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Instead of getting buried in snow and ice like last year, Comnet 2001 was blanketed in voice over Internet protocol (VoIP) announcements and demos. AT&T and WorldCom, looking to take a slice out of a VoIP market expected to generate $3.5 billion in annual revenue by 2004, announced standards-based VoIP services and a passel of vendors crammed their equipment into a makeshift VoIP Interoperability lab at the show late last month.
AT&T, which began dabbling into the world of VoIP last year with its massive investment in IP telephony carrier Net2Phone took another major step forward by announcing its own VoIP business portfolio of services.
The VoIP offer is part of a sweeping focus on enterprise networking services. Initially, the carrier will offer IP telephony on top of its AT&T's Managed Internet Service (MIS) and Managed Router Service (MRS). Ambitious plans for further expansion are in the works.
"Our plan is to be able to add voice to our entire portfolio of managed services over the coming year," said Kathleen Earley, AT&T's president of data enterprise services.
Both of AT&T's VoIP offers for MIS and MRS will use the H.323 protocol with Fast Connect capability. An upcoming release will support the Session Initiation Protocol (SIP) standard. The VoIP network architecture includes AT&T's OC-48/OC-192 IP backbone, with Cisco Systems' 2600 and 3600 multi-service routers.
The announcements signal incumbent carriers' realization that they must move forward toward future data and Web-based services and "strike a careful balance between cannibalizing their circuit-switched voice revenues and not losing customers to other providers who offer other kinds of service," says Jeff Moore, senior analyst of network services for Current Analysis.
AT&T is striking that balance by initially offering the service only to MIS and MRS customers, he adds. That curbs the risk of unleashing an all-out price war. But pricing is enticing-all-you-can-eat domestic calling for a flat rate and credit incentives for MIS service users for calls placed between VoIP-enabled sites.
"It's all about retaining your customers and building a better pitch for wining new customers, without losing significant amounts of circuit switched voice revenues," Moore explains.
Also at the show, WorldCom, which announced its managed IP and IP VPN network at end of 2000, launched "IP Communications," a suite of services enabling businesses to migrate their circuit switched voice traffic onto WorldCom's IP network. Customers can make VoIP calls to intracompany destinations or off-net. Off-net calls are routed though 3Com Total Control 1000 VoIP gateways.
When the service debuts in March, IP Communications customers' traffic will run as IP over WorldCom's worldwide frame relay and ATM networks. In the future, the service will extend onto WorldCom's managed IP network and public IP network.
WorldCom's initial VoIP platform eschews "telephony-based" H.323 protocol entirely, and is based solely on the "forward-looking" SIP protocol which operates in a Web environment, according to Teresa Hastings, director of multimedia services engineering for WorldCom's communication services engineering organization. WorldCom developed its own SIP server to support the service.
"H.323 has been struggling with interoperability issues for years and is a telephony-based protocol. Interoperability is less of an issue for SIP. There have been more than 30 vendors participating in recent SIP bake-offs," she says.
In fact, the first public demonstration of H.323 multivendor interoperability was held at Comnet. Ten IP PBX and five VoIP gateway vendors cobbled their equipment together in two meeting rooms. A demo of SIP and media gateway controller protocol (MGCP) is planned for Supercomm, according to a spokesperson for Miercom, a co-sponsor of the Comnet demo.
IP Communications is just the first of a number of offerings the new platform will support, notes Barry Zipp, senior director of enhanced voice services marketing for WorldCom. A multimedia communications protocol, SIP will position WorldCom's VoIP customers for future services such as IP conferencing, standards-based unified messaging and chat-like functions and applications, he adds.
These SIP-based future services are important because VoIP itself is not enough of an incentive for end users, who are enjoying low rates for their circuit-switched voice traffic, to make the switch, Hastings notes.
Customers can implement IP Communications service on their existing PBXs by inserting a port card on a PBX gateway, Zipp explains. Customers looking to buy a PBX or upgrade an old one can buy SIP handsets instead and plug them directly into their LAN. No PBX is required. WorldCom plans to use a subscription-based pricing model for the service that will offer a flat monthly fee for calls placed within the enterprise and calls terminated on the PSTN billed in metered charges.
Ty Cottrill, an analyst that covers long distance carriers for The Strategis Group, says the recent announcements by AT&T and WorldCom didn't catch anyone in the industry off guard.
"Technically, we believe this is the future of the industry," Cottrill says. "If anything, AT&T and WorldCom were pushed into this by seeing the success of companies like Level 3."
Cottrill says lingering concerns about latency and voice quality haven't completely subsided, despite companies such as Level 3 Communications that are offering the service claiming the technology can now offer toll-quality voice service. Earley confirmed that notion when she met with the media at Comnet.
"The significant differentiator for AT&T is that we have customers up and running," Earley said. "This is not that we're going to do it, it's that we have been doing it."
Customers that went through successful trials with AT&T included auto parts maker Tower Automotive and computer company NCR. In AT&T's official announcement, Tower Automotive representative Mark Huang said the company lost no quality in voice service during its trial of AT&T's VoIP with MRS. NCR also praised the voice quality of its VoIP with MIS service, and applauded the flat-rate pricing for U.S. calls.
"The technology is there," Cottrill said. "To this point, it's been a case of feeling good enough about yourself and your ability to offer the services."
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