Fueled by a group of traditional telecommunications service providers, voice-over-IP services are expected to become more prevalent within the next 18 months.
AT&T, MCI WorldCom, Bell Atlantic, SBC Communications and BellSouth are busy setting up packetised voice trials and planning new integrated voice and data services for business and residential users.
To prepare for this change, IDC expects service providers around the world to spend nearly $1 billion installing voice-over-IP gateways by the end of 2001.
Because these new, unified carrier networks will simply be switching packets, integrating voice and data traffic will be easier than it is with separate voice and data networks.
That will result in services such as unified messaging, in which voice, fax and e-mail are all combined.
These new networks will also be less expensive to install and easier for carriers to manage than traditional voice networks.
So when the likes of AT&T and BellSouth start rolling out voice-over-IP service bundles, business users should expect cost savings, says Lisa Pierce, director of telecommunications services at Giga Information Group.
"But because big businesses get such great rates now, it is going to be hard for the carriers to compete on price. The carriers will be adding a lot of bells and whistles to their offerings to attract customers," she says.
Despite the promise of voice-over-IP services, one user who has deployed a private voice-over-IP network questions whether carriers will be able to quickly become experts in voice-over-IP technology.
"I'm not sure carriers can do a much better job supporting IP telephony than I can," says Rod White, vice president of telecommunications for Home Shopping Network. "And I don't want them to become experts by trying things out on me."
It seems many other users feel that way, too. A recent study by Faulkner Information Services indicates that only 7 per cent of enterprise customers have deployed any voice over IP, and have installed it in only small pilot projects in least-critical environments.
Nevertheless, most local and long-distance service providers have some kind of voice-over-IP blueprint, even though some of those services may not be pure IP.
Most traditional carriers considering voice-over-IP services are actually running IP traffic over ATM networks because ATM provides quality-of-service (QoS) guarantees necessary for voice quality.
MCI WorldCom is the exception. It is in the process of putting together an IP network that will support combined voice and data services, says Frank Nigro, director of converged services at MCI WorldCom.
MCI WorldCom is in the midst of an employee-only service trial that the company will soon expand to include enterprise business users.
Nigro says MCI WorldCom is in the process of building a 100 per cent pure IP backbone that will take advantage of existing facilities, but will include new electronics and software.
"This is not a science project anymore," Nigro says. "We're constructing a carrier-grade IP network to support large business users' on-net and off-net voice and data traffic."
While MCI WorldCom is looking at supporting voice-over-IP services over a pure IP network, AT&T is looking at offering the technology over its Internet backbone.
AT&T expects to offer a voice service over its Internet backbone before year-end. With the service, customers will be able to send intracompany voice, fax and off-net voice traffic over AT&T's ATM Internet backbone, says Cliff Radziewicz, general manager of global IP telephony services at AT&T.
In September, AT&T started a service trial that provides multinational enterprise users with voice services over AT&T's Internet backbone. But the trial is limited in scope - it has only two customers on the network. One customer is making voice calls from the U.S. to the U.K., and the other customer is making calls from the U.S. to Asia over the Internet.
"The trial is going well, and we expect to increase the call volumes soon," Radziewicz says.
AT&T and MCI WorldCom are clearly gung-ho about voice over IP, but Sprint has a different take on the technology.
Sprint will not be rolling out any managed or integrated voice-over-IP services, but rather will point customers looking for an alternative to traditional circuit-switched voice services to its Integrated On-Demand (ION) service.
ION lets business users send voice and data traffic over the same ATM-based connection. AT&T has a similar service called INC. Both services rely on ATM rather than IP for service delivery.
Bell Atlantic, which is trying to become a long-distance power player, does plan to support voice-over-IP services in the future.
While Bell Atlantic will continue to use its existing access network to deliver phone calls to customers, it will convert circuit-switched voice traffic to ATM for long-haul connections.
The company says it plans to start IP-voice service trials later this year, but would not give specific details.