IP TELEPHONY'S SECOND CHANCE

After being relegated to the bottom of the cable industry's priority list, IP telephony is slowly making a comeback. Though most providers have focused on second-line services in smaller trials, the next year will see a rush of carriers that also want to offer IP voice in a larger, more challenging context: as a lifeline service. The timetable, however, won't be short.

Net2Phone CEO Stephen Greenberg admitted before addressing the audience at a J.P. Morgan Chase conference earlier this month that he would rather be somewhere else. After being named CEO to replace Howard Jonas, who had been filling in for Howie Balter, who left the company after announcing a new ownership structure, Greenberg was forced that day to cut 43% of Net2Phone's staff.

But behind the announcement was a quiet strategic shift that could push cable-based IP telephony onto the fast track. As part of a restructuring that left most of the voting power in the hands of a limited liability corporation made up of IDT, AT&T and Liberty Media, Net2Phone will now focus much of its R&D efforts on a solution that will let cable operators provide lifeline voice-over-IP services.

Conventional wisdom says that while current IP voice trials and smaller deployments will focus on second-line service, IP-based lifeline service will not be deployed until at least 2003. In the interim, Net2Phone will likely roll out a service tailored to the international second-line market, relying heavily on Liberty for an entree into the clubby cable market.

“We would like to believe we can move that timetable up,” Greenberg told the J.P. Morgan audience.

Jeff Skelton, chief technology officer for Net2Phone and the man leading much of the renewed focus on cable, is more to the point: “I envision a number of intermediate deployments between now and mid-2002, but when everyone says the end of 2002 and beginning of 2003, I want to see people flying at that point.”

Getting there will require the industry to address a number of mundane issues, including powering, quality of service (QOS) and access to emergency services that have hampered previous efforts. At the same time, the market is admittedly tackling those same issues to which there is no solid answer yet. Some in the cable industry, in fact, are content with taking a slower route to lifeline IP telephony by testing out second-line services.

WideOpenWest, the Castle Rock, Colo.-based overbuilder that acquired Ameritech's Midwestern cable properties, is quietly rolling out an IP voice service that gives users 1000 minutes of any-distance calling for $35 per month. The service, being marketed as WideOpenTelephone, uses a customer premises-based gateway from voice ASP Gemini Voice Solutions and is intended only for second-line usage.

Users activate the service by pressing the pound sign before dialing a 10-digit number, at which point the gateway will route the call over Gemini's network. (The gateway also has a public network pass-through feature that allows normally dialed calls to travel over the public network.) While not the ultimate solution, it's a start.

“The value proposition to the cable operator is there,” said Jeff Fuhrman, president of Gemini. “This is a low-cost solution. You tell me today you want to do this, and we can have this up and running in a matter of days.”

Gemini is currently working on a local voice solution, but the hurdles are high.

Perhaps the biggest problem lies in the most mundane of technical issues: powering the network on something other than the commercial electric grid. CableLabs' PacketCable 1.1 specifications, which most of the industry is using as its road map for IP telephony, lays out various options for local and network powering. But it leaves it up to individual operators to determine the best method. Gemini is following the specifications but hasn't bothered to go through the group's certification process because of the expense, Fuhrman said.

Even for a company like Net2Phone, which won't be dealing specifically with the access network, powering will be an issue.

“When you have a powered device on the network, you have to know that it's still available,” said Net2Phone's Skelton, noting that the company isn't going to recommend any particular powering scheme. “We also have to be able to hand the alarms off to whomever is providing the access network.”

In second-line deployments, power usually is handled locally. In the WOW service, for instance, household AC powers the Gemini box.

QOS, at one point the bane of all IP-based telephony, is improving, though it still remains a hurdle. More specifically, cable operators have been hesitant to jump into the IP voice market until the industry reaches agreement on basic network architecture issues, which will bring costs down, said David Spear, president and CEO of Cedar Point Communications, which has developed what it calls a cable media switching system.

Vendors such as ADC and Arris Interactive have relatively simple host digital terminals that convert analog voice to digital and send it on to a traditional switch, Spear said.

In the softswitch-based networks, “you've gone from a system like circuit switched, which is one concise system all-contained, all-managed at a high quality level, to multiple vendors, multiple protocols, whole multiple systems and a promise that cost is going to come down because it's packet,” Spear said.

Beyond the technical issues, taking on lifeline service raises the specter of liability in an industry that hasn't had to deal with issues such as guaranteeing 911 calls. Indeed, emergency services and network flow control are the third-rail issues of cable telephony, Skelton said.

“How do you deal with things like mass calling situations when there's a natural disaster? If necessary, your call management system has to be able to drop calls that are already set up,” he said. Providing access to information services such as directory assistance is less problematic, but it is something that still must be dealt with, he added.

“Lifeline services come with a whole array of issues, both technical and legal,” Fuhrman said. “And the legal ones are the more difficult.”

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With additional reporting by Jim Barthold in New Jersey.