By Peter Wolchak

There is a lot of talk about Vo IP , but little understanding of what it delivers to business.

Head down to any big tech or telecom trade show and the acronym on everyone’s lips is Vo IP.

In fact, there wasn’t an empty seat at a Voice over IP seminar at the recent Canadian Telecom Sumit in Toronto. So what had people spilling out into the hall, straining to hear the speakers?

It was the promise of an innovative, interconnected and inexpensive world of communication, enabled by IP. That’s the future everyone gets excited about, but the reality today is that business users often don’t fully grasp the technology or what it will deliver. According to many, this basic lack of understanding extends even to the Canadian Radio-television and Telecommunications Commission.

This was the view of Michael Sabia, president and CEO of Bell Canada Enterprises, a keynote speaker at the Telecom Summit. He told the crowd IP is a truly disruptive technology which has already swept away the old telecom landscape. There is now, he argued, no advantage to being an incumbent phone company, because the price of entry into the Vo IP provider space is so low that giants like Telus, Bell and Rogers are playing on the same field as the IP startups.

Which means “the question facing all of us is not ‘What worked in the past and how do we repeat it?’ but ‘What is necessary for the future and how do we create it?’” he told the crowd.

“The real competition today is about much more than simply getting telephone lines or cable lines to your home or businesses.

It’s about what happens over those lines once they’re there. It’s about applications.

And with the IP platform eliminating the once costly barriers to entry, all networks now compete in the same world — all play on the same field.

“And yet, here in Canada, we regulate in ways that are simply oblivious to these changes. Companies offering comparable services — but regulated differently. And all of it, the result of trying to interpret a new, fundamentally transformed reality through outmoded tools and ideas that utterly fail to grasp the new competitive paradigm ushered in by digitization.”

And about the recent CRTC decision to regulate some elements of the IP industry, Sabia’s assessment was blunt.

The decision is “wrong in its characterization of Vo IP as just another step in the evolution of telecommunications — when Vo IP and IP are revolutionary

...wrong in failing to grasp that the competitive paradigm for Vo IP is fundamentally different from traditional switched telephony...wrong in its assumption that [Incumbent Local Exchange Carriers] will act anticompetitively — when the record on wireless and the Internet tells a different story...and wrong in its understanding of the fundamentals of the technology itself — for instance, creating artificial distinctions between long distance and local calls when Vo IP, by its nature, makes no distinction.”

So, if Sabia is correct, then even the players in the industry don’t really understand this new telecom world. Why is that? According to many experts, Vo IP is simply too new and too different to be easily grasped.

Four questions, four execs
To shine some light on this issue, Backbone interviewed four executives at companies representing a cross-section of telecom and Vo IP providers, and asked four questions:

1. What is your biggest challenge as a telecom provider?
2. What is the most significant priority facing your customers?
3. What will the telecom industry look like in five years?
4. How significant will Vo IP be?

Their answers are important for companies looking to venture out onto this new telecom landscape.

Jeffrey Citron, CEO, Vonage
Vonage sells Vo IP service to consumers and small businesses in more than 150 North American markets. The company has more than 700,000 lines in service and adds more than 15,000 lines per week to its network.

“The biggest challenge is education, in terms of the value proposition: why this is important to customers and how it can improve their lives. People do not yet understand all of the cool things they can do. People who have tried it say, ‘I can’t imagine my life without it. Now, they need to say ‘I can’t imagine not getting it.’”

So Vonage is signing up 15,000 new customers a week, without people even understanding the full offering? “That’s right, which means that as people become aware the growth rates will only rise.”

But what if growth is so rapid the industry cannot maintain a solid customer experience? “We are always concerned about managing growth, so right now we are taking a bit of a breather to make sure everything is caught up. Our rate of resolving customer issues on the first call is going up literally every week. So we are paying very close attention to that, and we are going through a big network expansion to make sure we have the capacity we need.”

Which means that, in the near future, telecom will be a different industry. “It’s a given that everything will go to Vo IP.

The question is not if, it’s only ‘How long will it take?’ And we’re already seeing the compression of that timeframe, because of the industry’s growth.

“In terms of developments, the experience will become much richer. In the near future, Vo IP phones will become so integrated into your life that the service just becomes a part of you.”

