Embracing Internet telephony

When voice-over-Internet technology made its debut a little over 18 months ago, most observers-including major carriers-saw it as a product for computer hobbyists, a kind of ham radio for Internet surfers.

Since then, however, developers have added business-friendly features to the technology, and savvy software companies have marketed the use of the Internet as the secret to overcoming high long-distance costs (Figure 1).

Now carriers with Internet offerings are viewing the technology as a tool for their Internet service provider businesses. Carriers that aren't in the Internet access business-including most members of the America's Carriers Telecommunications Association, which has petitioned the Federal Communications Commission to regulate the software-are hoping that legislative challenges can slow the acceptance of such technology.

Although carriers' perception of problems may hamper the acceptance of Internet telephony, reception problems today are a greater hindrance. Even with some of the most advanced software on the market, sound quality problems-including dropouts, echoes and unwanted distortion-make conversations using the Internet as a transport medium frustrating and unreliable, especially for the business users that software developers are counting on as major markets.

"If you've ever made a call over the Internet, you know that the sound quality is like mud a lot of the time," says Michael Heylin, a senior associate at San Francisco-based Creative Strategies Consulting. Because information traveling across the Internet can take a variety of routes, delays are introduced as a matter of course. And just as data packets are dropped, so are chunks of conversation.

"The experience is still like using a computer to make a phone call, and until using the Internet has the same feeling as using the public switched network, callers aren't going to abandon their telephones, especially for critical business communications," Heylin says.

That prediction isn't lost on the developers of voice-over-Internet software. Even before the first edition of VocalTec's InternetPhone made its debut in February 1995, the company was working on a full-duplex version, says Elon Ganor, president of the Northvale, N.J., company.

Camelot Corp.'s full-duplex DigiPhone arrived just before the full-duplex version of the InternetPhone in June 1995. Since then, the two companies as well as a host of other competitors-including VDOnet Corp., IDT Corp., NetSpeak, and even heavy-hitters Microsoft and Intel-have endeavored to bring sound quality up to snuff (Table 1).

While the companies' efforts have turned Internet telephony from a difficult-to-understand, walkie-talkie-like experience into a less frustrating and more natural tool for conversation, the technology received its biggest boost this year from Lucent Technologies.

Improving quality In August, Lucent established a business venture group focused on "making the Internet a realistic option for consumers' everyday communications," according to Joe Mele, the president of the Elemedia business venture group.

The group was created to market technology developed by Lucent's Bell Laboratories, including standards-based voice coders to improve sound quality and a "software speakerphone" component aimed at improving duplex calling characteristics for voice-over-Internet software vendors.

"The intention here is to leverage Bell Labs' innovation and get the technology into the marketplace as quickly as possible," says Mele.

While some of Lucent's carrier customers might feel slighted by the company's endorsement of the Internet telephony concept, scientists at Lucent said that much of the technology they want to apply to the Internet was developed originally to improve the quality of traditional telephone calls.

"The low quality of the existing Internet voice applications is a result of the delays caused by dropped packets," says Krishna Murti, head of research and development for Elemedia. "Our error-mitigating algorithms allow us to get ahead of the delay and to substitute for missing packets so the quality of the call is comparable with that of a regular telephone.

Rather than become embroiled in the fray over which Internet telephony software package to adopt, the Elemedia group will compete with developers like DSP Group and Real Audio, selling software components to vendors that will integrate them into their own Internet software packages.

"It's a lot like the situation we have today with consumer electronics companies making phones," says Mele. "In the past, Bell Labs helped develop technologies to make the telephones work better. This situation is analogous-we're designing components to help improve the quality of these Internet phone products, and it's ultimately up to the people who build the Internet telephone software to use those components in the best ways.

This approach keeps Lucent from becoming embroiled in the rough-and-tumble world of retail software development, but Mele admits that the company would have to adapt to meet the needs of its customers. "We're championing speed and focus," says Mele. "We know we must work in three-month product cycles. We have to be as fast as the companies we want to play with.

Seeking standards Lucent's playmates soon may include the biggest fish in the software sea. Microsoft and Intel signaled their intention to take a bite out of the Internet telephony market in August, when they released a free beta version of their own telephony software. More importantly, Microsoft announced that it would build H.323 videoconferencing compatibility into its upcoming operating system releases, thereby proclaiming H.323 the de facto standard for Internet voice and video software.

"Currently, most Internet telephony products require the same vendor's software to be used at both ends of a connection," says Mark Winther, an analyst with International Data Corp., Framingham, Mass. "That's put Internet telephony more in the category of a cool trick than an up-and-coming business tool. But this is going to change that pretty quickly.

"H.323 is providing the technology for going across the network from phone to phone," says Rick Yeomans, marketing manager for Intel's network multimedia applications group.

Heylin sees adoption of the H.323 standard as a critical step in the spread of Internet telephony. "Microsoft and Intel are forcing everyone else in this space to move to one standard, and that's good for all of them in the long run," says Heylin.

Microsoft has also joined with U S West Interactive Services to purchase 20% of VDOnet, whose VDOwave compression technology is used to make full use of available network bandwidth.

"It's clear that they're building toward offering a full line of voice-over-Internet products," Heylin says. "And if they can address the quality issues with the number of Microsoft operating systems out there, they could really spur the market.

The nature of the Internet itself-with increasing traffic, its non-deterministic routing system and questionable service levels-seems like the traditional telephone carrier's best ally in staving off the new technology. However, advances in quality, and the ability to place calls and send faxes from the Internet to the switched network, will lure some long-distance users away (Table 2).

"The writing is on the wall for the long-distance carriers-they will face competition from a variety of sources, including the Internet," says Martin Reynolds, an analyst with Dataquest, San Jose. "Then again, they've known that was coming for a long while. Now the question is whether they will resist it or embrace it and turn it into a service for their own customers.