|Topic:||The changing structure of VoIP in Europe|
|Title:||General Manager and Chief Marketing Officer|
|Organisation:||EMEA and Sonus|
Steve Edwards is the Chief Marketing Officer (CMO) and General Manager for Sonus Europe, Middle East and Africa (EMEA). Mr Edwards is responsible for Sonus Networks’ global marketing, product management and business alliances activities, as well as business operations within EMEA. Before joining Sonus, Mr Edwards was AT&T’s Vice President of indirect sales and strategic alliances, responsible for its channel partners, its strategic alliance and partner program. Mr Edwards held overall responsibility for the distribution strategy supporting AT&T Business. Previously, Mr Edwards served as Chief Operating Officer (COO) and Vice President of service delivery at Concert and as President of BT Visual Images. In his 17 years with British Telecommunications (BT), Mr Edwards was general manager of BT Videoconferencing and held various positions in product management, marketing and R&D. Mr Edwards holds an honours degree in Electronic and Computer Systems Engineering from Loughborough University of Technology.
Mobile phones have boosted the voice market, but data networks have grown faster. VoIP carries voice over data networks. VoIP transmission is cheaper than traditional voice. As a result, it has grown and already accounts for 10 per cent of global voice traffic. VoIP was first successful in large multi-nationals, providing inexpensive voice service to their branches throughout the world, but as broadband at home grows, private use of VoIP increases. New services such as Vonage and Skype have driven rapid VoIP acceptance.
Europe’s core network has been undergoing some radical changes over the past ten years. Brought about by the implementation of some of the most disruptive technology since the Internet, the impact of the new VoIP network is finally reaching the end-user in both business and home environments. Pedestrian voice To the average person, telephony seems like a somewhat pedestrian application: you just pick up the phone and make a call. Most end-users know little more than that a wire runs out of their house or office and, maybe, that it ends at an exchange. They probably have never heard of a circuit switch or a packet switch, so it is understandable that few know of the changes that have been transforming the infrastructure of Europe’s telecommunications networks to Voice over IP (VoIP). Those behind the scenes know that packet-switched alternatives are rapidly replacing circuit-switched legacy systems. It is not a straight swap. This transformation changes the business model for the service provider and completely redefines what is possible in terms of services for the end-user. Voice is no longer a pedestrian application and, in the next few years, even the most techno-phobic consumers and businesses will begin to see the benefits. The data driver The migration away from the old legacy technologies began during the Internet boom of the 1990s. Since then, there has been a switch from telephony and fax to email and the web. The voice market was sustained by the advent of mobile phones, but by the year 2000 data had overtaken voice and dominated traffic over the world’s networks. However, legacy networks, designed for carrying voice traffic, were highly inefficient at carrying data. Hence, the telecommunications service providers created a new data-centric layer to support the boom. The problem with this was that companies needed to support two networks. VoIP, though, provided a way to send voice traffic over data networks. Since the network handled both types of traffic, the services became cheaper to run; this made more efficient use of network capacity and boosted the return on investments in capacity. Of course, it was not only the traditional voice service providers who had access to IP. Newer companies that had sprung up to support the demand for data traffic now had a route in to the voice market, from which they had been shut out before. In this way, VoIP gained a foothold in the core of the world’s telecommunications networks. Today approximately 10 per cent of global voice traffic is carried over IP and this number grows every year. Business benefits VoIP, at first just a way to reduce costs, soon became a platform for a variety of applications. The legacy networks could offer many services but implementation was, and remains, often clumsy and manual. By contrast, the decentralised nature of IP and the fact that it operates on the same types of server as many other Internet applications makes it the ideal platform on which to offer a broad range of services. Most end-users’ first taste of VoIP was probably a long-distance calling card, one of the earliest VoIP applications. VoIP first saw major success providing large multi-national corporations with voice services wherever their business was located throughout the world. Newer entrants to the voice market such as Interoute have also had great success delivering a range of innovative services such as secure voice Virtual Private Networks, call centre applications and conferencing, together with low-cost calling. Broadband world Although enterprise applications have demonstrated the viability of rolling out VoIP to the end user, the real shift in the market comes when these advanced services become available to the wider public, both at home and in small businesses. The last three years have seen a massive expansion in use of broadband services worldwide; broadband provides the channel