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The future of telephony gets a whole lot simpler

By Timothy J. Gibbons
Published by Florida Times-Union on December 13, 2004.

When someone calls Jim Kutsch's desk, it doesn't matter if the Convergys executive is in his Jacksonville office or working out of a hotel near the company's North Carolina call center: Either way, his phone rings where he is.

The technology that lets Kutsch have his phone number follow him is the same technology that lets Convergys seamlessly shift calls from one call center to another depending on staffing needs, and also lets employees work at home while retaining all of the recording and logging features the outsourcing company requires.

The key: Take phone calls off fixed lines and instead have them routed over data networks, using a technology known as Voice over Internet Protocol.

Voice over Internet Protocol (generally known as "VoIP") is a technological trend poised to transform the way we communicate.

At its most basic, VoIP simply uses a different method to transmit telephone calls. For users, though, this new technology promises lower costs as well as enhanced features.

For telephone companies, VoIP promises -- or threatens, depending on your point of view -- to revolutionize the entire industry.

Resetting the bar

It has been possible to make telephone calls over the Internet for years, dating back to the early 90s, when clunky programs let early adopters shout into a microphone in order to talk -- when the program didn't crash -- with other people who happen to be online at the same time with the exact same software running on their machines.

Things have come a long way since then.

Now, VoIP is usually a behind-the-scenes sort of thing, transmitting telephone calls over a data network like the Internet in a way that is transparent to the end user.

The difference between VoIP calls and typical phone calls is how those calls get from one telephone to the other.

Traditionally, telephone calls use what is known as "circuit switching." In this method, the fiber optic lines or copper wires carrying the conversation between two telephones are reserved for those two phones for the length of the call, forming a static circuit. As you speak into your telephone, that information is sent down the line in an orderly stream of data, one bit of information after the other, with the phone on the other side simply picking the data up and turning it back into an audible signal.

VoIP uses packet switching, which breaks the conversation down into packets of data and sends them down the line willy-nilly, out of order and mixed in with other packets of data, such as e-mail messages and Web pages.

On this sort of network, the phone call can be transmitted over various routes on whatever network you're using -- consumers usually use the Internet -- with a computer near the receiving end of the call reassembling the data and converting it back into the callers voice.

All of that sounds like an arcane technical difference that means little to the person simply picking up their telephone handset to wish Mom a Happy Holiday.

By turning telephone calls into just more packets of data, though, VoIP opens up a whole new world of options. Telephone numbers no longer identify particular locations on a physical network, but are now just a spot on a virtual network, making them more like e-mail addresses than a fixed street address.

"As this thing moves forward, you reset the bar," said Gary Kim, editor in chief of VoIP Business Weekly, a trade publication launched last month to cover the industry. "It's going to up the ante and raise the expectation of all consumers."

As more and more consumers and businesses sign up for such service, users will begin to expect their phones to do more than just make calls.

"VoIP appears to be crossing over into the mainstream this year," said Jeff Pulver, an entrepreneur who has touted Internet telephony for years and co-founded Vonage, one of the major players in the field. "By the end of next year, it will simply become part of a digital lifestyle."

More options, more time

Other than some cutting edge individuals, the main early adopters of Voice over IP service have been businesses looking to gain greater efficiencies and perhaps save some money by ditching their traditional phone service.

Traditionally, as businesses grow, they begin managing their telephone systems by bringing them in-house. Rather than setting up 50 telephone lines, for example, a company can set up what's known as a private branch exchange or PBX, a machine that acts like the guts of a mini-phone company, giving the business more control over its telephones.

By moving all of that to what's called a "virtual PBX," which sits on a data network and manages the packets of phone call data, businesses retain that control as well as gaining more functionality.

Covad, for instance, recently entered the Jacksonville market with its VoIP service, an offering which uses the company data network, a legacy from Covad's beginnings as a broadband network provider.

Customers who sign up with the company aren't able to just make phone calls; they also get access to an online control panel through which they can easily set up teleconferences, access call histories and even tell their phone how to track them down if they're away from the desk.

Those features help workers be more efficient, said one Covad customer.

"I don't have to play the phone tag game," said Mike Pacelli, vice president and chief information officer at Atlantic-Pacific Carlson Wagonlit Corporate Travel. "It's not the nature of my job that I'd be sitting behind my desk for eight hours. [VoIP] allows me to operate much more efficiently. It really gives me time. That's the one thing I can't get more of."

Convergys uses VoIP technology to connect its various offices, as well as keeping executives connected when they travel.

"If I'm in another one of our business centers or even a hotel and I'm online, I can bring VoIP up on my laptop and it connects to the telephone number on my desk," said Kutsch, the company's vice president of strategic technology. "What VoIP does is breaks the need for a specific physical wire needing to be connected to a phone."

The Cincinnati-based company, which has a large presence in Jacksonville, received Frost & Sullivan's technology innovation award this year for its usage of VoIP, a technology the company began embracing three years ago.

Voice communication redefined

For consumers, the benefit of VoIP has been found in the lower costs VoIP companies charge. Such service is usually cheaper because providers don't have to build huge networks of lines over which to send calls, instead routing those calls over the Internet.

Home users have also fallen in love with things like phone portability, the feature that lets Kutsch take his number with him.

For example, Mike McCarthy, the founder of advocacy group VoIP Action, got a Voice over IP connection with a number from Palm Beach, where he lives, and gave it to his girlfriend, a doctor in Mexico.

"All our calls are free," he said. "And when I travel, I just plug in wherever I am and anyone who calls my local number can reach me."

