Using the Internet as a Telephone Service (VoIP)

Abstract

We are at the dawn of a new era: the next generation of products - phones, walkmans, radios… will be completely Internet-ready. Without requiring a PC, they will allow for the Worldwide Exchange of voice, e-mail, music, photos and more.

This unique combination of technology and services makes for an ideal partner for your Internet Phone, IP Phone, Smart phone, Screen Phone, E-mail Phone, MP3 Player, Web Radio projects, and more.

Since 1995, Voice over Internet Protocol (VoIP) has grown from being just an amusing Internet toy that allowed a few people to save money on long distance calls to a nearly ubiquitous technology that is being evaluated by people and businesses of all types.

The telephone is the most pervasive of all technology instruments, particularly in business. Many of us are avid every day users of the telephone but businesses make literally thousands of calls. The cost of an individual call is often low; the accumulated cost to business is substantial.

Despite Quality of Service concerns, packetised voice (how voice is transmitted over the Internet) is exploding in popularity because the potential savings are so large.

Internet service providers (ISPs) are rapidly transforming themselves into Internet telephony service providers (ITSPs) and are tapping into a market that currently represents as much as 70% of traditional carriers' revenues. In the long run, quality and innovation will outpace price as the primary market driver.

What is VOIP?

VoIP is the ability to make telephone calls and send faxes over IP (Internet Protocol) based data networks with a suitable quality of service (QoS) and superior cost/benefit. VoIP stands Voice over Internet Protocol.

How does it work?

VoIP digitises conversations and transmits it as data using standard TCP/IP (Internet) networking packets.

This allows voice traffic to be carried over the same wires as Local and Wide Area Network data or across wireless networks if required. With the right equipment, voice calls can be transmitted over the Internet, just like ordinary e-mails, Web pages and other Net-borne data.

Some Background

The phone line in your home is called a POTS (plain old telephone service) line. There is usually a copper wire running from your house to the Telephone Exchange. Office buildings have very few POTS lines (only for modems and fax machines) and often have digital phone signals running between the offices. A business will have a PABX (Private Branch eXchange) somewhere in the building that handles the telephones. The PABX receives incoming phone calls (they are digital signals remember) and routes them to the proper phone within the building.

Digital means ones and zeros. This is not magic. With your home phone, the POTS signal (non-digital) is changed over to digital (ones and zeros) at the Exchange. The Internet is all digital. The information moves around the Internet with TCP/IP (Transfer Control Protocol/Internet Protocol). In many cases, the Internet actually uses telephone lines to accomplish the task. The ISP is connected to the Internet so it is only a small leap for people to access the Internet Network instead of the phone network for phone calls.

Essentially, voice messages are encapsulated in IP (Internet Protocol) packets and transmitted across the Internet.

The ISP holds your access to the Information Super Highway. Thus, if you have the right type of equipment in your home, you make a local phone call to the ISP, and then tap in a few more numbers and the call goes through.

What are the Benefits?

The main justifications for development of VoIP can be summarised as follows:

Cost reduction There can be real savings in long distance telephone costs, which is extremely important to most consumers, particularly those with international markets.

While many believe VoIP will lead to free long distance telephone service, others believes this is not true. While many of us long for the day when we can just pick up the phone, dial a long distance number and not pay a cent for the call, some believe its just not going to happen. Service providers are in the business of making money, so while you might not pay per-minute charges, you'll still pay for the call. Call prices from some countries (e.g., Germany) to many international destinations have fallen 90 percent in just two years. Ironically, the only thing holding up international call prices on many competitive routes is the cost of local interconnection at either end of the call.

Simplification. An integrated voice/data network allows more standardisation and reduces total equipment needs. As data surpasses voice as the predominant traffic on communication networks, the market is realising the tremendous benefits of a consolidated voice/data network.

Consolidation. The ability to eliminate points of failure, consolidate accounting systems and combine operations is obviously more efficient.

