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  1. 1. ASOCIO Policy Paper Voice Over Internet Protocol Date: November2004 Prepared By: AIIA, based on WITSA paper
  2. 2. Table of Contents 1 Introduction................................................................................................................................2 2 How Does VoIP Work? ..................................................................................................................3 3 Phasing in VoIP ..........................................................................................................................4 4 VoIP and Broadband: A Statement of Principles ...................................................................................7 5 Conclusion ................................................................................................................................7 6 Further Steps .............................................................................................................................8
  3. 3. ASOCIO Policy Paper VOICE OVER INTERNETPROTOCOL Page 2 1 Introduction Internet Voice, also known as Voice over InternetProtocol (VoIP), is a technology that allows you to make telephone calls using a broadband Internetconnection instead ofa regular (or analogue) phone line. At its mostbasic level, Voice over InternetProtocol (VoIP) is voice communication delivered over a data network rather than a circuit switched network. In an increasingly VoIP world, people will use any one ofnumerous intelligentdevices instead oftraditional telephones to send real-time, high-quality audio files over an Internet Protocol (IP) network to other people doing the same. The result is telephone calls, integrated messaging,videoconferencing and workgroup collaboration. Some services using VoIP may only allow you to call other people using the same service, but others may allow you to call anyone who has a telephone number - including local, long distance, mobile, and international numbers. Also, while some services only work over your computer or a special VoIP phone, other services allow you to use a traditional phone through an adaptor. VoIP has the potential to transform broadband demand, rearrange the competitive landscape, and usher in a new era of technology-driven, cost saving, consumer empowering communications. The combination of “IP” and “Voice” completely changes the nature of voice service from a simple utility function into a multifaceted information application, just like email, text messaging, and instant messaging. But converting voice sound waves into digitised audio packets is justthe first step in the VoIP journey. Much needs to happen in the nextfew years to realise the full promise ofVoIP technology. Innovation must thrive, technology investments mustbe made, consumers must adoptthis new broadband application, and policy makers mustrefrain from imposing today’s outdated regulatory systems to this emerging setofvoice enhanced information services.
  4. 4. ASOCIO Policy Paper VOICE OVER INTERNETPROTOCOL Page 3 2 How Does VoIP Work? Voice Over Internet Protocol is more a capability than a single service or device. In standard analogue voice service,signals travel over the public switched network. In contrast, with Voice over InternetProtocol, voice traffic is converted into a digital signal and transmitted over the Internet (including intranets or private IP networks) using packettechnology. The distinction is critical as the technology encompasses significantadvantages as well as challenges for the long-term success ofVoIP. Currently VoIP communication takes place in one oftwo basic ways: computer to computer or computer to telephone. In the case ofthe former, the computer (equipped with sound card, phone software and microphone) converts the analog voice signal to IP; in the latter, a telephone on the public switched network uses a VoIP gateway to make the conversion. In the future, telephone-to-telephone communication using VoIP may become the norm, again using VoIP gateways to move to and from an IP network. As IP pervades the networks, some VOIP calls will be all IP. The VoIP possibilities are by no means limited to telephone handsets, however. Future connections will no doubtinclude:  Cell phones With VoIP, cell phones will not only route telephone calls over the Internet but also become “click to talk” intercoms for immediate access to friends or family;  PDA and Wi-Fi phones Personal Digital Assistants will not only be used to make phone calls but also, when part of a Wi-Fi network, they will be used to create a private, in-house phone system; walk from room to room and transfer the call from IP device to IP device;  Cable and DSL modems Take laptops or desktops, add software and a headset, and start making calls right from the screen. Attach an adapter and legacy phones become IP phones for flat rate domestic calling; add free or low cost features like call waiting, caller ID or personalize a local exchange so that long distance become local calls;  PBXs Like an Internet server, an IP-enabled PBX allows users to dial in with IP phones or laptops and reach the Internet. In disaster situations, an off-site IP PBX could help assure continuity of business operations;  Other hardware and software devices Telephone companies will use intelligent routing, IP Centrex and other technologies to create software-defined networks. IP networks make all ofthis “device diversity” possible. IP blurs the functional distinctions between devices: cell phones become personal digital assistants; Session Initiation Protocol
