VoIP
... large scale, market concentrations will be much lower, and we will begin to see the same kind of oligopolies as we see in the ISP industry currently. Strategies and Gambits: PSTN Telco’s bids to preserve business Response from telephone communication companies have been varied and interesting. While some of them recognized the threat and moved to stake their claims on the VoIP market, many of them were too resistant to change and instead chose to block VoIP in every way that they could. Some forward thinking companies plan on offering integrated voice, text, audio, video services over VoIP, transforming in order to add value to the consumer. SBC’s SBC-IP is one such example. (However, SBC swings the other way as well, as we shall soon see) On the other hand, efforts to undermine VoIP included 1) Partnering with ISPs to block VoIP traffic (as was the case for a short time in India, where the national ISP backbone was run by the same parent organization as the telecom backbone and they used to block all dialpad traffic) 2) Running PR campaigns undermining VoIP because of its known issues: Quality and Security, and lack of interoperability. 3) Major price cuts in order to compete better with VoIP options – taking losses as a consequence 4) Converting parts of THEIR networks into VoIP, especially the switching and addressing sides, over VERY high bandwidth but low-spread intra-nets. This enabled them to reduce costs to support their lower prices, and didn’t have many disadvantages that pure VoIP has. 5) Raising prices for incoming VoIP traffic - Southern Bell increased incoming charges for PC to Phone VoIP services, thus making those services lose money – but their own service SBC-IP’s existence that this might raise anti-trust lawsuits. (See Appendix 2) 6) Lobbying lawmakers to make IP Telephony illegal (again, true in India till some time ago. Luckily, wiser counsel has prevailed, and VoIP is booming there, now) and where legal, to impose same rules and taxes on IP telephony as on PSTN telephony (as was the case in the State of California before the current FCC ruling was passed). 7) Lobbying standard setter to set stringently high Quality of Service standards. Quality of service standards are sometimes consumer friendly, and sometimes a barrier to entry. Concern for quality standards can stifle innovation. Incumbent providers frequently urge regulators to set exceedingly high quality standards that provide little marginal benefit to consumers but make entry by other providers prohibitively expensive. Current Scenarios: Challenges, Barriers and efforts to overcome them Among the barriers that make their presence felt whenever a decision needs to be made regarding switching to VoIP are the following: Fixed Costs – while variable costs are little or none, there is a significant installation cost if a company requires custom VoIP communication on its intranet or WAN. Costs include VoIP routers, training of network staff on the “voice” side of the network, other hardware (IP phones), etc. High Switching Costs – Many companies have already invested in traditional telephony based private voice/video communication between their offices scattered worldwide and many vendors of such services tend to lock in customers by contract agreements . Most businesses have already made large investments in PSTN telephony solutions and despite that being a “sunk cost”, the sunk cost fallacy DOES play a part and managers are hesitant to discard a network on which so much was spent. Also, PSTN quality is much better than VoIP for the moment, and bandwidth limitations sometimes prevent VoIP calls from connecting. These shortcomings add up to the perceived switching costs – lost business due to inferior quality telephony and dropped connections. Quality of service - VoIP sound quality is still deficient compared to the proven reliable and robust traditional circuit-switched telephony, but this gap is closing rapidly with new compression and transport algorithms. Also, on a VoIP network, if a network is overloaded, it quickly breaks down and takes the entire data backbone with it. Dropper calls, lost internet traffic and annoyed users are just some side effects. While reliability is rising, there is still some way to go before VoIP attains the same reliability as the old-faithful PSTN networks. Research is underway to address this issue. Security : Mentioned as an advantage earlier – but comes at a high price. While it is much more secure than security on your regular phone (with or without scramblers!), a VoIP network is inherently vulnerable to hacking, and standard sniffing techniques like tcpdump used in conjunction with applications like VOMIT (Voice over Misconfigured Internet Telephones) allows a hacker to access the TCP streams and extract the “voice” part into a playable .WAV file. Encryption based security effectively stops the hacker on his tracks. The data can’t be made sense of even if it is hacked. However, Encryption comes at a cost. One of the big cost advantages of VoIP comes from its low bandwidth usage. A traditional phone call over a T1 Line takes 64 Kb, which means 24 simultaneous calls at any point in time. Appropriate codecs and compression algorithms imply that VoIP phone calls can be compressed to 8 Kb, increasing the number of simultaneous calls to 192 through a single T1 pipe, and if so many simultaneous calls aren’t required, then the bandwidth saved is money saved. However, encryption takes away almost all the savings that VoIP provides because encrypted data is typically much larger in size than non encrypted data. However, research in order to achieve fast and efficient compression and encryption is going on in many places, especially at companies like Cisco, and at various Universities across the United States. Governmental Regulation: This is especially a barrier in countries where telephony is controlled by government owned companies. In India, for example, VoIP is regulated via the same regulatory bodies that regulate telephony. Thus, for a long time, VoIP wasn’t legalized because that would cannibalize the regular