Are we there yet?

Reports of long-distance arbitrage's death greatly exaggerated Similar to a mantra that gets drilled into one's head, vendors and service providers in the IP voice market seem to believe that if they continually tell the industry that the future lies in enhanced services, someone eventually will believe them.

The chanting resumed once again at last week's Voice on the Net show in Atlanta, where industry leaders repeated the vow that IP voice cannot survive on long-distance arbitrage alone. But this time, it appears that application developers finally are making an appearance, while some carriers are looking to become prime players in the process.

And while some view the emergence of application developers as a natural evolution, the current state of venture capital markets also is playing a part.

"Arbitrage is going away," said David Fraley, director of communications for SS8 Networks, which develops signaling gateways for IP voice carriers. "It's hard to make a return-on-investment argument on gateways with the current rates [of circuit-switched long-distance]."

Level 3 Communications, among the most aggressive carriers in the market's early development stage, announced a certification program designed to encourage developers to create services that will interoperate between Level 3's (3)Voice services and third-party IP voice applications.

Under the (3)Works certification program, Level 3 will publish its standard interfaces to which application service providers (ASPs), vendors, ISPs and competitive local exchange carriers (CLECs) can write applications. The carrier also introduced (3)Voice Exchange, which provides a softswitch layer to ASPs. In both cases, the objective is to create a simple path for developers.

"We see this leading to all the Web-centric companies, ISPs, ASPs and CLECs getting rid of all those applications sitting on the shelf," said Matt Johnson, senior manager of softswitch product management for Level 3. "Right now, they're putting it together the hard way. The vendors and the service providers have been holding back."

The efforts already are generating interest, with 13 companies publicly announcing their participation in the certification program.Al-lied Riser and TalkingNets also have said they will use (3)Voice Exchange.

TalkingNets, a 4-month-old telephony ASP, is using both Level 3 products in a Denver-based trial of its services, which includes basic dial tone and a virtual key system. Using TTI Telecom's softswitch, TalkingNets provides a customer premises device similar to an integrated access device, which combines voice and data over a broadband connection (see figure). At the local point of presence, a voice application gateway provides access to the hosted application.

Currently marketing to ISPs and smaller CLECs, TalkingNets will use the next few months to test SIP-based phones, which company officials say lend themselves to many different applications, including online Yellow Pages on handsets.

"Our CLASS features are provided over our infrastructure," said Tony Surak, executive vice president of marketing for TalkingNets. "We're no longer held hostage to Lucent, and we get the whole softswitch value proposition."

Taking advantage of those softswitch metrics also is the objective of BroadSoft. The company announced at the show that ITL Metro - the CLEC operating division of International Telecom - completed initial testing of its voice-over-IP services, which are based on BroadSoft's BroadWorks service delivery system. ITL will begin customer trials in 30 locations later this month.

BroadSoft's approach focuses on the small and medium-sized enterprise applications, generally emphasizing productivity.

"We spend a lot of time with the core service operating system," said Scott Wharton, vice president of marketing for BroadSoft, which eventually will open its operating system to third parties. "A lot of the service logic - billing and stuff like that - is built into the [operating system]."

But some in the industry are taking a more consumer-oriented approach to application development, focusing on e-commerce as the future of IP voice. Clarent's third generation of IP voice clearinghouse software targets future applications, including transaction processing. On the surface, Clarent Connect 2.0 allows clearinghouses to exchange basic settlement and billing information among different vendors' systems.

Beyond such mundane data, though, those same clearinghouses could exchange transactional records, said Heidi Bersin, senior vice president of corporate marketing and communications at Clarent.

"It leads to things like getting on my phone, ordering a CD and getting it billed on my phone bill," she said."It's totally changing the rules of how to compete. The bill is now a strategic asset."