AT&T VoIP project will open doors to new markets

AT&T has announced a number of VoIP (voice over internet Protocol) initiatives to draw more corporate users, despite its own...

AT&T has announced a number of VoIP (voice over internet Protocol) initiatives to draw more corporate users, despite its own research highlighting concerns over the quality of service.

AT&T will develop common standards for the technology and an expansion of its international VoIP remote worker pilot project.

With its traditional long-distance business under increasing competitive pressure, AT&T sees internet calling and its associated products and services as the way for the company to open doors to new markets and revenue streams.

"We want to sell more bandwidth and more managed services both in the US and internationally; to facilitate access to data applications and services," said Jeff Ace, vice-president for global business development at AT&T.

Part of the company's programme to develop common standards for VoIP includes allowing its partner companies, such as Intel, Cisco Systems and Texas Instruments, to test applications and equipment for VoIP using the proprietary specifications developed by AT&T. Partners are also working with AT&T to develop a range of products for the VoIP market, Ace said.

Other AT&T partners include Alcatel, Siemens, semiconductor maker Broadcom and the network gear maker Nortel Networks.

Outside of the US market, AT&T is targeting only large multinational corporations and, as part of those efforts, is conducting a VoIP remote worker pilot project involving companies with locations in Hong Kong, Singapore, Australia and the UK.

AT&T, which launched the trials in June, said 23 multinational corporations signed up to participate in the project.

Companies participating in the trial include Air Products and Chemicals, chemical company BASF Australia, vision care company Bausch and Lomb, network data services provider Global Exchange Service and Hong Kong-based telecommunications and electronic learning product maker VTech Holdings.

AT&T expects to be begin commercially offering VoIP remote worker services, based on its CallVantage Service platform, in the first quarter of next year. The company has yet to determine pricing, according to Niall Hickey, director of communications for AT&T EMEA (Europe, Middle East and Africa).

"The companies involved in the trials aren't currently paying for the service," Hickey said. "Once the trials are concluded, we'll look at things like usage patterns to help in determining pricing."

Calling services for remote workers - be they people working from home or business travellers - will include global teleconferencing, integration of voicemail with e-mail and the ability for users to avoid wireless global roaming charges.

According to research commissioned by AT&T and carried out by Economist Intelligence Unit (EIU), the biggest draw of VoIP for corporations (87%) is its ability to reduce the cost of calls, though questions about quality of service remain a problem.

The issue of quality of VoIP service was overwhelmingly the primary concern for survey respondents. Furthermore, quality was more of a concern for those already using or testing VoIP (67%), than for those who have yet to implement the technology (64%).

"The fact that quality of service is a higher concern for those who have implemented VoIP would lead us to say that not all of the kinks have been worked out yet," said Denis McCauley, director of global technology research for EIU.

Quality problems included transmission interruptions and delays, McCauley said, but users also feared that the system was not as fail-safe as its traditional telephone service.

AT&T's Ace said that the technology has rapidly matured and that quality issues are constantly being addressed.

"If it's on our network, you're guaranteed quality, but it is more difficult if a company is using another ISP," Ace said. "On the backbone, there is little congestion; access is where you still suffer congestion."

As part of the EIU survey, 254 senior executives were interviewed in Europe (40%), North America (27%) and the Asia-Pacific region (21%). The survey was conducted in March and April, followed up by interviews and other research in August and earlier this month.

Despite concerns about performance, 43% of respondents to the EIU survey said that they are currently using, testing or planning to implement VoIP within the next two years, while 18% said they plan to implement it in the long term.

AT&T is facing "plenty of competition" in the VoIP market both in the US and internationally, Ace said. Rivals in Europe, for example, include international hardware and services companies such as Fujitsu, former telecommunications incumbents such as BT and localised IT consulting and outsourcing companies such as the UK's ITNet. 

However, in the rapidly developing VoIP market, lines can be blurred as competitors are also often partners and customers: One of AT&T biggest competitors, IBM, is also its biggest customer in Europe, Hickey said.

In the US, AT&T has since March expanded its VoIP services to 150 markets and expects to have a million customers by the end of 2005, Hickey said. By year end, the company will add VoIP-enabled options for users of its managed data communications and VPN (virtual private network) services and is already testing VoIP applications for call centres, remote workers and IP Centrex networks.

Laura Rohde writes for IDG News Service

This was last published in September 2004

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