Making Sense of VoIP
Voice over Internet Protocol (VoIP) is the technology used to transmit conversations
digitally over the Internet. VoIP is being adopted globally and changing the landscape of
telecommunications for businesses and consumers. This presentation describes VoIP and
how it compares to traditional phone systems, the standards organizations promoting the
technology, and what this means for you now and in the future.
Simply stated, Voice over Internet Protocol, or VoIP, describes how the Internet or other
packet network can be used to carry voice conversations. More and more, people are
switching from traditional phone service to VoIP for their calls. For example, IDC
estimates that at the end of 2004, 600,000 households were using the service and projects
that number to increase to 14 million by the end of 2008. Many people describe VoIP as
a disruptive technology1 for telecommunications.
This paper describes what VoIP is, how it compares with the legacy phone technology,
and what solutions can be devised using internet to carry voice. It also explores what
government is doing to regulate this technology, how the standards organizations are
organized, what businesses and other groups are trying to sell (or give away), and what
this means for business and residential consumers.
The Technology of VoIP
Audio is converted to digital by a process called encoding. This is the “voice” part of
VoIP. Once audio is encoded, it can be transported via electronic means, such as the
internet. There are rules, or protocols, that have been established for exchanging
information over the Internet, the basis of which is called Internet Protocol, thus the “IP”
VoIP is becoming popular as more and more people utilize broadband technology.
Broadband technology is a large capacity data connection to your home or office that is
“always on”. Examples are internet service provided by cable or digital subscriber line
Internet Protocol describes, among other things, how data is broken up into packets,
addressed, and transported. In this way, you can use a single network to transport many
kinds of data at the same time. For example, someone can be surfing the web while
another person is having a VoIP connection.
It is interesting to note that many long haul phone calls are already utilizing IP today.
The phone company networks utilize internet in their backbone which is used to transmit
phone traffic and other data. The technology has existed and has been utilized for many
years. The key difference between that use of IP for calls, and what we’re calling VoIP
today, is managed –v- unmanaged IP networks. The internet that exists in the phone
company network is private and managed. The phone company manages both sides of
the network and everything in between. When we refer to VoIP today, we are referring
Wikipedia.org describes a disruptive technology as a new technological innovation, product, or service
that eventually overturns the existing dominant technology in the market, despite the fact that the disruptive
technology is both radically different than the leading technology and that it often initially performs worse
than the leading technology according to existing measures of performance.
to voice traffic over a public network. The endpoints can be anywhere and the route in
between can be unknown and not managed by a particular entity.
Turning analog phone signals into digital packets and routing the packets to the Internet,
can occur at various places along the phone call. For example, an IP phone sitting on
your desk can handle the encoding. Or, as another example, a gateway box on the edge
of a network such as in your home or on your service provider’s network can handle the
technology for VoIP. This lends itself to a number of diverse VoIP solutions.
Comparison of Packet Switching to Circuit Switching
Packet switching can be described as data, traveling along the internet in packets, each
having the address of where it needs to go attached to the packet. A packet travels along
the data network and is switched along until it is routed to where it needs to go. This is a
simple view of how the Internet works.
The way most of the phone calls have worked up until now, and still do to a large extent,
is through circuit switching. In circuit switching, if you were to call your friend, for
example, a circuit between you and your friend would be established and would stay
active and dedicated to your conversation for the duration of the call. Even during pauses
in your conversation, you would hold that circuit and no other traffic could utilize it until
one or the other of you hung up the phone. This is expensive.
One way to exhibit the expensive use of resources that occurs in circuit switching as
compared to packet switching is to use an analogy to driving your car on a trip. If you
were to drive from Colorado Springs to Denver, the analogy of circuit switching would
be you would first have to wait to use a lane on the highway until no one else was on it.