telephone service provided by the state-owned telecom departments. Wiser counsel prevailed and VoIP was legalized in a limited way and is now used extensively by individuals and companies. The same companies offering traditional telephony have started considering offering IP based telephony. Debates regarding VoIP regulation has been going on for a while in the United States as well. However, there is good news for VoIP advocates. According to http://arstechnica.com/news.ars/post/20041109-4386.html , the FCC has placed a regulatory study around VoIP which, essentially rules that VoIP data should be treated exactly like other data over the internet. This pre-empts the attempts by state and federal regulation of VoIP, and can’t be taxed. The media announcement of this ruling is attached as an appendix. Privacy advocates are up in arms against attempts to regulate VoIP according to regular telephony and it seems that, for the moment, they have triumphed. Lack of Interoperability: Unlike traditional PSTN telephony, All VoIP networks aren’t mutually compatible yet. For example, one can’t use Skype to call into a dialpad application, or into an MSN voice chat session (Yes, Voice Chat is one example of VoIP). Having said that, standards ARE being worked on, and interoperability should not be a problem in a few years. All the above re-affirms that while VoIP is here to stay, PSTN networks can’t be done away with just yet. While VoIP has immense potential and is a big step towards ultimate convergence of communication, it still has some way to go before it can assume its rightful position, and for that, technologies such as Wi-Fi(802.11) and IPv6 need to gather more momentum. At the same time, natural partnerships like VoIP over 802.11 and addressing structures based on IPv6, and related research and working implementations of those ‘partnerships’ imply that VoIP as a cornerstone of convergence isn’t as far away as one might imagine. Woe-IP to Hero-IP: The Story of Hines Healthcare’s ride on the VoIP roller coaster (Paraphrased from the study by Dan Leary http://www.tmcnet.com/it/0404/CaseStudy.htm) Many companies are turning to VoIP as an easy way to slash communications costs while improving user feature sets, but adding VoIP to an existing wide-area network (WAN) can spell trouble if the network can’t handle the additional traffic. Hines and Associates, Inc., is a case in point. Hines is a nationwide healthcare management firm that hoped to reduce communications costs by deploying VoIP among its offices in Illinois, Iowa, and Virginia. But when call quality suffered due to WAN performance issues, Hines faced the prospect of spending an extra $40,000 per year for larger WAN pipes. Instead, Hines found another way to ensure quality VoIP performance without WAN upgrades Founded in 1987, Hines & Associates is a healthcare utilization review and case management firm that helps its customers — enterprises, insurance companies, municipal governments, and other large organizations — conserve healthcare dollars. Much of Hines’ work is done directly with insured patients and their families, so Hines must ensure quality telephone communications with its customers and their employees. Hines is headquartered in Elgin, Illinois, but serves more than two million patients, from 25 offices nationwide. To handle most of the initial patient contacts, Hines maintains call centers in Elgin and Rockford, Illinois. Technology Challenge As Hines’ business has grown, so have its communications demands. While its call centers typically handle initial calls from patients for authorization or other services, many patients are often redirected to other Hines employees for specialized evaluations or information. Hines began investigating a migration to VoIP in 2002 as a way to reduce its infrastructure costs and to facilitate intra-office call transfers. In November of 2002, Hines deployed Nortel IP PBXs in its two call centers as well as in offices in St. Charles, Illinois; Panora, Iowa; and Virginia Beach, Virginia. The Nortel system was deployed in a central hub configuration. While initial testing and network engineering by Nortel had shown that there was enough bandwidth over all of the intra-office links to enable high-quality voice connections, this proved not to be the case. “We estimated that we would be overflowing only two to three calls at a time from one call center to other locations, but by early 2003, we were dealing with 10 overflow calls at a time, and we started getting call quality degradation.” said Hines IT director Carl Valiulis. “We were also having some other network performance issues related to printing Citrix documents across the WAN.” Valiulis and consultants from other network equipment providers felt the problem was a combination of application contention and bandwidth capacity. Hines’ call volume was on a rapid growth curve (up 250 percent in 2003), and the WAN links to four of the VoIP sites were 256 Kbps and 512Kbps. The team reasoned that between Citrix, HTTP, SQL, Net BIOS, and the rising VoIP traffic, some of the links were either overcrowded or simply not dealing efficiently with the traffic mix. Alternatives Considered One obvious solution to the problem would be to increase bandwidth across the WAN. However, Valiulis found that upgrading the five WAN connections and adding a second router at headquarters to support a second T1 line would cost the company an additional $48,000 per year. As an alternative, Hines’ router vendor suggested using router-based compression and QoS features to manage the traffic flow. Upon testing, however, the vendor’s compression solution reduced traffic only about five percent, while its compression and QoS mechanisms were expensive to set up and administer. “We started looking at stand-alone bandwidth optimization solutions because we wanted something that would deliver a lot of additional bandwidth, give us real-world traffic prioritization tools, and allow us to monitor and troubleshoot the network easily,” said Valiulis. His team evaluated products from four different vendors, including