Can VoIP be mainstream?

The success of VoIP in international telephony should encourage firms to take another look at the merits of combined voice and data services, argues Bill Pechey

I recently reported that the telecommunications operators were using voice over IP (VoIP) to take advantage of the lower costs of IP switching equipment, compared with its Asynchronous Transfer Mode (ATM) equivalent. So they are, but because of the general malaise in the industry, many are deferring capital investment in IP infrastructure. This has provided an opportunity for new companies with IP networks to sell voice capacity to the established operators.

There are quite a few firms engaged in this business now, but the two largest VoIP specialists are iBasis and ITXC. Neither is over five years old and both are seeing rapid growth. Strangely for IP companies, iBasis and ITXC measure their traffic in voice minutes per day rather than IP datagrams carried ­ a clear indication of their emphasis on voice. What may surprise many is the sheer volume of traffic each carries: about five million minutes per day, which equates to as much as one percent of the world's voice traffic. The largest international carrier, AT&T, deals with about 10 percent. Clearly, international VoIP is no longer an insignificant fraction.

So where does all this voice traffic come from? Originally, the customers were new telecommunications operators set up to compete with the incumbents. They wanted low-cost international connectivity, and VoIP offered a good way of obtaining it. But older operators saw the success of VoIP and became customers of the IP carriers themselves. IBasis now claims that 54 percent of its traffic comes from the so-called Tier 1 companies. In future, it is likely that the VoIP firms will offer interconnection to the 3G mobile networks, where IP will be used to carry a wide range of services.

The VoIP companies actually own very little raw transmission capacity: they rent it from the Internet backbone providers such as WorldCom, UUNet and Cable & Wireless, and deliver it to their own customers. They connect at the backbone level and agree priority arrangements for their traffic. This tactic allows them to avoid the unpredictable latency that you or I might experience on an Internet connection. The consequence is that when we make international voice calls, quite a lot of them are carried over the Internet.

The VoIP companies are aware they have to provide quality of service (QoS) guarantees and service-level agreements (SLAs) to attract the major carriers. IBasis now offers SLAs to its customers, and both iBasis and ITXC use very sophisticated monitoring mechanisms to ensure the quality of the network is strictly maintained.

Unfortunately for corporate IT managers, neither of the large VoIP companies sells directly to enterprise buyers. So IT managers can't sign up for a guaranteed VoIP pipe, although it may be possible to get quality guarantees from the larger ISPs that are sufficient for good VoIP performance.

The real message, however, is that if VoIP quality is good enough for the Tier 1 carriers, then it ought to be good enough for any corporate, given that suitable guarantees of IP performance can be obtained without going to the expense of renting private circuits between business locations.

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