Internet telephony in play

January's a funny month for me. I don't know about you, but even now that the decorations are all put away and the tree has been carted off, I'm still walking around in a Christmas afterglow. Reality can't shake a feeling that everything's OK and anything's possible.

It seems this euphoric feeling has also overtaken the biggest names in heavy-duty Internet hardware.

Cisco Systems, Bay Networks, 3Com and even staid and conservative Lucent Technologies all are spending and posturing as if 1998 will finally be the year of Internet telephony. These companies, through partnerships with the likes of Siemens and Alcatel, and outright acquisitions of high-speed switch and multimedia start-ups, are truly committed to finding the Holy Grail-the unified carrier-class device that can handle both data and voice in huge quantities.

As a group, these titans of Internet backbone hardware have spent almost $3 billion-or doled out an equivalent amount of stock-to gear up their equipment to handle voice over Internet protocol (IP). That sounds like a lot of money for a technology that always seems about to arrive but never quite gets here.

But with projections of voice and fax traffic ranging as high as $10 billion by 2000, maybe the spending makes sense. Many network CEOs think so, anyway.

Take a look at some of the stars aligning in favor of an Internet telephony blitzkrieg before the millennium:

* We are zeroing in on a voice-over-IP standard, which should take some of the political foot-dragging out of the equation.

* Cisco, Bay, Lucent and many other networking companies have just about tapped out their three-digit growth opportunities, selling the same old high-speed routers, switches and PBXs. Not surprisingly, they're all struggling to find new, lucrative markets.

* A torrent of virtual private network (VPN) options are crowding onto the scene. These VPNs initially have promoted themselves as data traffic competitors to T-1 lines, noting that they can provide the same security and quality of service as a T-1 at half the cost. But because most VPNs use IP end to end, they are well-positioned to begin talking about adding high-quality, low-latency voice to their secure data transmission services.

* The VPN phenomenon is getting local and long-distance carriers off the dime when it comes to infrastructure upgrades. In the last months of 1997, MCI, AT&T WorldNet and Sprint all announced grand plans to upgrade their aging voice-driven infrastructures in pursuit of keeping these VPN upstarts away from their treasured big-buck business customers.

These factors don't automatically mean Internet users will start defecting in droves from Bell companies, AT&T or anyone else. But it does suggest that the army could be ready to march. And that's not necessarily a bad thing-at least for those with the vision to sense opportunity rather than danger.

As high-quality, high-capacity voice technologies are added to traditional packet hardware, the time is right to undertake aggressive upgrades of circuit-switched networks to integrated circuit- and packet- or cell-switched nets.

After all, integrating with sensitive and expensive equipment could simplify things.

For instance, Cisco officials say that the company's acquisition of LightSpeed will enable voice and data signaling to be transmitted via many voice protocols and applications.

That should enable different phone and communications systems-including dozens of corporate PBXs-to interoperate. Bay, 3Com and Lucent have similar goals.

This said, in 1998, I don't think we'll have to worry too much about industry-wide retrofits with new voice and data technologies. But we will see many of these emerge from the lab and probably even find their way into corporate private networks.

And although I'm not convinced 1998 will be the year Internet telephony makes a splash in the marketplace, I do think this could be carriers' last year to get on the train-or get out of the way.

Keep Internet telephony in your sights as these tests and pilots come into the marketplace, or by November, you may not be smiling.