Then, you would get the entire lane of I25 dedicated to your travel and no one else can
use that lane until you got off on your exit in Denver. The analogy for packet switching
is how we drive to Denver – we share the routes and there is no one lane dedicated to a
Flavors of VoIP
Two of the reasons why many flavors of VoIP have evolved is because 1) the need for
interoperability with existing telephone systems, e.g. Public Switched Telephone
Network (PSTN); and 2) there are many places “along the way” that analog voice can be
encoded to digital packets. This section gives an overview of the major kinds of VoIP
An IP phone is like a gateway that handles the encoding/decoding of voice and connects
directly to the Internet. By itself, an IP phone can only act like a phone “extension”; it
needs to work with a switch in order to make or receive calls. Additionally, since it only
speaks IP, a softswitch, such as an IP-PBX or a proxy, is necessary to interface with the
Another way that VoIP is implemented is called “bring your own broadband”. In this
scenario, you already pay for a high speed internet connection from one provider, and
you pay another company to supply phone service over that internet connection.
Examples of companies that provide this kind of service are Vonage and BroadVoice.
The VoIP supplier handles routing calls to/from you and interfaces with PSTN if it needs
to in order to complete the call.
While the “bring your own broadband” companies have the majority of the commercial
VoIP market at the moment, their share is expected to erode away quickly as more and
more Internet service suppliers, such as cable companies, begin to provide VoIP service.
In this case, you get an adaptor, i.e. a gateway, that sits on your cable modem and handles
the telephony. In many cases, you can then take that adaptor with you, hook it to a high
speed Internet service, and get your calls routed to where you are.
One way that calls can be made for free is by supplying your own internet service and
downloading one of the free software packages that exist for VoIP. When you download
the software to your computer, you are then able to call others who are using the same
software and connected to the Internet. This is often called the “away at college”
solution, where parents and college students can load up the software and call each other.
Examples of software that do this is Skype and Free World Dialup. Skype also provides
pay-per-minute calls when you dial someone who is not a Skype user.
Many of the services that involve telephony are moving towards Internet solutions. For
example, IP solutions are being implemented for call centers and conferencing services.
Additionally, features such as video conferencing and voicemail are being implemented
over IP using equipment on the service provider side. This is called IP Centrex.
Equipment that sits on the customer premise and provides services such as extension
dialing and voice-mail are called IP PBX’s
A Glimpse at What’s Possible
The maturing of VoIP technology is allowing for new possibilities in terms of economics
and technology. For example, even today, someone in Japan can call anywhere in the
world for 2.5 cents per minute over a service such as Yahoo!BB.
Many residential and business customers subscribe to two different networks – one for
their phone service and one for their data network. The technology exists to have a single
network – the Internet – carry both their data and phone calls and people are starting to
take advantage of this and save money. In a 2005 interview, Hossein Eslambolchi,
AT&T’s CTO, stated it’s not a matter of if VoIP will eventually replace TDM for all
calls, it’s a matter of when. He predicts that could happen in one to two decades.
The telephony features that we know of today, such as follow-me or conference calling
services – have been implemented in VoIP. What companies and entrepreneurs are now
looking at are the new features, or the “killer applications”, that can drive new markets
and differentiate themselves from other VoIP or phone service providers.
Where are companies looking to provide new voice applications? One area is integration
of email and voice mail. Imagine having one point where you can access your voice mail
of your business phone, your cell phone, and your home as well as viewing your email.
Another area is presence and instant messaging. Presence refers to the availability of
someone on a device. For example, if I am at my PC and wish to receive instant
messages (IM), I can turn my status to “available” on my IM client. Friends now know I
am accepting instant messages. By devising intelligent instant messaging and presence
applications, people can let it be known on which device, e.g. cell phone, office phone,
PDA, voicemail, that they are accepting messages. Or, one can configure that a call only
comes through if it is from a particular person, such as your boss when you are in a
Then there are the possible applications available when pairing wireless and VoIP.
Imagine being in an unfamiliar town and having your cell phone or PDA notify you when
you are within five blocks of a Starbucks, maybe even sending you a coupon or telling
you how long the wait is.
There can be negatives to the advancement of this technology. SPIT stands for spam
over Internet. Imagine having 100 voice mail spams in your inbox. These are possible
Current Players in VoIP
Consumers – Business and Residential
Residential consumers can benefit by the packaged plans that companies are offering.
Typical rates for unlimited local and long distance, including features, are from $20 to
$40 per month, not including the internet service.
