IP Telephony Vendors Look to Advanced Services

HONG KONG (05/09/2000) - Internet Protocol (IP) telephony is evolving from low-cost phone service toward advanced services such as unified messaging, but in Asia it is still helping upstart service providers take a foothold in newly liberalized markets, vendors and analysts said at a conference here today.

Asia is a hotbed for deployment of the technology, which allows voice calls to be carried as data packets over the Internet or private IP networks, observers said. Either type of operation can be set up more quickly and with much less investment -- analysts estimate 60 percent less -- than a traditional phone network.

Basic IP telephony can make big payoffs for carriers and end-users in Asia, but the time to act is now, carrier representatives and others said at the iLocus.com Show (Asia 2000), organized by iLocus.com, a London-based research and consulting firm specializing in IP telephony.

IP telephony companies rate Asia the most promising region of the world, according to an iLocus survey of the industry, according to Jahangir Raina, director of the company.

The technology is making big inroads into the business, even among Asia's telecommunications giants such as Japan's NTT Communications Corp., which in January launched an IP telephony clearinghouse. [See "NTT Launches Asia's First IP Telephony Exchange," Jan. 24.] IP telephony is hotly debated within NTT but the company is beginning to see it as strategically important, said a top evangelist for the technology at NTT.

"Last year, we had a lot of resistance in the company, but now we are a kind of champion, so we have a lot of power," said Tetsuro Mikami, vice president of IP business development in NTT's Global Business Division.

At least one carrier, Beijing-based Jitong Communications Ltd., is taking advantage of the lower costs to sell voice services in China, according to Gu Yiping managing director of the carrier's Hong Kong subsidiary, China Jitong Communications Holdings (HK) Ltd, who spoke at the conference.

State-owned China Telecom's monopoly on traditional fixed-line service creates an opportunity for companies recently licensed to offer IP telephony at one-third the cost, he said. Jitong is one of the four licensed companies, he said.

However, like other carriers and IP telephony clearinghouses (which provide billing, settlement, and other services for carriers that want to start offering IP telephony), Jitong in the long run plans to extend its offerings to more advanced services.

Value-added services such as unified messaging, videoconferencing, Internet-based collaboration and virtual private voice networks will expand the IP telephony business over the next several years, as traditional telecom networks are deregulated and the price advantage of the new technology shrinks.

"The arbitrage opportunities are vanishing, and they're vanishing faster than anyone thought," said Roderick Beck, a telecommunications analyst for venture capital firm Broadmark Capital, in Seattle, and a consultant to iLocus.com.

"The costs will converge."

Regulation is keeping the cost of the public switched telephone network (PSTN) artificially high, while service providers can actually add capacity at a cost not much higher than for an IP network, Beck said.

Vendors including software maker VocalTec Communications Inc., telephony application service provider IPX Inc., and clearinghouse eGlobe Inc. pointed to a future in which IP voice calls are a low-cost or free element of broader services such as unified messaging (one-stop e-mail, voice calls, voice mail, and fax), videoconferencing, Internet-based collaboration, and e-commerce sites with the option of speaking to a salesperson.

VocalTec later this year will jointly offer with its carrier partners a set of enhanced Web-based services on top of its software that allows PC users to make phone calls using their computers, said Elon Ganor, Vocaltec CEO, in a keynote address.

The services will extend VocalTec's TrulyGlobal Inc. consumer communications portal, first with free enhanced features and later with other capabilities for which service providers will charge fees.

Quasiworld, a start-up preparing a virtual-reality portal in Singapore, is looking at IP telephony as an extra element in addition to chat, virtual-reality shopping, and interaction among avatars (animated characters that represent the user in cyberspace.) Voice over IP can be part of a richer experience for current users of messaging systems such as ICQ, said Quasiworld CEO Alex Kusuma, who attended the conference to learn more about IP telephony. The company, part of Singapore's CircleCom Group, will launch its portal in the next quarter, he said.

"This is the next version of ICQ. Instead of just chatting, you'll be interacting," Kusuma said.

ILocus.com, in London, can be reached at +44-20-8813-8885 or online at http://www.ilocus.com. China Jitong Communications (HK), in Hong Kong, can be reached at +852-2520-6160 or online at http://www.jitong.com. VocalTec, in Herzliya, Israel, can be reached at +972-9-970--7777 or online at http://www.vocaltec.com. NTT Communications, in Tokyo, can be reached at +81-3-3539-2480 or online at http://www.ntt.com.

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