IP voice quavers

By Denise Pappalardo
Network World, 7/6/98

Hype, hesitation and hope. Three words that best define the voice-over-IP market today.

Business users brave enough to weed through the marketing hooey and nascent promises are finding that IP telephony works. But other users remain skeptical.

While the voice-over-IP service market is expected to be worth over $10 billion by 2002, it's still very much a market in flux. Users, carriers and vendors are trying to figure out what's the best application for the technology. Pioneering users of voice-over-IP gateways say the technology can save thousands of dollars on recurring long-distance telephone bills by making existing bandwidth more cost-effective.

Businesses that routinely communicate with clients or remote sites in other countries are some of the earliest adopters of Internet telephony. This is primarily because international calls carry the most expensive per-minute rates. By encapsulating voice traffic into IP packets, users can send their voice calls over the Internet or an intranet, saving some companies thousands of dollars each month.

For example, Universal Sewing Supply, Inc. is saving $2,300 per month on international long-distance fees since the company deployed two VocalTec Communications, Ltd. IP telephony gateways.

With a gateway at Universal Sewing's headquarters in St. Louis and another at its Santo Domingo, Dominican Republic, site, the industrial sewing equipment manufacturer is sending all of its intracompany voice and fax traffic over the Internet, said Curt Geiler, technical systems administrator at Universal Sewing.

"We are at the mercy of the public Internet and latency does sometimes cause choppiness, but for the most part it's pretty reliable," Geiler said.

Although Universal Sewing has found success with voice over IP, many users said they will not make the plunge in the near future.

"The biggest problem [with voice over IP] is the lack of quality and transmission

lag times that cause serious delays," said Nick Barraco, director of information services at Petri, Inc., an automotive steering-wheel manufacturer in Port Huron, Mich. Therefore, there is no business application for the technology, he said. "Sometimes it's easier to have Ma Bell handle things."

Analysts agree, but are quick to point out that there are other options. In a private IP network, users can get better reliability. "You can get pretty reasonable quality with voice over a private IP network, but the second you go over the Internet the quality goes way down," said Dan Merriman, a vice president at Giga Information Group, Inc., a Cambridge, Mass.-based consultancy.

It's critical that business users understand there is no way to control their traffic today over the Internet, Merriman said. Time-sensitive traffic, such as voice, will suffer. That said, some small to mid-size businesses that are particularly price-sensitive will deal with the latency and jitter to save on monthly long-distance telephone bills, he noted.

But users who find the benefits of voice over IP outweighing the uncertainties of the technology are not easy to come by. Analysts attribute this not only to users' concerns about quality but also to the indecisiveness of industry vendors. Interoperability among gateway vendors is unheard of, even though the International Telecommunication Union H.323 voice-over-IP specification was finalized several months ago.

So instead of committing to deploying the technologies themselves, users are waiting to see what kind of services their carrier may roll out, said Francois-Eric de Repentigny, industry analyst at Frost & Sullivan, a consulting firm based in Mountain View, Calif.

Analysts expect ISPs, competitive access providers, new telecommunication service providers and even traditional long-distance companies to start offering voice-over-IP services within the next two to four years. Some companies, such as Qwest Communications International, Inc. and IDT Corp., already offer limited services. But these are not the services that business users are expected to adopt.

Instead, the preferred voice-over-IP services will most likely be extensions or added features to existing intranet or virtual private network (VPN) service offerings, de Repentigny said. Carrier voice-over-IP VPN services are also expected to come with service-level agreements, he said.

By choosing a service over a do-it-yourself setup, users will be passing interoperability and upgrade problems on to a service provider.

Galaxy Scientific, Inc. has talked to PSINet, Inc. about being a beta site for the ISP's planned voice-over-IP service, said Glenn Botkin, IS engineer at the Egg Harbor Township, N.J.-based engineering firm.

Galaxy is using an IP-based, fully managed VPN service from PSINet. Adding voice to Galaxy's existing connections to reduce its long-distance telephone costs between sites is tempting, but also daunting.

Rolling out voice over IP internally will require some significant investment in terms of initial procurement, ongoing management and trouble-shooting, Botkin said. But if someone else were managing the service, that would be more appealing, he said.

"The potential is there to get into voice over IP, but in order to deploy this technology it has to offer good quality, and it has to be simple to use," Botkin said. "Our people will not accept much degradation, and if they have to go through a lot of gyrations to use voice over IP, they simply won't use it," he said.