Verizon takes next big step toward VoIP

Best known locally for its spring tulip festival, the small northwest Washington city of Mount Vernon now has a new claim to fame: the first central office in Verizon's network to be converted from old-fashioned circuit switching to cutting-edge packet telephony.

Best known locally for its spring tulip festival, the small northwest Washington city of Mount Vernon now has a new claim to fame: the first central office in Verizon's network to be converted from old-fashioned circuit switching to cutting-edge packet telephony.

The setup within the Skagit Valley facility doesn't look much different than it did before the conversion, part of a $1 billion-plus nationwide project that Verizon estimates will take five or six years to complete. The central piece of new equipment, a Nortel softswitch outfitted with add-ons to support legacy TDM interconnections, takes up about as much space as the 7-foot-high, 19-inch-wide Class 5 circuit switch it replaced. The most visible change is that the new gear flashes with green lights, whereas the Class 5 cabinets were "closed up and pretty mundane," says a network operations supervisor at the facility.

But the most significant difference is what you can't see: a platform that promises to generate increased revenue through support of new converged services while slashing capital and operational costs by up to 50%.

Verizon is looking to ditch 2,500 Class 5 switches in about as many local central offices in favor of IP softswitches, plus line media and trunking gateways. The carrier is deploying Nortel's Communications Server 2000 softswitch, Packet Voice Gateway (PVG) and Media Gateway 9000 products.

Verizon also is investing an unspecified amount in application servers supplied by other vendors and developed internally. It intends to purchase session border controllers and other niche pieces of the softswitch setup from various vendors.

Of all the RBOCs, Verizon appears to be the furthest along in the circuit-to-packet transition. BellSouth is conducting trials of Siemens softswitches in South Carolina and Florida; Qwest has announced intentions to use the Lucent softswitch in its VoIP infrastructure; and SBC is using Siemens' softswitches in its hosted VoIP service. However, none of these other RBOCs has divulged the status of Class 5 switch replacements or other plans to transition their central offices to packet telephony.

Verizon might be lagging behind AT&T and MCI in moving to a single IP network, analysts note. And Sprint started on its packet transition last year via a $1 billion deal with Nortel.

Some observers say Verizon's circuit-to-packet transition is more flash than substance. They say Verizon is really just looking to replace older, smaller switches in its GTE footprint - Verizon was formed in 2000 through the merger of GTE and Bell Atlantic - that have depreciated while making it look as if the RBOC is undergoing a comprehensive, bleeding-edge technology overhaul.

"These announcements have tended to be more eye candy than substantive," says Thomas Nolle, president of consultancy CIMI. "There's no possible way that voice pricing and market trends could justify a decision to convert a [central office] from circuit to packet. They are posturing for Wall Street, because Verizon has a financial albatross around its neck with these old GTE" central offices.

Verizon maintains that the VoIP project is strategic, and not only in its ability to make and save money. It dovetails with the carrier's Enterprise Advance initiative to garner a greater share of the large corporate telecom services business. Under Enterprise Advance, the carrier has built a national IP backbone that supports multiple access methods - frame relay, ATM, Ethernet or private line.

Enterprise Advance also supports IP VPN services that large businesses eventually can use to carry VoIP traffic.

"Any customer that's buying an IP VPN from us will naturally consider putting voice on that same pipe," says Stuart Elby, Verizon Network Services vice president for Network Architecture. "It's an easy incremental for them to add the voice."

The VoIP buildout also hinges on Verizon's ambitious Fiber-to-the-Premises (FTTP) project, a multibillion-dollar effort to run fiber to businesses and homes. So far, FTTP is being built out in nine states and will let customers access a host of new, high-speed broadband services, such as multimedia VoIP.

FTTP is key to Verizon's capital and operational cost savings with VoIP. If Verizon can bring VoIP customers into the central office directly over fiber, it can avoid the cost of deploying thousands of Nortel media gateways, which enable subscriber copper lines to connect to a packet backbone for delivery of switched and non-switched services.

"Our strategy moving forward is that we would really like VoIP to come in over the fiber directly from the customer premises and be able to handle it as IP traffic there on out, and not have to split off traffic to a traditional [public switched telephone network] switch," Elby says.

"If I weren't doing FTTP, I'd be taking out 2,500 Class 5 switches and putting in 2,500 Nortel media gateways," he says.

