interesting trends vying for attention in our industry. Please contact Marc with comments at mrobins@tmcnet.com.

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