Migratory pattern

Soundpipe brings LECs into the IP voice world - without the worries of real time Local exchange carriers want to embrace packet-based voice for a number of reasons - primarily related to the lower operating costs that IP offers, but also to take advantage of the ability to deploy new services and calling features more easily than in the circuit-switched network. Unfortunately, unless they have pockets as deep as those of AT&T or Cable & Wireless, those switched network operators aren't going to be replacing their legacy systems with newer IP designs any time soon.

Start-up Soundpipe thinks it has an answer that will let incumbent LECs (ILECs) get into packet-based voice services quickly and cheaply, without intensive capital spending on infrastructure. The key is to focus not on real-time IP voice but on messaging services that use Internet files to unite voice mail and e-mail.

IP-based unified messaging does exist today, as provided by services such as Onebox.com and uReach.com. Those services show that the public is ready for unified messaging, but they constitute an incomplete solution because they ask users - and the people trying to reach them - to change their behavior by remembering and using a second phone number to dial into the service.

"From a user's perspective, the solution wasn't complete," said Sung Park, co-founder and marketing vice president of Soundpipe. "I would have to memorize that new phone number and extension, then force my friends and colleagues to use that number. If I wasn't at my existing phone number, they would have to hang up and make a second call to the new number to leave me a unified message." This complexity was enforced by the architecture behind most unified messaging services: servers equipped with digitizer cards and deployed in central offices (COs) in every area code in which the service wanted to operate.

"In those services, IP and switched telephony convergence was done in the CO," Park said."We solved that problem by pushing the convergence point all the way out to the customer premises."

More specifically, Soundpipe created a plug-and-play device located on the customer premises that connects to the circuit-switched phone network and to the packet-based Internet. A bit smaller than the average answering machine, it sits between the phone and the wall jack - or connects to a high-speed modem via a built-in Ethernet port (see figure).

When the Internet voice station (IVS) answers a call, it stores the message onboard as an MP3 file (1). It then sends that file over the end user's Internet connection - dialup or broadband - to a server at Soundpipe's network operations center in Santa Clara, Calif. (2).

The server generates an e-mail message containing a URL for the MP3 file and sends it to the user's e-mail account - which can be any one of up to four accounts specified by the user (3). And it will interoperate with any e-mail provider, Park said. Since the service is only sending a message, there are no troublesome integration issues.

Users can access the message either from the IVS or from e-mail (4).When the message is deleted in one mode, the Soundpipe server gets instructions to delete it from the other (5, 6).

Soundpipe, which is now amassing its second round of funding after a first dose of cash in January, expects to begin beta testing its service with ILECs and ISPs soon and to launch before the end of the year. The first revenue model probably will be to wholesale the device and the outsourced service to service providers. The device, although a fully functional computer able to connect to the Internet, will probably wholesale for $50 to $60, while the service can be supplied to the service provider for $4 a month per customer, Park said.

"The wholesale model exists today in the DSL world, where you have to buy an Alcatel modem from Pac Bell to get their high-speed service," he said. "Before that, caller ID really provided the business model for wholesaling devices." Last week, Soundpipe announced an OEM licensing deal with Samsung Electronics, which will build the IVS.

"Soundpipe's technology forms the foundation of a powerful new generation of voice Internet communications systems," said Blair Pleasant, director of communications analysis for The Pelorus Group. "The Soundpipe approach allows users to keep their existing phone numbers while offering service providers tremendous scalability for worldwide markets."

Still, the question of price points will be crucial in making Soundpipe's business model a success, said analyst Terry Breen of Tel-Data. Breen has studied the unified messaging market, although not specifically Soundpipe's product. Service acceptance is highly dependent on convenience and price, he said.

"Onebox.com is ad-supported, so it's free to the public," Breen said."They'll put up with a clumsy second-number system to get the basic convenience at the low, low price of nothing. But how many people will pay up-front for a device, and what will they pay for the service? These are going to be interesting questions."

The value Soundpipe's product and service will bring to ILECs that want to get into value-added IP services and to ISPs that want to expand beyond straight access will give them incentive to work to find the right price balance, Park said. Enhancements planned for the first quarter of 2001 include the ability to receive faxes, reply to messages or forward them with envelope information, and a content delivery feature that pushes personalized info on weather, news and traffic to the user: Simply hit a button on the IVS and get those items along with your messages.

"It will be like radio on demand," Park said. It also will give Soundpipe and the service providers the opportunity for incremental ad revenue.