This rise in consumer interest has led even such old-guard companies like AT&T to abandon traditional phone service. The venerable long-distance company is now focused on its $30-a-month CallVantage service, a VoIP offering that provides unlimited local and long-distance calls. "We think VoIP can be redefining voice communication," said company spokeswoman Julie Spechler.

Consumers have been embracing the services provided by companies like AT&T and Vonage -- one of the first VoIP companies, which has a $25-a-month plan similar to AT&T's -- in part because, well, now they can. For VoIP to work well, users need to have a broadband Internet connection such as a cable modem or Direct Subscriber Line, and VoIP adoption rates have closely tracked the rising number of broadband subscribers.

"It comes down to the growth of broadband," said Joe Laszlo, a senior analyst with Jupiter Research who predicts there will be 12 million VoIP users in 2009, up from roughly zero in 2003.

It also helps that, because of cell phones, consumers are used to a slightly worse quality of service when it comes to phone calls, Laszlo said.

Because of the nature of consumer-grade VoIP technology, in which a telephone call is sharing network space with eBay bidders, spam and everything else on the Internet, quality can occasionally suffer, although widespread broadband connections and better equipment makes the quality magnitudes better than the choppy calls of years ago.

"Consumers are willing to put up with a worse quality of service for a cheaper price," the analyst said. "Expectations have been lowered, in a positive sense."

(Businesses, which usually pay higher prices for Voice over IP service, aren't as forgiving of glitches, which is why most companies go with providers like US LEC or Covad, which have private networks, giving the provider greater control over quality.).

The ubiquity of cell phones also means that most VoIP providers have a backup phone in case, say, the power goes out, which means the equipment that sends the phone call to the network doesn't work.

Phone companies receptive

With both businesses and consumers seeing Voice over Internet Protocol as a viable alternative to traditional phone service, the traditional telephone companies have begun to get into the game as well.

Comcast, for example, offers traditional phone service in several markets, including Jacksonville, and is now testing a VoIP offering in Philadelphia, Indianapolis and Springfield, Mass.

"We think VoIP is a good business that allows us to offer more value to our customers," said company spokesman Robert Smith.

As one of the nation's largest broadband Internet providers, Internet-based voice service seems like a good fit, Smith said, but the company wants to first determine exactly what features home users are looking for

"We will want to differentiate our service from others," he said. "We're looking at all sorts of features, although it's too early to talk about those."

About half of the cable company's network will be ready for VoIP telephone service by the end of the year, Smith said, and most of the rest of the network by the end of 2005. The company has not yet announced a timeline for rolling out service.

BellSouth has also begun offering VoIP service, although its offering is, so far, confined to business users.

"What we're finding is a very large percentage is asking about it," said BellSouth spokesman Todd Smith. "Customers are planning right now. They're thinking about migration. They're thinking about where they want to move their business over the next couple of years."

Pushing service to customers

As more of those customers -- business and residential -- switch their phone service to VoIP products, the entire telephone marketplace will change, analysts said, in much the same way that fax machines and then e-mail changed the way we communicate with the written word.

"We're in one of those major transformation of industry technology that will eventually affect 100 percent of service providers," said Kim, editor of the VoIP trade publication. "There's a lot of turmoil we anticipate coming."

With more users turning their phone calls into data packets, the types of data that become part of the telephone system increase: E-mails can be transformed into voice mail messages, video conferencing can be a standard part of phone conversations, work groups spread around the world can collaborate on projects during phone calls.

When the editors of VoIP Business Weekly started working on the magazine, for example, they were able to review articles and comment on layouts by tying together Web browsers, phones and cameras.

"There are things that you can do on a state-of-the-art business system that you're going to see pushed down to consumers," Kim said.

The technology will get pushed ever further behind the scenes, Jupiter Research analyst Laszlo said, and consumers will just get used to a new suite of features.

"In the early days, you had to plug a microphone into your computer, open a program, type a number. Now it's dead simple," he said. "You get a box and you plug it in."

At the end of the day, added Pulver, the VoIP entrepreneur, "as long as it works and its reliable, more people will use it."

"It's gone from a theory to being widely available," he said. "Now it's just a question of who do you want to get it from."


Sidebars:

Regulation

Voice over Internet Protocol services are not regulated by the state the same way traditional phone companies are, the Federal Communications Commission ruled in November. Because calls sent over the Internet don't use equipment physically based in a state, the commission said, regulation of the service must be done by the federal government.

That ruling came in response to an attempt by the state of Minnesota to apply traditional regulations to Vonage, one of the first VoIP companies.

Even before that decision, Florida had decided not to get involved with the issue, with the Legislature declaring in Statute 354.01 that "the provision of voice-over-Internet protocol free of unnecessary regulation, regardless of the provider, is in the public interest."

Making it work

In order to get residential Voice over Internet Protocol service, you first need to have a broadband Internet connection, such as a cable modem or direct subscriber line.

Transmitting your voice over this connection can then be done in a variety of ways, with the cheapest (although not necessarily the easiest) being through software you install on your computer. (Startup company Skype is the current major player in this arena.)

If you want to use an actual phone handset with your VoIP service, you have to hook up a translation device to your broadband connection: This will take your voice, which is an analog signal, and transform it into packets of data before sending it over the network. This device can either be an Analog Telephone Adaptor that goes between your phone and your Internet connection, or it can be an IP telephone system that has the adaptor built in.

Most service providers will either sell or rent both types of adaptors to their customers.

Things to keep in mind



About

This is a showcase of the work done by Timothy J. Gibbons during a journalism career now stretching back more than a decade.

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