The future of telephony is Internet Protocol (IP). Instead of sending your calls over the public switched telephone network (PSTN), a handful of wholesale phone companies are breaking your voice into syllable-sized packets and sending them over a lattice of networks that resemble and include the Internet.
The result: Big Savings.
The following article was written by Chad White, Technology Investor, Sep 2000.
"Customers save between 10% and 50% depending on the route that the phone companies take when they use the IP carriers to deliver their international calls rather than PSTN carriers. Why are IP calls cheaper?
First, IP can send at least six times more calls over the same bandwidth as a single PSTN call. IP calls are compressed and on average need only 10 kilobits per second. Second, IP software uses bandwidth better when sending voices. The algorithms used to encode voice into IP adapts to the conversation. If you speak less often, less bandwidth is used.
In contrast, the public switched telephone network does not adapt. It dedicates the entire expensive bandwidth of a two-way circuit to a conversation. If you are not using the whole bandwidth - pausing, hesitating, and listening - it goes to waste. Add up all the spaces and there is lots of waste - at least 65%. You are paying for silence every time you call Aunt Bertha in Timbuktu.
The savings with voice over IP (VoIP) has phone companies handing off their international long distance calls to dedicated IP carriers. Last year, IP carrier revenue grew 500% to $500 million, says the IDC. It will increase 120%
per year to $1.19 Billion in 2003:
| IP Telephony Minutes (billions) |
1998
|
1999
|
2003
|
| |
|
|
|
| Wholesale |
0.0
|
1.6
|
15
|
| Retail Consumer |
0.3
|
1.8
|
40
|
| Retail Business |
0.0
|
0.3
|
33
|
| Total |
0.3
|
2.7
|
88
|
Imagine voice as Internet data.
Today, your PC can browse five websites, receive email and listen to high-fidelity music - all simultaneously while online. But voice? You have to hang up and dial again. Dumb.
Tomorrow, you'll stay on. Answer multiple calls, conference them together, have them find you wherever you are&. All the while you are still browsing five websites, emailing.... It will be cramped on a dialup line, but on a DSL or a cable modem? A snap! At some point, when we're all on one gigantic broadband network, the world's entire Internet traffic, phone traffic and video traffic will pass by our doors, ready to be plucked off for our pleasure, our business or our edification.
Life will pass us by. But it will be Everyone's lives. It will be there for instant participation. Such is the ultimate power of IP. "
It is obviously a large issue. Good voice quality, few (if any) dropouts and high availability (dial tone is always there) must accompany and IP based telephony solution. The Internet connection you are using to read is an example of a network not designed to provide adequate quality of service for voice. Private IP networks have much better chance (currently) of delivering adequate quality of service.
