Shift to voice over IP underway

Telcos will see up to 40 percent of their fixed-line traffic leak away to other networks in five to seven years, an IP communications expert has warned.

Speaking on Tuesday at the telecoms conference Voice on the Net (VON) in Boston, CEO Jeff Pulver of IP communications company Pulver.com said that technologies like broadband, Wi-Fi and satellite have triggered an inexorable shift of voice traffic to alternative networks.

"People are increasingly communicating with other people who are on these networks, so there's less of a need for them to depend on legacy networks," Pulver said. "The traffic is naturally moving."

While the 1990s technologies that allowed people to make voice calls over the Net were characterised by choppy quality, the four-day conference is dedicating itself to highlighting that voice over Internet protocol (VoIP) is ready for prime time. Pulver estimated there are at least 100,000 people using voice over a broadband Internet connection today, and the numbers continue to grow.

To make calls over the Net, users are either using special software, a microphone and speakers on their PC, or they are using one of the new IP-enabled telephone handsets, an estimated 4.5 million of which were sold in 2002. If the person they're ringing doesn't have the right software or an IP handset, the caller pays a fee to make the call; but if the recipient is equipped with the right gear, the call is free.

Services like Free World Dial-up and Vonage provide the downloadable software to let users make the free calls from their PC, and earlier this month the same people who founded the Kazaa file-sharing network made a stir with the unveiling of their own Internet phoning software, Skype, which uses peer-to-peer technology.

Already telcos in the US and Europe are prepping themselves to fight back against this leakage of revenues by getting in on the act themselves. Telekom Austria, for example, is readying its first major push into IP communications for next year, according to Richard Stastny, project manager of the Telekom Austria consulting subsidiary Ofeg. Stastny told ElectricNews.Net that by the second quarter of 2004, Telekom Austria DSL subscribers would have the option to rent a special IP handset or terminal adapter from the company.

That means customers of Telekom Austria, which is the incumbent in that country, will be able to make free calls over the Internet to anyone else who has the gear to accept an IP phone call; subscribers can also ring friends who don't have IP gear, and the call will be routed out to the normal telephone network as usual. Pricing is still up in the air, but Stastny said users might pay around EUR20 a month in addition to their DSL subscription to avail of the service.

The whole initiative may seem like a direct cannibalisation of revenues by the telecom, but Stastny says the company is simply moving with the times: another Austrian telco is already offering voice over IP using DSL, and Stastny says the new service could also help encourage a new wave of DSL subscriptions, which have recently evened off. "In my opinion, if we don't do it, somebody else will," Stastny said.

James Enck, European telecom analyst with the Daiwa Institute of Research, said the Telekom Austria initiative is in line with other defensive moves by European telcos, including some of BT's plans for Bluetooth. Enck said telcos, and especially incumbents, who are seeing their revenues drip away to other platforms like mobile have the opportunity to act now to offer interesting IP-based services that will let them hold on to subscribers.

"If telcos push the button now [with new services] they can pose it to their customers as a valuable new service rather than look like they're acting out of desperation," Enck said. "It's going to be the same story repeated all across Europe."

© ENN