Clarent, one of the most successful voice-over-IP (VoIP) companies,
brought together several VoIP service providers to speak about
their experiences at its third annual customer conference in Hawaii
earlier this month
Danny Bradbury.
The VoIP market targets three user sectors: telephony carriers,
which use it to route their customers' calls; the corporate market,
which can use it to run traffic over internal networks or the
Internet; and retail customers, who access it via services such as
Net2Phone and Go2Call.
BT's reluctance to open up the local loop and allow broadband
networking to the home has constrained the growth of the retail
sector in the UK. Another problem for companies such as Clarent is
that VoIP has traditionally faced concerns over call quality, which
have steered many potential customers away from the idea.
IP's traditional characteristic as a better-late-than-never
service (packets might take a while to get there but they get there
in the end) does not sit well with the low-latency requirements of
voice calls.
Nevertheless, IP is attracting considerable interest, both from
the young upstarts in the telephony carrier community and from the
incumbent telephone operators which are starting to add routing
voice traffic over packet-switched IP networks as an alternative to
circuit switching.
Cable & Wireless has announced plans to move increasingly
towards IP-based telephony networks and will have 84 global nodes
by the end of the year.
One of the drivers towards VoIP is the cost argument.
Theoretically, distance is irrelevant to customers of VoIP, and a
packet can be sent across the globe as easily as across town. In a
circuit switched system, a specific route has to be set up for each
call.
Certainly, the incumbent telephone companies are chasing
dwindling revenues as call costs fall, so any decrease in operating
costs would be welcomed.
Craig Kesby, manager of international IP development for Cable
& Wireless Optus, an Australian C&W subsidiary, says there
is a limit to the cost savings telephone companies can expect to
make. This is due to the existing circuit-switched infrastructure,
much of which has not been paid for yet. They have to run something
over those lines.
In private networks, cost savings are potentially huge for
corporate users that implement VoIP systems internally. Hooking up
branch offices' voice phones to a data network could save thousands
of pounds.
A more attractive prospect for both telephone carriers and
enterprises is the concept of enhanced services. Services, such as
pop-up screens for call centre personnel and unified messaging,
have been well documented - if not widely implemented - but there
are others. Self-provisioning of services is a good example.
Imagine providing automatic redirection of calls to a temporary
number while travelling, for example, or being instantly able to
set up another number in your office for a new employee online
without having to wait a week.
But the question of quality remains. Mike Varga, Clarent's chief
technical officer, advises the use of bigger pipes which Kesby, who
has set a rule prohibiting his VoIP routers from going above 50%
capacity, also favours, but not everyone can afford to be so
liberal.
As an enterprise running a relatively new technology over its
internal local or wide are a network, any corporate early adopter
of VoIP must be sure that its network management is up to scratch,
and for many this will be prohibitively complex. Network management
skills become a major issue.
Such questions are bound to be at the root of Clarent's share
price. The company made approximately $45m (£30m) in revenues in
the first three quarters of this year, indicating that the market
is growing steadily , but its share price has dropped dramatically
since the start of last year. Not all of that price drop can be
readily attributed to conditions in the tech stock market.
Clarent is the lead player worldwide in its area by volume,
according to UK analyst firm i.Locus, but its market is heavily
focused on service providers in the Asian market. For European
enterprises to buy into the technology, the company needs to do a
lot more evangelising.