Telcos Pitch Voice/Data Convergence

SAN MATEO (03/27/2000) - With business seeking to cash in on the promise of drastically lower costs associated with making voice calls via data networks, old-line telecom giants are pushing into the converged voice/data field.

In an effort to fend off the mounting pressure from upstart rivals, MCI WorldCom this week will unveil a comprehensive convergence strategy aimed directly at the enterprise.

MCI WorldCom officials pointed to a demo with several other vendors at the Spring 2000 Voice on the Net (VON) conference going on this week in San Jose, Calif. There the carrier will shoot voice packets across multivendor, multiprotocol networks.

Industry watchers speculated that elements of MCI WorldCom's new strategy might include an official voice over frame-relay service, an existing capability that has gone undersupported by the major carriers but that would appeal largely to corporate IT.

But more important than any particular service is the indication that carriers are ready to get out front with VOIP (voice over IP) plays, analysts said.

"A lot of these companies want to be out there with some sort of convergence product so they don't fall under the perception that they are just telcos that don't understand data," said Melanie Posey, an analyst at International Data Corp. (IDC), in Framingham, Mass.

Indeed, the long-talked-about promise of running voice as packetized traffic over IP networks, which should introduce much lower cost and largely replace leased lines, may finally be coming to fruition.

"VOIP is already off the ground. Minutes of use are growing steadily and the equipment market is doing very well," said Tom Valovic, a research manager at IDC. "I think this year and next year we will see continuation of this growth."

IDC predicts that VOIP use will spike significantly next year (see related chart, page 1), and vendors are getting in place for that to happen.

About 40 CLECs (competitive local exchange carriers) have come out with integrated voice and data services. But unlike major carriers, these emerging carriers are not saddled with having to provide traditional offerings such as private line service.

Users, too, are saddled with existing systems, and it will likely be up to carriers such as MCI WorldCom to come up with methods to allow voice traffic to traverse IP, ATM, or frame-relay networks.

"You have to address the infrastructure that is in place. That infrastructure won't be replaced and ... vendors are attacking it from all angles," said John Kuzma, senior analyst at RHK, a telecom market research company in Milwaukee.

"But it is all starting to come together. The early adopters are the small CLECs, and they are starting to put this in the public network."

Along with the interest among big players such as MCI WorldCom, the sheer volume of VOIP announcements may speak of the evolution of the market.

For instance, GTE Internetworking (GTEI) this week at the VON show will roll out a nationwide VOIP service, which according to the company will cover 80 percent of the U.S. metropolitan population.

The service, called ESP (Enhanced Service Provider) Direct, is an inbound VOIP service directed at service providers that offer services such as unified messaging, call waiting, and voice mail.

"One key factor for these providers is being able to reach a large customer base," said Nick Damenti, director of VOIP services at GTEI.

Also at VON, Lucent Technologies will roll out three enhanced voice and data services that run on Lucent's PacketIN Application Server, which is based on the company's Softswitch technology.

The services -- Network Contact Center application and Online Communications Center service -- are prepaid and postpaid calling card services for VOIP networks.

For enterprise users, this kind of integrated VOIP capability has been lacking.

"As vendors get farther along on the new kinds of PBXs, we will have true convergence," said Goutham Surapaneni, chief of technology operations at Complete Business Solutions, in Farmington Hills, Mich.

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