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Voice over IP has precipitated a battle between circuit and packet switching technology for voice communication. While IP networks now carry only a token amount of voice traffic, is VoIP truly the next big thing? Mark Atterby looks at the potential and the pitfalls.

Voice-over-IP (VoIP) technology, waiting in the wings for some time now, has re-emerged higher on the agenda for most carriers and service providers. "Convergent technologies such as VoIP are expected to facilitate the blending of different services delivered via one infrastructure," says Michael Salama, general manager for Optus. Through one connection, a home or business can access a range of services including telephony, data, and interactive video, thereby increasing their level of choice and flexibility in managing their communication needs. Hopefully, it will also allow the integration for the billing of these services into one notice.

Circuit switching guarantees a dedicated connection, whereas packet switching can fluctuate depending on the amount of traffic. "At present," says Salama, "the nature of the Internet and the infrastructure that underpins it can't provide the reliability or range of traffic management capabilities necessary for carrier grade voice communications. So far, the IP networks have yet to capture even 1 per cent of the voice market, but the maturity of the technology and the return on investment is expected to improve over time."

For the last couple of years vendors have been clamouring to introduce products and move customers away from circuit-switched voice technology. Eamonn Kearns, product marketing manager for Intel Australia Asia Pacific Region says, "Businesses are considering the costs of maintaining two separate networks - one for voice and the other for data. VoIP solutions are being integrated into existing corporate PABXs to provide a range of services to their users, from low-cost long distance and international calls, to simple office-to-interoffice communication."

According to Craig Neil, Managing Director of the national communications integrator NSC, most companies investigating VoIP implementation cite four things as reasons to adopt. He says, "Companies we talk to typically cite toll bypass, better management of their communications networks, the use of multi-vantage applications and avoiding cable costs for green field sites as reasons for considering what VoIP can do for them. Three of these are squarely related to reducing costs, all are related to improving efficiencies."

With pressure on business to reduce overheads, drive productivity levels and enhance process efficiencies, the combination of VoIP and wireless has also received a greater level of attention over the past 18 months. Craig Neil comments, "The perfect green site in my view is a combination of both. The largest overhead for a site that has set up to make the best use of VoIP and wireless is usually the IP handsets, and even they are reducing in price as the technology becomes further commercialised."

Providing some services over the data network can also reduce the number of circuits brought into a facility, thereby lessening the need for separate POTS connections. "Integrating VoIP technologies with installed PABX technologies helps users through the transition from traditional telephones to computer telephony or ethernet-based phones," says Neil. Several WAN technologies can be used to provide these services. ATM has long been used to transmit voice over data networks, with frame relay being a slightly newer entrant. New methods incorporate the developing DSL market to provide voice services as a separate channel or as integrated data packets.

Most businesses have at least one PABX that connects all phones in the office to the trunks that go to the POTS. Offices located in different cities also have their own PABXs handling calls. Calls between offices usually are sent to the POTS and routed via a long-distance carrier to the other city and back to the remote office. In larger set-ups, companies link PABXs over long-distance connections using their own trunks. This eliminates paying long-distance charges for calls to other offices, requiring only a flat monthly payment for the tie trunks.

Providers of voice switches are not known for their openness. One of the biggest problems for VoIP in the past, and for organisations trying to use it, has been the interoperability between different switches and the inability to easily switch voice communication from a data network to a traditional voice network. But in the last few years, work has been carried by the likes of Avaya, Nortel and Cisco to improve the interoperability between their switches. "The development of packet switching to handle both voice and data has the potential to broaden the scope of the market. The open nature of data networks can allow the development of niche products and market segments for ISVs to operate in," according to Fausto Marasco, CEO of Premier Technology, systems integrators of voice and data networks. On the down side, security will become a more crucial issue. As systems become more open, they also become more vulnerable.

Another issue that needs to be addressed is billing. Most telecommunications billing is based on the criteria set by circuit switching, calculating charges on the geographical distance and the time for the connection. For a data network, charges are typically measured on the amount of bandwidth being accessed. As the pricing criteria changes, extensive re-engineering of the billing systems used by carriers is likely to be required. One would also expect that rates for long distance calls, at least the costs for establishing the connection, would drop. Even for local calls, users would be charged for how long they are accessing the network, rather than being charged for each connection.

"The biggest hurdle for VoIP and other related convergent technologies is the development and delivery of broadband services," says Marasco. It's through broadband access, either cable or DSL, that converged data and voice services can be delivered via one infrastructure. Over the last year various pricing structures have been announced by Telstra and the numerous resellers who are trying to compete in a very confusing and dynamic market. But there has been no move to make these services affordable for the general public or small businesses.

Implementing VoIP

First-level integration can be achieved simply by connecting analogue phones to a VoIP gateway and connecting that to the office PABX. For many small businesses, the PABX can be completely replaced by a VoIP system. Vendors have been manufacturing VoIP products for years, and these also provide a simple way to extend a PABX in a larger environment.

The take-up in the Australian market has been slow. According to Andrew Littlejohn, marketing and product manager for Commander Telephone Systems, specialists in the small to mid market, "We've seen strong interest in the marketplace, where many of our customers are asking questions. But no one is buying."

The next step would be to use the data connection to pass voice traffic not only from one office to another, but from one city to another. If a person in office A wanted to make a call to someone who lived in the same city as office B, a call could be made from office A to office B, then routed to the local POTS from office B and to the called party. This eliminates all long-distance charges and uses only the bandwidth of the data network from office A to office B. However, while long-distance charges will decrease, the amount of data traffic travelling from office A to office B can easily increase, thereby necessitating more bandwidth.

If the goal is not integration with existing PABX equipment but rather outright replacement, several vendors are ready to provide a solution. IP PABX equipment bridges the gap between the traditional PABX and the VoIP world. By operating in both environments, IP PABX vendors offer voicemail, call conferencing and other services, along with computer services such as email and VoIP.

These IP PABXs can work alongside existing PABX equipment or they can replace it. They offer the ability to dial the desktop phone directly from a contact list on a computer and can listen to email messages remotely over the phone. Dial-in capability is also available to provide remote users with access to the internal corporate network or the Internet. IP PABXs offer traditional data services by tying into the WAN directly from frame relay or DSL connections. An advantage to this is that they can be tied together over a single frame relay connection to the cloud, instead of through individual lines. This saves on the number of physical connections that have to be purchased and maintained.

Replacing legacy PABX equipment with a total VoIP solution may seem like a good idea, but there are important issues that should be considered. "The biggest problem," warns Salama, "is call quality and grade of service." Calls placed on VoIP systems can still usually be distinguished from their circuit-switched brethren.

People have long been aware of inadequate voice quality because of compression and as yet, no magic fixes exist. It usually comes down to personal preference and needs to be decided on carefully. While replacing the PABX in some areas may not cause any problems, poor compression quality could easily hurt a company in areas such as sales or tech support. VoIP may afford slightly increased security for interoffice communications. Calls leaving a small office via a copper pair can be easily tapped with inexpensive equipment. For calls placed on a data line, however, more costly and bulky equipment is required to tap data from the line and convert it back to voice for someone to listen in. In the future, users of IP networks may have equipment to encrypt the voice conversations before placing them on the line.

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