Advanced Applications. The long run benefits of VoIP include support for multimedia and multi-service applications, something, which today's telephone system can't compete with. Being able to combine data, voice and video transmissions on a single network will enable providers to introduce a tantalising suite of convergent services like unified messaging, Web conferencing and enhanced call centre systems. VoIP will make it possible to send and retrieve a mix of voice and e-mail messages through a single integrated mailbox such as videoconferencing, discussions that accompany electronic white boards, and voice calls placed from World Wide Web pages.

Voice annotated documents, multimedia files, etc. can easily become standard within office suites in the near future

Is there a Down-Side?

Sure, the quality of the digital phone will not be as high as what you are getting now. If the trade-off is between 'hearing a pin drop' and saving a few dollars on long distance phone charges, which will you choose?

There still remain many challenges facing VoIP, both in terms of voice quality, lag, and jitter and packet loss as well as call control and system management. Others include coding / decoding, quality of service tools, and mean opinion scores

Voice compression issues. Perhaps the biggest effect on VoIP voice quality is the selection of codec (coder-decoder) or vocoder. In general, the greater the compression, the greater potential for lower speech quality

Managing Delay Issues. Total end-to-end delays can severely degrade speech quality. Long delays cause speakers to revert to a "you talk, then I'll talk" mode which is highly unnatural and disturbing. Long delays also exacerbate echo problems. There is actually no guarantee of packet delivery at all. And security measures for firewalls and virtual private networks (VPNs) can bring still further delays and packet losses

The quality of the connections still is generally comparable to a mobile phone at best and can be much worse. Further many people do not want to buy special equipment or learn new software programs just to save a few cents per minute on their phone bills, analysts say.

How do we get between the Telephone System and the Internet System?

Until public Internet networks entirely replace the major elements of traditional telecommunication networks, the IP network and the normal telephone network will need to coexist.

The connection of normal telephone systems and Internet systems is achieved through the use of gateways. A gateway translates the protocols for call set-up and release, converts the media formats, and then transfers the user information between the different networks connected to it.

An ITSP (Internet Telephony Service Provider), such as an ISP that supports IP telephony uses the Internet as the primary backbone, it allows customers to make phone-to-phone calls or PC-to-phone calls. The ITSP uses IP gateways to convert between voice and IP packets.

Will VoIP Succeed?

You might liken the debate over the merits and drawbacks of IP telephony to Thomas Edison's efforts to promote DC power by arguing that AC power was dangerous. We are seeing the same effect here one analyst said; IP telephony "is ready for prime time".

Communications has always been a diverse and complex field. Voice, image, video, text, data. Client-to-server, peer-to-peer, human-to-human, human-to-machine, machine-to-machine. Wired and mobile. Switched and routed. CPE and service provider. And so on. A field in which all of us are stakeholders: be we manufacturers of core technology, providers of infrastructure or services, developers of applications, or end-users.

Even as our industries focus moves towards newer applications, we continue to re-invent the underlying infrastructure. This process has been likened to "working on a jet engine while the plane is in the air." It's very hard on the mechanic, for sure. But it's also hell on the passengers, the pilot, the flight attendants, the ground crew, the airline execs, and the shareholders.

Although VoIP seems to be most attractive, the technology has not been developed to the point where it can replace the services and quality provided by the normal telephone system. First it must be clear that VoIP will indeed be cost effective. In order to compete with today's PSTN, there must be significantly lower total cost of operation. These savings should initially be seen in the area of long distance calls.

Will VoIP Threaten Traditional Phone Companies?

VoIP provides a competitive threat to providers of traditional telephone services that will clearly stimulate improvements in cost and function throughout the industry.

There are a growing number of clients at upstart companies that are helping to take bites out of bread-and-butter voice business for long-distance titans such as AT&T and WorldCom.

Big carriers have seen their voice revenues shrink amid fierce competition from all players in the sector, not just Web phone companies. And as revenues fall in a battle where Internet telephone companies can sometimes offer service for free, the big carriers' share prices go with them. For example, AT&T's stock has lost almost 60 percent of its value in the last 12 months.

Examples

Deakin University

In one of the first large-scale deployments of voice-over-IP (VoIP) technology in Australasia, Victorian tertiary institution, Deakin University, has chosen to replace part of its existing PABX infrastructure with an IP (Internet protocol) telephony solution.

