Hongkong Telecom considers voice-over-IP

Hong Kong Telecommunications (HKT) disclosed last week that it is taking steps towards offering voice-over-IP (VoIP) services to both the corporate and consumer markets.

"We are actively playing on the IP field and if voice-over-IP becomes an important component, of course definitely we will be working on that," Gary Chow, general manager of marketing for the corporate market at HKT, told Computerworld Hong Kong last week. Chow was unable to offer a specific timetable for a rollout of any VoIP-related initiatives, however.

Testing is the first order of business. Currently, HKT is "actively" looking into VoIP-related technology developments and testing VoIP at both the corporate and consumer levels, Chow said. In testing various VoIP-related equipment, HKT has found a couple of "outstanding issues" that are inhibiting deployment -- standards and quality, he said.

Most of the available technology is still "very proprietary" -- there are no international regulations; and according to HKT's technical development team, the quality is not yet up to par, Chow said. Once HKT finds that the technology's quality and standards are acceptable and the product is a practical alternative for the customer, "we will definitely be in a position to do (VoIP) in a very proactive manner", Chow said.

Currently, Hongkong Telecom is testing equipment from Cisco Systems, Lucent Technologies and other "big names", Chow said, adding that HKT will continue to test any "new developments" on this front.

Along with the quality and standards issues, market acceptance is also a key factor in determining HKT's VoIP strategy. "If there is a strong demand, then we will definitely roll [VoIP] out to the marketplace to insure that we will be in a very competitive position," Chow said.

With respect to corporate vs consumer takeup, Chow said he would expect corporate customers to be more prone towards early acceptance. "I believe that [VoIP] will go earlier in the corporate level rather than the consumer level at this stage," he said.

In any event, it is unclear what would happen to HKT's traditional IDD (International Direct Dial) voice telephony services if or when a cheaper VoIP option becomes available.

"We wonder . . . will Voice-over-IP be able to take over the traditional way of international call services?" Chow said. If VoIP can deliver the same level of quality and services as traditional IDD and IDD remains at a relatively high price level, then "of course" IDD will be overtaken by VoIP, he said. However, "that is pretty questionable at this stage", he said.

Since the opening of Hong Kong's IDD market at the beginning of this year, the prices for international services are becoming more competitive, Chow acknowledged. Despite that, the pick-up rate for VoIP is still confined to small sectors of the economy where people are less concerned with quality or tend to call through the PC, Chow said.

For at least one local VoIP services supplier that hasn't necessarily been the case, however.

With respect to pick-up rates, "the only thing slowing uptake is the marketing budget", said Ryan Hendricks, CEO at MagicTel. The company has conducted marketing campaigns that sign up 8 per cent to 12 per cent of those contacted, Hendricks said.

And on the quality issue there's more than meets the eye, Hendricks pointed out.

The quality of VoIP is directly related to network management, Hendricks explained. Furthermore, most people who consider VoIP to be sub-par only have experience with public IP telephony networks, as opposed to managed IP networks like MagicTel's he said. HKT is using quality issues as a "smoke screen" to extend the "cannibalism" as long as possible, Hendricks claimed.

One of the reasons HKT is starting VoIP trials now is because the last vestige of its monopoly will disappear when the market for external telecom facilities opens up on January 1, 2000, he said. "That's driving them to act, not because they've suddenly gotten religious about IP telephony," Hendricks said.

Regardless, it will clearly be some time before VoIP catches up to IDD in Hong Kong. The outgoing minutes for the total VoIP market for Hong Kong is around one million a month, Hendricks said. In comparison, according to the Office of the Telecommunications Authority (OFTA), traditional IDD outgoing calls totalled around 125 million minutes a month last year,.

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