So did the CRTC make the right decision? “The regulators face a difficult challenge in helping legacy industries transition into the 21st century. Their primary role is to protect consumers, but also to create a competitive environment. The more competitive the environment, the greater the benefit to the consumer. The problem is, when you have companies that possess 99 per cent of the business, it is more difficult to create that open experience. The CRTC’s approach is to ensure new entrants have a chance to get established before there is unfair advantage from incumbents. That is a pro-consumer and procompetitive option, and I think as the market matures the CRTC will reduce restrictions on incumbents, to allow them to be more aggressive.”

Mark Henderson, president and CEO, Ericsson Canada
Ericsson is a telecom infrastructure systems company, and a handset provider through its Sony Ericsson partnership.

When it comes to devices, users can look forward to good times, Henderson said. Take camera phones: the megapixel capacity is rising faster than anyone anticipated. “We already have one and two megapixel cameras, and some are talking about five megapixels this year. And that is a really rapid change.

Couple that with better displays, more security on the phone and a lot more storage, you are now talking about the capabilities of laptops.

“So the mobile phone will start to replace many of the devices you carry with you. We still call it a phone, but really it’s a game console that you talk into, a camera that rings, or a Walkman that can call home. More and more functionality is being squeezed into here.”

Going forward, “devices that utilize a lot more bandwidth, a lot more storage and a lot more applications require a network that is able to deliver a fat pipe to the phone. So we are looking at the rollout of faster networks; at the end of this year we’ll see downstream speeds to the phone of 14Mbps, and that is incredibly quick and opens the door to many applications.”

And Henderson believes people will embrace this functionality if it is easy to use. “Business users, when they find something that is intuitive and userfriendly, they tend to jump on it. The BlackBerry is a good example of that.

Going forward, when you look at higher bandwidth down to the mobile device and you can start to move picture back and forth, for example, the users will come.”

Mario Belanger, president, Avaya Canada
Avaya provides Internet Protocol telephony systems and communications software applications and services.

Belanger echoed the impression of others in this young industry, citing “brand awareness” as the biggest challenge in the Canadian market. Despite that, the near future holds significant growth for IP, he said.

“Over the next five years, we expect the Canadian telecom market will shift to offering fully converged IP telephony solutions.

Globally, there are approximately 400 million business lines and only about 18 million to 20 million are IP-based business phone lines, which works out to five per cent of the market. We are seeing dramatic growth in IP telephony and we think it will continue over the next five years.

“Our goal over the next five years is for Avaya’s communications solutions to become ‘designed in’ to the offerings from the Canadian service providers.

For example, customers will be able to call their service providers and order the Avaya solution designed to fit their needs. This is likely not going to happen within five years, but is a longer term goal.

In terms of the significance of IP, Belanger said voice is still king. “As we look at specific convergence applications, voice emerges as the killer app of IP technology, since it enables companies to change the experience for the customer, and can convert an enterprise from many disparate locations into one integrated business. Vo IP gives customers a competitive advantage, through features such as Unified Messaging and Meet Me Conferencing, to increase their overall abilities.”

Bob Berner, Chief technology officer, Rogers Wireless
Rogers Wireless bills itself as the largest Canadian wireless communications service provider, serving more than 5.7 million subscribers, including more than 5.5 million wireless voice and data subscribers.

For companies such as Rogers, the biggest challenge is that mobile data is a fundamentally different animal than is wireless or wireline voice, and that creates different demands for providers, Berner said. “Meeting ongoing and increasing expectations is a challenge. Not so much in voice; voice is a great service, and it’s still 94 per cent of our business, but data-related services (like Vo IP) put the company into an entirely new paradigm.

“If you break the market down into enterprise, business and consumer, voice is the same application for everyone.

Customers want the ubiquity, they want economy and quality. In the rare circumstance there is a problem, there are other ways (beside cellular) to get voice service.”

With mobile data services, however, if the link goes down there are no ready alternatives; a worker away from the office who loses the cellular connection simply cannot access the corporate network any other way.

“That changes the way we think of our business. For example, support has to be 24/7, because the applications are not only weekday applications now, they are 24/7.

“So the entire move into an increasing share of revenue coming from data, datarelated or data-delivered services changes our relationship with our customers and the amount of support we have to give them. Support is a key issue, as it drives cost into our business. Voice doesn’t really need much support — everyone knows how to talk and the operation of a phone is simple. But once you add wireless transports to a variety of devices — PDAs, laptops — it’s not that easy.”