Deakin’s VoIP solution will connect to the Australian Academic Research Network (AARNET), a national IP-based communications infrastructure built to facilitate cheaper and more effective data, voice and video communications between Australia’s research institutions.

Currently five per cent of Deakin University’s telephony infrastructure has been converted from PABX to IP, linking Deakin’s six campuses that are spread more than 400kms apart. In addition, Deakin’s internal technology committee has pledged its support for the complete replacement of PABXs with the IP solution over a 36-month period.

Travel Agents

Australian web travel agents travel.com.au are leading the world with its cutting edge Internet call centre technology, which is currently under going tests. The new service is due for a ‘soft’ launch in January and is currently undergoing trials.

If potential customers have a microphone and speakers set up on their PC, the new call centre can offer Voice over Internet Protocol (VoIP). This enables the customer to stay on the Website, but make a telephone call to one of the telesales team at the call centre to discuss the booking further. "By talking them through their inquiries, we can resolve a clients question in real time," says Chris Ryan, E-business systems manager.

Pay Phone Calls over the Internet

A Canadian company is to begin work immediately on building Australia's first nationwide Voice over IP phone network. The new network is expected to slash the cost of interstate calls.

Users will be offered unlimited calls anywhere in the country for a single monthly subscription in much the same way as they would subscribe to an Internet Service Provider.

The company announced it had signed an agreement with Perth-based ITSP Australia to build the phone-to-phone VoIP network that will link Australia's six major cities.

Last year this company completed the first stage of a phone-to-phone VoIP-based system linking nine major Canadian urban centres. That service allows Canadian customers to pay a single monthly subscription of $C19.95 and make unlimited calls within North America.

Free Phone Calls over the Internet

The Free World Dialup plans start where other attempts based around carrier toll charges have left off.

The system is built on a network of participants who have broadband Net connections around the world. Each participant hooks up a "gateway" that converts analog telephone signals into Internet-style traffic to their telephone.

This kit will initially cost $150 but will likely come down as more people sign up for the service. When someone in Melbourne wants to call a friend in New York, for example, they would dial her phone just as they ordinarily would.

But the call would be routed through the Net to someone else hosting the service in New York, whose equipment would then complete the call to the nearby friend as a local call, free of charge. This is really a community that will be working together to make this work. Theoretically this could be an easy way of avoiding long-distance charges. In practice though it is more likely to cause considerable headaches, analysts say.

Since the system requires that participants allow other people to use their local phone lines, conflicts are sure to arise when the person who actually owns wants to use the phone for another call. Temporary fixes that simply notify the caller that the connection is about to be broken by the owner of the phone line they're using are being put in place as a work around.

Further the limited nature of the network adds in some uncertainty. A caller might find a network node to borrow in New York, but then find that the system is useless when trying to call Seattle or Paris, because nobody in those cities has signed up for the service. Nor is the "early adopter" audience who still dominates the broadband subscriber rolls necessarily the right target for this type of service, some analysts note.

"Broadband penetration limits a lot of what kind of customer they can target," said Aurica Yen, an analyst with the Yankee Group. "These early adopters generally don't care about saving a few cents on a phone call

Corporate

Vendors of network tools and telecoms are promoting voice over IP (VoIP) solutions for corporate networks, and analysts continue to predict a big market for this technology.

Analyst company IDC forecast that firms worldwide will spend over US$24bn on VoIP next year. VoIP can provide organisations with an alternative to analogue telephone connections. Instead of having to set up a dedicated circuit between parties, as happens with calls over the public telephone network or mobile networks.

Because carrying voice and data on the same wire removes the need for separate networks, implementing VoIP can save companies money, although special digital exchanges and telephones are required. There may be little difference in terms of running costs when compared with a private branch exchange (PABX), but savings can be made on calls between offices.

One of the biggest advantages of VoIP is that it can support integrated voice and data applications it enables what used to be referred to as computer telephony integration. VoIP can make it a lot easier to build customer relationship management (CRM) applications, providing, for example, the ability to link Web and voice services. Video can also be added to the mix if required.