People who use computer-to-computer VoIP services, such as Skype, can make calls to
other Skype customers for free and pay a per-minute charge to people who don’t have the
The disadvantages of VoIP include E-911 service is not available or guaranteed, no
service during a power loss, and voice quality may be akin to cellular phone quality.
Regulatory Agencies with VoIP
Up until now, the Federal Communications Commission, FCC, is attempting to strike a
balance of growth and regulation. From their website, on January 05, 2005:
The Federal Communications Commission (FCC) has worked to create an environment promoting
competition and innovation to benefit consumers. Historically, the FCC has not regulated the
Internet or the services provided over it. On February 12, 2004, the FCC found that an entirely
Internet-based VoIP service was an unregulated information service. On the same day, the FCC
began a broader proceeding to examine what its' role should be in this new environment of
increased consumer choice and what it can best do to meet its role of safeguarding the public
In November in a case involving the state of Minnesota, the Federal Communications
Commission declared that the service offered by Vonage, and other similar Internet
telephony services, were not subject to state regulations that affect telephony services.
This ruling made it clear that the FCC, not state commissions, “has the responsibility and
obligation to decide whether certain regulations apply to IP-enabled services.”
The FCC has created an Internet Policy Working Group to address telecommunication
issues that arise from Internet telephony. One of these issues is CALEA and E-911
Service. CALEA stands for Communications Assistance for Law Enforcement Agencies.
It basically regulates how the technology needs to provide certain accesses for federal
agencies, such as for wire-tapping. E-911 is the dialing of 911 from any phone and
having it go through to an emergency handling facility, not currently supported on many
Companies that offer VoIP services fall into 3 categories – cable companies, phone
companies, and alternative VoIP providers (e.g. the “bring your own broadband”
solutions). Although the alternative providers, such as Vonage, were first to market and
have the majority of the residential market, their share is expected to erode as the other
players come on board. For example, at the end of 2003, Vonage or similar kinds of
companies had nearly 66% of the residential VoIP market and the Yankee Group predicts
that by the end of 2005 that they will only hold 19% of the market, while cable
companies will have 56% and traditional phone companies will have 25%.
Among the VoIP service providers, quality of service (QoS) will be an important way
that businesses will distinguish themselves from all the other options that exist. This is
especially true for companies going after the business-place market share. QoS includes
services like traffic management and security.
Besides VoIP service providers, other companies that are positioning themselves in this
industry include hardware and chip makers such as Avaya, Nortel, Cisco, and Intel.
Network providers, such as Level3, are banking on the technology to increase their
network usage and revenue. There are also softswitch vendors and application
developers that are writing software to enhance the features and usability of the
Protocols and Standards Groups
There are many standards organizations dealing with aspects of telephony, the Internet,
and VoIP. This paper mentions a few and summarizes their responsibility.
The International Telecommunications Union (ITU), a charter organization of the United
Nations, is the international standards body and parent of ITU-T which stands for
International Telecommunications Union, Telecommunications Standardization Sector.
The ITU-T’s mission is to ensure efficient and high quality production of quality
recommendations for all fields of telecommunications.
Loosely under the Internet Society’s umbrella is the Internet Engineering Task Force,
IETF, is the standards body for Internet protocols and services. Some of the working
groups related to VoIP are organized as follows:
• SIP– Session Initiation Protocol is a text based, peer-to-peer protocol.
• SIGTRAN – The SIGnaling TRANsport group’s primary purpose is to address
the transport of packet-based PSTN signaling over IP.
• ENUM – Protocol for translating ordinary telephone numbers into IP addressing
• MEGACO/H.248 – The Media Gateway Control protocol describes a control and
signaling protocol for VoIP.
High speed internet connections to businesses and residences have made it possible to use
the bandwidth for voice communications along with the other kinds of data. VoIP is
beyond the early adoption phase and can be described as being in the initial growth
phase. With VoIP, many different add-on applications are possible and it will be
interesting to see where this leads voice communications from where we now know it.
Federal Communications Commission website on VoIP at www.fcc.gov/voip
Newton’s Telecom Dictionary, Harry Newton, 2000
Von Dictionary of IP Communications, Richard Grigonis, 2004
Rocky Mountain News, January 03, 2005, “VoIP Ventures Forth”