for delivering VoIP to the door. Some European countries reached a 30 per cent broadband penetration in 2004. The world’s most advanced countries, like South Korea, are closer to 65 per cent penetration, according to figures from IDC. As broadband enters more and more homes, the potential for carrying voice traffic to the home using IP networks increases. New entrants to the voice market such as Vonage, in the US, Softbank Broadband, in Japan, and software-based services such as Skype have driven rapid acceptance of consumer VoIP services. Existing voice service providers such as AT&T and Qwest have reacted quickly, recognising the opportunity to expand their current offerings. Enhanced services driving growth The prime movers in the broadband voice market have started bundling existing added-value services into the flat monthly fee. This is possible because of the low cost of delivering additional services over IP. AT&T, for example, is offering voicemail, caller ID, call waiting and call forwarding as part of its VoBB (voice over broadband) package. Other services that might be offered as part of a package, or as an extra-cost feature, include automatic call routing, live fixed-to-mobile handover and multi-party conferencing. The range of services and the flexible billing options provide opportunities for additional revenue. When a PC accesses the services, the web interface provides links to email, instant messaging and PIM applications. Using options similar to instant messaging, users can specify their availability, through Do Not Disturb options or the available selective answering options. In the longer term, many companies hope to integrate video programming, but the success of the services launched so far shows that consumers are happy to switch to VoBB based on the currently available services combined with low call costs. Fixed-mobile convergence Of course, the progress of VoIP will not stop now that it has reached the home; the next step is mobile. The European mobile operators have made the term 3G (Third Generation) well known, but few people know that 3G is destined to become an all-IP platform. That means that not only will the video and gaming services that have formed the heart of the marketing campaigns be delivered over IP, but so will voice. This is an incredible opportunity for European operators. With an all-IP platform, they can provide mobile users with exactly the same services their home VoIP users get. With everything operating over IP, operators need only one converged infrastructure to support all their users, whatever connection they are using and wherever they are. The UN predicts that mobiles could outnumber landlines (worldwide) by 2006; this makes investment in broadband VoIP very attractive today. IP Multimedia Subsystem (IMS) is the name of a unified platform for delivering these services. IMS is based on specifications from the 3G standards body, the 3GPP. IMS offers service providers a consistent environment for enhanced multimedia services such as voice, video, instant messaging and online gaming, whatever the device that is accessing the services. This means reduced capital expenditure to create services, lower operational costs to manage them, centrally controlled service provisioning and massively simplified customer relations. Crucially, in the competitive telecommunications market, it also offers consistent brand and user experiences. The regulation situation Regulation is a threat to the continued march of VoIP. Because of its amorphous, international nature, regulating and controlling the Internet has always been difficult; very few countries have made any real effort to control the content and services available to their residents. Entirely new services such as the web or email were launched with no prior regulation and the only problems have been with regulating offensive or illegal content. Now that the Internet is expanding into historically heavily regulated markets such as voice services, lobbying groups are forming both for and against regulation of this new delivery platform. It would be easy to assume that the incumbent service providers, who often own the legacy connection to the end-user, would be the most in favour of heavy regulation of this new competition. However, this is not always the case: “regulation has to reflect the realities of the market”, said BT CEO Ben Verwaayen in a recent statement. Convergence is coming and consumers will soon make no distinction between fixed and mobile services for their voice calls, emails, text messages or use of the Internet. Regulation of the fixed line market on its own is simply not relevant anymore. Put in the context of the European legislative framework for telecommunications, this argument for leniency makes good sense. Markets are deregulating globally and although the pace of change is varied, the drive for development is universally strong. VoIP is Here to Stay Some form of regulation seems inevitable, but the historical models of control at a national level seem doomed to failure. Total convergence to IP is coming and VoIP is just one part of the wider telecommunications picture. The next twelve months will see most of the major ISPs, incumbent and mobile service providers and cable companies entering the broadband voice market. Following this, the first steps towards mobile VoIP will start to reach the end-user, through software clients for WiFi devices or even offered by third parties over 3G networks. VoIP is coming to your office, your home and, eventually, to your pocket.