  5. 5. ASOCIO Policy Paper VOICE OVER INTERNETPROTOCOL Page 4 (SIP) phones become Java computing devices;Wi-Fi handsets are transformed into endpoints for SIP calls. Justas with other types ofInternet traffic, IP renders distance irrelevant for voice traffic as an application and can make phone numbers location independentofgeography. IP also decouples voice as an application from traditional telecommunications networks, thus making it also potentially available on cable, fixed wireless, fibre, satellite and other transmission modalities. 3 Phasing in VoIP Today, and for the foreseeable future, VoIP services will co-existin a “mix and match” telecommunications world. Achieving end-to-end voice services over IP networks that could eventually replace the existing circuitswitched telephone networks will require significant capital and will occur in a phased approach. And few observers predictthis new technology will be an easy replacementfor today’s public telephone networks. Mostacknowledge that these legacy networks will coexistwith new IP networks for years to come. Part ofthe issue is simple quality of service. Often unknown to users ofthe Internet, transmission of data files like e-mail, video clips or music can be a far from flawless process. Packets ofinformation are dropped in transit, reassembled incorrectly, or susceptible to other errors. Many of these problems are simply invisible to the typical computer user or, ifthey degrade system performance to some degree,are still considered tolerable. To be successful, VoIP service mustbe clear, crisp, and reliable. VoIP traffic cannot drop packets, allow bitrates to slow, create appreciable delays, send echoes or introduce jitter— pulse variation that corrupts digital voice transmission. Atthe same time, however, the Internet is a besteffort environment—a network of over 100,000 interconnected networks--an environmentwhere the weakestlink may play havoc with real-time services—like placing telephone calls. So how will the quality gaps getresolved? Successful VoIP rollouts will depend on business strategies thatleverage hybrid networking environments. Even today, leading companies and government agencies are implementing dedicated (or in-house) IP networks. Such networks take the place oflocal and long distance phone service inside the enterprise,butinterface with the public switched network for external voice traffic. By creating a dedicated IP network, the enterprise can enjoy the many costand productivity benefits ofVoIP service, withoutfalling prey to the “weakestlink” aspects ofthe public Internet. Another part ofthe solution will require innovation in state of practice networking technology. New protocols will make it possible for an increasing number ofcallers to make their VoIP connections from an increasing number ofdifferent devices and carriers. Session Initiation Protocol (SIP) is one important open standard in this area. Open standards in areas such as e-mail and websites led to explosive growth in these domains. An industry-wide, open standard in the VoIP device domain may likewise prove decisive in achieving widespread adoption. The need for technology advances is notlimited to standards and protocols. New tools will also help VoIP network managers partition data packets into more manageable, predictable
  6. 6. ASOCIO Policy Paper VOICE OVER INTERNETPROTOCOL Page 5 pieces; create guidelines for how much bandwidth is needed for various types ofservice,and eliminate variations in bitrates that could otherwise degrade performance quality. Perhaps the biggestbarrier to VoIP is the consistency of market capital. The scale ofthe undertaking needed to build outIP networks is enormous. As an example, one leading telecommunications firm providing long distance services handles 350 million calls per day with fewer than 100 defects per million calls. Comparable VoIP networks mustbe scalable and dependable. Massive investments will be needed to putVoIP on this kind ofcompetitive footing. Companies and consumers will notembrace this technology in a significantway until it provides voice services ofcomparable quality to the public circuitswitched network. Until a critical mass ofbuyers existfor these services, however, investors will be hesitate to provide the capital necessary to address performance quality and functionality concerns. Inadequate financial resources will mean fewer VoIP companies, less competition, and less innovation. Phase 1 of introducing VoIP services has been to digitise and then packetise voice traffic over an IP backbone network. Digitisation ofvoice began in long-distance networks during the early 1980s. Packetising voice has been a more recentevent, appearing with the introduction ofvoice enabled packetswitches in existing IP backbone networks. Long distance carriers and other large backbone providers have been making significant investments to provide voice service over their backbone facilities. This enables lower operating costs in the long term and the ability to offer combined voice and data enterprise services with a controllable quality ofservice over the backbone and privately provided facilities. But businesses need to be able to reach other parties who are not a part of their enterprise network; hence, the developmentofgateways that allow voice to be converted from packets back to a digital form (time division multiplexing) that the traditional phone networks recognize. Some service providers have been quick to recognize the consumer marketcould also be addressed with this first phase ofVoIP. The quality of service for a phone-to-phone IP offer would be acceptable to a large range ofcustomers because such services—both