Statistics

Growth in the VoIP market is expected to be considerable over the next 5 years. Estimations put the annual growth rate for IP-enabled telephone equipment at 132% between 1997 and 2002 with an expected market of some $3.16B in 2002. Annual revenues for the IP fax gateway market are expected to increase to over $100M by the year 2000 (from less than $20M in 1996).

According to TeleGeography 2001, "Voice over Internet Protocol (VoIP) traffic began to have an appreciable impact on international call volumes in 1999. Total international VoIP traffic grew more than tenfold, to approximately 1.7 billion minutes." Also according to TeleGeography 2001, "International telephone traffic grew by over 15 percent in 1999, to 107.8 billion minutes, fueled by falling prices and the mobile phone boom in Europe and Asia." This number does not include PC-to-phone traffic, traffic routed over end-to-end IP networks, traffic routed on private networks, or domestic traffic in any country

ITXC Corp established and operates ITXC.net(SM), the largest global network for voice on the Internet with 330 points of presence in more than 194 cities and 78 countries. The company is the leading provider of worldwide Internet voice services with more than one billion minutes of use since the inception of ITXC.net in 1998. ITXC's patent-pending BestValue Routing(TM) technology provides such high voice quality over the Internet that tier one carriers use ITXC for worldwide phone-to-phone traffic without indicating that the calls are actually going over the Internet

Although the North American packet telephony market is expected to generate revenues of nearly $34 billion by 2004, the market will make up a mere 10 percent of total North American voice revenue, a report by Insight Research says. Packet telephony technologies, which include VoIP, voice over frame relay, voice over ATM, and voice over DSL, will grab a larger share of the telecom market in the next five years. The market is set to grow, from $870 million last year to $98.7 billion by 2004. (Network Operations, Management and Control)

Speech Recognition

In the first ever comprehensive speech recognition market report, a high-tech market research firm finds that in 2005, sales of speech recognition software engines, the basis for all speech recognition products, will reach $2.7 billion. The result will be a speech recognition enabled world where the technology can be found at every office, call center, wireless provider, and e-vendor.

Bandwidth

The undersea bandwidth boom reached an unprecedented single-year growth rate in 2000. Submarine cables installed in 2000 increased aggregated trans-Atlantic bandwidth by a factor of 12 in just one year, to over two terabits per sec-ond. And while huge growth rates in long-haul capacity have been standard fare for the latter half of this decade,bandwidth at the edges—in the metropolitan area network (MAN)—has been in short supply until recently.

Techno Speak

Human speech, and in fact everything we hear, is naturally in analog form, and early telephone systems were likewise. Analog signals are often depicted as smooth "sine waves," but voice and other signals contain many frequencies and have more complex structures.

While humans are well equipped for analog communications, analog transmission is not particularly efficient. When analog signals become weak because of transmission loss, it's hard to separate the complex analog structure from the structure of random transmission noise. Amplifying analog signals also amplifies noise, and eventually analog connections become too noisy to use.

Digital signals, having only "one-bit" and "zero-bit" states, are more easily separated from noise and can be amplified without corruption. Over time, it became obvious that digital coding was more immune to noise corruption on long-distance connections, and the world's communications systems converted to a digital transmission format called Pulse Code Modulation or PCM.

There is an alternative if packet voice transport is used. In packet voice applications, speech is transported as data packets, and these packets are generated only when there is actual speech to transport. The elimination of wasted bandwidth during periods of silence will, by itself, reduce the effective bandwidth required for speech transport by one-third or more.

Standards

The International Telecommunication Union (ITU) H.323 standard provides a broad foundation for the transmission of voice, video and data over packet-based networks, with little or no need for infrastructure changes. Since the standard's ratification in 1998, H.323 has been widely adopted to provide interoperability between VoIP products over local and wide area networks.

Along with other standards, notably the Session Initiation Protocol (SIP) that makes it easier to translate phone numbers to IP addresses and back again, H.323 can enable VoIP solutions to work alongside traditional public switched telephone network (PSTN) networks. This would make it possible, for instance, to call an ordinary phone from a VoIP system and vice versa.

Arthur Hissey
Computer Research & Technology
www.crt.net.au