Peribit. Bandwidth optimization solutions sit at each endpoint of a WAN link, compressing and decompressing traffic. “Once we did port mirroring with Peribit’s SR-20 product, we didn’t move forward with the others,” said Valiulis. “We saw the highest overall average data reduction (72 percent), and all of Peribit’s QoS and monitoring tools had a simpler interface than the other vendors’ products.” Because of their strategic location in the WAN, Peribit systems provide a comprehensive, real-time view of traffic at the packet level, along with the ability to set QoS priorities. Solution Hines installed Peribit SR-20 Sequence Reducers at its five VoIP-enabled offices in March 2003, and saw its voice quality problems immediately disappear. The Peribit gear’s plug-and-play installation made it possible to eliminate performance problems within half an hour at each location. “I like the easy setup with these systems,” said Valiulis. “We can ship an SR-20 to a remote location with some simple instructions, and the office manager can have it up and running with very little support from us.” The SR-20 units have nearly quadrupled available bandwidth and gave Valiulis and his team the ability to easily prioritize network traffic. “One of the things we found by using the traffic monitoring and QoS tools was that the Citrix printing application would use up all available bandwidth if it wasn’t regulated,” said Valiulis, “so our ability to overflow voice calls from one call center to another would immediately drop whenever someone printed a Citrix document across the network. With Peribit’s QoS, we quickly assigned a low priority to Citrix printing jobs and the highest priority to VoIP traffic.” Another issue that Peribit’s monitoring tools revealed was that the Blaster virus had invaded Hines’ IP network, causing massive traffic increases that also affected VoIP performance. “Using the Top Talkers report available in Peribit’s software, we were quickly able to identify the sources of the virus traffic and to stop them,” said Valiulis. Now, monitoring the Top Talkers report after hours for suspicious activity is a regular routine for the IT staff, and it is able to quickly spot and deal with abnormal traffic before it affects call quality the following day. Results Despite a near tripling of its call volume during 2003, Hines & Associates’ VoIP system has handled all calls with high quality and rapid connections. “Now,” said Valiulis, “our VoIP system can support twice as much traffic as we thought it could, and much more than the original engineering studies showed us our network would handle.” Along with fatter WAN pipes, his staff’s ability to rein in Citrix printing and other traffic ensures that voice calls have all the room they need to connect smoothly and reliably. When compared against the cost of WAN link upgrades and associated equipment, the five Peribit SR-20 systems returned their investment in roughly four months. Now that it has a solid technical infrastructure for further VoIP rollouts, Hines & Associates will be expanding its deployment as it migrates branches from DSL to Frame Relay connections. For other companies struggling with VoIP deployments, Valiulis’ advice is not to give up without exploring all the options. “I’ve talked with other companies that abandoned VoIP deployments because they couldn’t get them to work, and even our own router vendor was skeptical about it,” he said. “Peribit showed us that there was a simple, practical, and cost-effective solution to our problems, and we’ve ended up with a VoIP system that saves money and delivers new features without a drop in call quality.” Fast Forward: A glimpse into the future of VoIP One of the most promising new ‘technology pairings’ of recent times has been that of VoIP and Wi-Fi (802.11). This could potentially replace all cellular technology into an IP based backbone. While there are existing implementations in place, this will achieve its highest potential with IPv6 where the addressing structure will allow every cell phone to have an IP address if necessary. That would lead to telephony becoming just one application on your hand held device. Telephony as a wireless “web service” would be the apex of this union. Another potential enhancement of VoIP could include its becoming the de-facto internal communication mode within organizations. According to the inc.com article located at http://www.inc.com/articles/2003/02/25180.html , “Nearly 90% of large companies recently surveyed expect to use VoIP technologies within three years, according to research and consulting firm Meta Group” Standardization of VoIP protocols and increasing interoperability are likely to make VoIP calls as convenient as normal telephone calls. Enhancements including low bandwidth encryption (securing the conversation from snooping) and better compression algorithms (thus improving quality) will help make VoIP more popular among end users. Also, IPv6, when adopted, will give a huge quality boost primarily because addressing and switching issues can be handled much more simply on IPv6. As efforts to converge technologies and mediums of communication grow more intense, at some stage most wireless devices will have an IP address, and that IP address can act simultaneously as a phone number as well as email address, and maybe someday, with further advances in body-embedded technologies, as a social security number, health insurance card, drivers license, passport – the possibilities are limitless. Voice over IP will be one of the cornerstones of the convergence-dream – embedded voice recognition software will be able to analyse and convert conversations into text, and thus save them in a “light” format as opposed to the “heavy” formats of digital saved audio. If and when the ultimate convergence begins, it won’t go far without VoIP. Appendices: 1) FCC Ruling with respect to VoIP 2) Unofficial Transcript of Wall Street Journal article about SBC. Appendix 1 _____________________________________________________________________ FOR IMMEDIATE RELEASE: NEWS MEDIA CONTACT: November 9, 2004 Mark Wigfield, 2...