VOIP

Sorry for the acronym. VOIP stands for voice over internet protocol.

It is one of the most disruptive technologies to come around in a long time. Although the average person probably has no idea what it means, they have probably used it many times without knowing it.

Five years ago, i fell in love with VOIP. I met a guy named Tom Evslin who had just left AT&T where he ran the AT&T WorldNet dial-up ISP business. He learned a bit about voice communications there. And by virtue of sitting on the board of an Israeli technology company callled VocalTec, he learned that you could take voice calls, turn them into data packets, route them over the Internet, turn them back into voice calls, and then get them to where they were supposed to go. That's VOIP in a nutshell.

Tom thought that VOIP would be the future of the long distance business because instead of paying for expensive long distance calls that had to be routed through monopoly phone companies in most of the developing world, you could take those calls, turn them into data packets, send them over the Internet to a computer somewhere in the developing world, get them back onto the local phone system, and finish (terminate) the call. I thought it was brilliant. And it was.

Tom's company, ITXC, is now a $300 million phone company, and the largest VOIP phone company in the world. Somewhere between one in ten and one in twenty long distance phone calls are routed over the public Internet, many of them on ITXC's network.

And today we announced that we had merged it with Teleglobe, an old-fashioned long distance phone company, to create the third largest long distance phone company in the world. It's a big deal. The new Teleglobe can take all that long distance traffic it has on its network and move it onto the Internet. It can save lots of money. It can do things with the Internet calls that you can't do with circuit switched (old fashioned) phone calls. It can bring this technology to mobile phones. It can marry this technology with its data business. In short, its a marriage made in heaven.

But VOIP is a double-edged sword, like most disruptive technologies. It's a lot cheaper to route phone calls over the Internet than to route them over the traditional circuit switched network. That's great news for people who need to make long distance phone calls. But it's really bad news for traditional phone companies who have lots of money invested in their voice networks. Because those investments are worthless. There's a better way to do it now. And that's why the companies with large long distance businesses are not doing well. They are losing money. They have large networks that are worthless. They need to write them off and get into VOIP. Fast.

And that's the way it is with technology. It's capitalism on steroids. Survival of the fittest (ie newest). That's why i love it. Those on the cutting edge win every time.

Comments

[simon]

Interesting article... I first came accross VOIP in my study days when a lecturer was starting a VOIP centre here in Australia. He had backing from yahoo, ibm , sun. But apparently the deal fell through... and the project never completed.

The question that has boggled me ??? Will this technology really knock over the big Traditional phone companies ???

I recently downloaded and installed a application called SKYPE. SKYPE is brillaint still in beta but this app runs fine. I was on a 256k connection in Brisbane and my client was on a isdn connection in sweeden. I was really suprised of the quality of the call .... Fast, no lag , clear and hands free :) ..

[Gen Kanai]

Skype is cool, but it is proprietary, and it does not connect to the POTS (plain old telephone system) network. Watch the VoIP open standards such as SIP (Session Interchange Protocol;IETF RFC 2543.)
http://www.ietf.org/html.charters/sip-charter.html

My personal experience with VoIP is taking a Vonage ATA (analog telephone adapter) to Tokyo with me this year. Now I have a New York City, 212 area code, local phone number ringing in Tokyo. My friends and family in NYC call me in Tokyo as a local call. I call them as if I was physically in New York. We skip around all the international phone interchanges and agreements. Call quality? Essentially the same as via the phone lines. But as bandwidth increases (100Mb/sec. fiber-optic Internet connections are commonplace in Tokyo) quality quickly becomes a non-issue.

VoIP is one of the few technologies that really does feel like magic. It takes a process that is filled with intermediaries and regulations and international boundary agreements and just cuts out everything in the middle.

[simon]

Ohh thanks for the tip Gen, i was unaware that VOIP will be intergrated with POTS...

//interesting

[Jeff Pulver]

If you are interested in VoIP beyond Skype, you may want to give Free World Dialup a try. - http://www.pulver.com/fwd.

If you are interested in the VoIP Industry, just drop by http://pulver.com. :-)

Amongst my other activities I also produce the industry trade show for the VoIP Industry. http://www.von.com The next event takes place at the end of March in Santa Clara.

Now that the technology is firmly in place the bigger issue will be the short term and longer effects from a regulatory perspective. The November 13th California CPUC hearing on VoIP will set the tone for future hearing in the US despite the recent ruling of Judge Davis...this followed by the December 1st VoIP Hearings at the FCC will set a tone for 2004.

My hope is to see less regulations rather than more, but getting there will take time.

[Sid Sidner]

I recently read that Qwest and AT&T weighed in on the side of Vonnage in the tussle over whether states (e.g. Minnesota) can apply all the PSC baggage to VoIP phone bills that they do to POTS bills. ( http://news.com.com/2100-7352-5092708.html?part=dht&tag=ntop )

I thought this was profound. It certainly tips the hand of these two old phone companies about where they are headed. They must figure better to help a dangerous competitor than to ruin the future that they see in VoIP.

[Elon Ganor]

I am amazed how history can be distorted by people who know exactly the real history.
ITXC was a VocalTec idea. Tom Evslyn became a VocalTec boatrd member much later.
As part of the founding deal of ITXC VocalTec committed to hand Over what later became ITXC's business plan. It is IN THE CONTRACT. If you need me to bring these clause out in th eopen I am more then willing to do it.
VocalTec funded the angel seed money for ITXC ($500K) + $1 Million in VOIP equipment. It was the ONLY source of funding at the beginning for ITXC.
THE VC money (Including Flatiron and the other VC's ) came about 8 months later .
I know in America Perception is reality.
but bending reality to create different perceptions has different names where I am coming from. For those who are interested in the details of the VOIP history (and ITXC's) you may find it in the first VON magazine published by Jeff Pulver the VOIP guru in the following interview with the undersigned.
http://www.vonmag.com/issue/2003/sepoct/features/pioneers.htm

Elon Ganor
Chairman & CEO
VocalTec Communicatiosn Ltd

[Aparaty cyfrowe]

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[koshot]

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As part of the founding deal of ITXC VocalTec committed to hand Over what later became ITXC's business plan. It is IN THE CONTRACT. If you need me to bring these clause out in th eopen I am more then willing to do it.

[katalog]

But VOIP is a double-edged sword, like most disruptive technologies. It's a lot cheaper to route phone calls over the Internet than to route them over the traditional circuit switched network. That's great news for people who need to make long distance phone calls. But it's really bad news for traditional phone companies who have lots of money invested in their voice networks. Because those investments are worthless. There's a better way to do it now. And that's why the companies with large long distance businesses are not doing well. They are losing money. They have large networks that are worthless. They need to write them off and get into VOIP. Fast.

[Barbara]

VOIP is not the future, it is already the present. All those phone companies who have closed their eyes for the new technology just lost. You can't keep your high prices for long distance calls when you have such a cheap(actually even free) and high quality alternative.
I know I use skype to talk to AND see my cousins overseas, and I am just a small drop in the ocean of people who have forgotten the existance of phone companies for that purpose. It is already no wonder why eBay is buying Skype for $2.6 billion (with $1.3 billion more than what they paid for PayPal).
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