local and long distance—are already accepted in the marketplace today. In this arrangement, a phone call is routed to a packetswitch at the local phone company’s central office for transmission on the IP network. Participation of the traditional end-pointtelephone companies mitigates any public safety issues. Some companies are moving ahead to provide phone to phone VoIP, while they are seeking to make the investmentto move to the next stage for VoIP. Phase 2 puts VoIP closer to the end user. It requires significantmarketcapital to build out two-way broadband access thatcan supply the speeds and reliability required for real time IP applications, such as VoIP. Speed and access reliability concerns remain. Some businesses are experimenting with softphone services (phone capability via software on a computer) for their remote workers, who have broadband connections from home. Service providers have seen this as an emerging consumer market. A variation ofphone-to-phone IP service, these providers use an adapter behind the high-speed modem to digitize and packetize the voice. Phase 3 is IP everywhere. Voice calls would startas IP, move over networks as IP and end as IP. New, innovative real time services could be developed and rolled outover this type of platform in months and days instead of years. However, significanttechnical and operational barriers to phase three remain:
  7. 7. ASOCIO Policy Paper VOICE OVER INTERNETPROTOCOL Page 6  Open standards for real time communication need to be further developed and widely adopted;  New network managementtools are needed to help companies and service providers to predict failures before they happen, mitigate denial ofservice and virus attacks, create policies for how much bandwidth is needed for various types ofservice, and eliminate variants that could otherwise degrade performance quality;  Interconnection agreements between service providers and between IP network providers will be a necessity;  Quality ofService (QoS), reliability and non-performance measures will need to be developed, negotiated and monitored;  Significant investmentof capital will also be required to provide the level ofpublic safety required for today’s public switched networks.
  8. 8. ASOCIO Policy Paper VOICE OVER INTERNETPROTOCOL Page 7 4 VoIP and Broadband: A Statement of Principles  Service providers musthave non-discriminatory interconnection from the broadband provider at fair and reasonable term and prices  The wide resources ofthe Internet should be available, withoutdiscrimination by the broadband provider, while respecting applicable law  Service providers should notbe liable for the actions of end-users  Device and application developers should adhere to open, interoperable standards.  Users should have their choice ofdevices, services and applications independentofwhich broadband provider they use  Users should respectcopyrightlaws and other legal obligations related to the use ofapplications and networks  Users should show respectfor other users and their ISP by using firewalls, anti-virus software, anti-spam filters, not monopolizing bandwidth or otherwise degrading the network. 5 Conclusion Voice over InternetProtocol is an exciting technology with the potential to have a sweeping impacton voice and data networks and to drive demand for broadband services. Partofthat impactinvolves eliminating distance as a significant pricing factor and dramatically lowering the costofmaintaining networks and placing calls; partinvolves collapsing the distinctions between various types ofservices and rewriting the business models ofthe companies that provide them; and partis creating a value added layer ofapplications that leverages the natural synergies ofconverged voice and data. While initial concern aboutVoIP networks has focused on whether this technology will displace the phone company by providing low costor no costlocal and long distance dialing, the more vibrantand sustainable business ofVoIP networking may lie in the productivity gains achieved by both enterprises and individuals. Corporate and governmentnetwork managers will use the technology to achieve both costand productivity savings as well as to offer newly affordable value added services. Consumers will use enhanced personal communications to simplify and organize their busy lives. The challenges to providing a widely deployed and adopted, fully substitutable voice service are significant and costly, pushing that possibility into the future. Whether VoIP becomes a major rung in the ladder ofprogress or a minor footnote in the annals of the Internet will depend on ensuring a patientpolicy environmentfor the nextseveral years. This will allow some difficultquestions regarding public safety issues to be worked outin a balanced manner, for standards to be developed and widely adopted, for jurisdictional and taxation issues to be addressed. This in turn will accelerate the investments by industry needed to push IP/broadband networks closer to home and create the platform for the nextgeneration
  9. 9. ASOCIO Policy Paper VOICE OVER INTERNETPROTOCOL Page 8 of personal communication services for enterprises and consumers thatwill drive further broadband adoption. 6 Further Steps 1. ASOCIO to supportthe continued build-outofIP infrastructure. 2. ASOCIO to follow WITSA lead and recommend thatnational and regional regulators and policy makers mustrefrain from imposing today’s outdated regulatory systems to this emerging setofvoice enhanced information services until the market has matured and it is more clear what, if any, regulation is required. 3. Adoptthis paper as an ASOCIO policy position.