For customers, the biggest hurdle is simply making use of these new IP and data services. “The challenge is for us to make it easy, make it transparent.

Take the BlackBerry — why is it so popular? One of the key reasons is that it just works out of the box. How many things work out of the box in telecommunications? There are virtually none. So if you take that as a paradigm — it is clear what it does, it is intuitive to use, you get it activated and it works — our challenge is to create that simplicity of experience (more broadly), so customers get the communication they need without giving up on it before they even get started. And we’re not there.

“But in five years, I would expect to see many more integrated services — and notice I don’t say ‘integrated networks.’ These will be services that are available across multiple networks, and those services will become much more multimedia oriented. You probably will not go out and buy wireless service only; you will be buying mobile access to a number of services — entertainment, communication, information — that interest you.

“We will have that in five years, in a meaningful manner. And you’ll be able to access this when mobile, at home, at work or at a friend’s house. The ability to get what you want when you want it is so different from what you have today.”

However, voice over IP itself will not be the big story in the near future. “The question should not be about Voice over IP; it should be about everything over IP.

Voice is a small thing to do over IP.

“So, what impact will everything over IP have? What we are seeing is incremental evolution towards IP being the common way of delivering all entertainment communication and information. Because in the end, it’s all data. Today, legacy products are providing this transport but over time it will all evolve to IP. And at that point, all devices do is receive an IP stream and decode it into its components — voice, video or information.”

Rogers Wireless bills itself as the largest Canadian wireless communications service provider, serving more than 5.7 million subscribers, including more than 5.5 million wireless voice and data subscribers.

For companies such as Rogers, the biggest challenge is that mobile data is a fundamentally different animal than is wireless or wireline voice, and that creates different demands for providers, Berner said. “Meeting ongoing and increasing expectations is a challenge. Not so much in voice; voice is a great service, and it’s still 94 per cent of our business, but data-related services (like Vo IP) put the company into an entirely new paradigm.

“If you break the market down into enterprise, business and consumer, voice is the same application for everyone.

Customers want the ubiquity, they want economy and quality. In the rare circumstance there is a problem, there are other ways (beside cellular) to get voice service.”

With mobile data services, however, if the link goes down there are no ready alternatives; a worker away from the office who loses the cellular connection simply cannot access the corporate network any other way.

“That changes the way we think of our business. For example, support has to be 24/7, because the applications are not only weekday applications now, they are 24/7.

“So the entire move into an increasing share of revenue coming from data, datarelated or data-delivered services changes our relationship with our customers and the amount of support we have to give them. Support is a key issue, as it drives cost into our business. Voice doesn’t really need much support — everyone knows how to talk and the operation of a phone is simple. But once you add wireless transports to a variety of devices — PDAs, laptops — it’s not that easy.”

For customers, the biggest hurdle is simply making use of these new IP and data services. “The challenge is for us to make it easy, make it transparent.

Take the BlackBerry — why is it so popular? One of the key reasons is that it just works out of the box. How many things work out of the box in telecommunications? There are virtually none. So if you take that as a paradigm — it is clear what it does, it is intuitive to use, you get it activated and it works — our challenge is to create that simplicity of experience (more broadly), so customers get the communication they need without giving up on it before they even get started. And we’re not there.

“But in five years, I would expect to see many more integrated services — and notice I don’t say ‘integrated networks.’ These will be services that are available across multiple networks, and those services will become much more multimedia oriented. You probably will not go out and buy wireless service only; you will be buying mobile access to a number of services — entertainment, communication, information — that interest you.

“We will have that in five years, in a meaningful manner. And you’ll be able to access this when mobile, at home, at work or at a friend’s house. The ability to get what you want when you want it is so different from what you have today.”

However, voice over IP itself will not be the big story in the near future. “The question should not be about Voice over IP; it should be about everything over IP.

Voice is a small thing to do over IP.

“So, what impact will everything over IP have? What we are seeing is incremental evolution towards IP being the common way of delivering all entertainment communication and information. Because in the end, it’s all data. Today, legacy products are providing this transport but over time it will all evolve to IP. And at that point, all devices do is receive an IP stream and decode it into its components — voice, video or information.”