This is a change from Verizon's initial strategy to embark on the VoIP buildout separately from FTTP, based strictly on the economics of what was happening with the PSTN switch in central offices.

From Washington to California

Verizon initially is offering, via its Mount Vernon central office, live plain old telephone services - call forwarding, call waiting, voice mail, fax, dial-up Internet access - to businesses and residences in that community. Customers are still on the copper loop there, so media gateways are deployed until fiber is run.

Customers don't see any change in service when their calls come through the softswitch and through the PVG trunking gateway out to the PSTN.

"I haven't noticed anything; it's the same old, same old," says Darrell Brayer, vice president at Cornerstone Financial Services in Mount Vernon. "Just some screwy billing from time to time."

Verizon also has installed many softswitches in five central offices in California, but has not yet turned up service on them because state regulators are challenging an FCC rule that does not require incumbents to unbundle VoIP facilities to provide wholesale access for competitors.

"Unfortunately, we ran into a little bit of a regulatory snafu," Elby says. "It's one of those classic state vs. federal issues."

Elby says the recent FCC ruling that found Vonage's VoIP service to be interstate in nature and thus exempt from state regulation has no bearing on Verizon's softswitch deployment in California. Wholesale unbundling is a separate issue, and Elby argues that California has erred in its judgment and questions if this error will be fixed.

In other parts of the country, Verizon plans to roll out an IP Centrex service in the second quarter of next year. This will be for small and midsize businesses using a DSL or T-1 access service that is supposed to debut by year-end.

Verizon says it also plans to roll out an IP PBX trunking service for larger businesses in the second quarter of next year that uses the carrier's IP VPN service to tie together IP PBXs on the business premises. This service will feature a central numbering plan managed by Verizon that lets users add a site without manually going into every PBX and changing the numbering plan.

In the third quarter, Verizon says it will add more advanced, large-business multimedia services to its IP Centrex offering, such as some of the Iobi services it is provides to consumers. Iobi is intended to let customers manage phone calls, voice mail, calendars, address books and e-mail using wireline and wireless phones, computers, laptops and PDAs.

For example, what someone sends as a voice message from a landline or cell phone can be received as an e-mail or text message on a PDA or laptop, or redirected to a different phone line. The service can locate customers and customize communications delivery based on preference or time of day, Verizon says.

The market is still immature for these types of services, however, Elby says.

"We're throwing as much out there as we can to see what's going to take,"he says.

Early challenges

Some of the challenges that have cropped up during the transition have to do with voice traffic engineering. Carriers such as Verizon that have been around for 100 years learned one particular way to engineer voice traffic using circuit switches with QoS.

IP and packet switching changes all that. Moreover, all the IP experts are from the "old Internet" world, where voice and QoS were not part of the equation, Elby says.

"What we found early on is we were having some problems where things were working fine between calls that were coming from the Midwest into the Northeast," he says. "Then we started getting complaints that echo was turning up. We have echo cancellers, but that would indicate that somehow the delay changed so much in the network that it was outside the bounds of what the echo cancellers could fix."

VoIP calls initially going from Chicago to New York were routed down to the Southern states if there was a failure in an optical ring connecting the Chicago and New York routers, Elby says. The routers were reconnected in 50 millisec and resumed normal operation, but the outage created a huge gap in VoIP latency -beyond what the echo cancellers could handle, he says.

"We found that we really had to go and rethink the way we do IP engineering and get it out of the early days of the Internet," Elby says. He says they had to "start thinking about the classes of service and putting bounds on latency, and making sure your engineering tools and the IP domain and the transport domain could take into account the fact that you have real-time services running over them."

The entire project also is getting Verizon to move away from the cost structures tied to legacy voice services. Once an entire Local Access and Transport Area (LATA), or telecom service region, is changed out, that LATA achieves a return on the VoIP investment within several months, Elby claims.

There are also two big buckets of operational cost savings in store for Verizon. One is eliminating the need to write checks to Lucent and Nortel to maintain the old Class 5 switches.

The other big bucket is in the cost of maintenance, repair and rehab of the copper plant, a situation that the FTTP build-out is designed to fix. The cost of maintaining a fiber plant is negligible compared with that of maintaining a copper plant to get to the customer, Elby says.

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Copyright © 2004 IDG Communications, Inc.

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