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Companies and organizations around the world are
deeming it necessary to reduce the rising communication costs. Today,
when the consolidation of separate voice and data networks is no more
an alien concept, there appears to be an opportunity for significant
reduction in communication costs. Accordingly, the challenge of
integrating voice and data networks is becoming an important priority
for network managers. Since data traffic is growing much faster than
telephone traffic, a need has been identified to transport voice over
data networks, as opposed to the transmission of data over voice
networks. This has led to a growing popularity for Voice over IP
(Slater, 2001).
Although voice over IP (VoIP) has been in existence for many years,
it is only recently that it has begun to take off as a feasible and
practical alternative to traditional public switched telephone networks
(PSTN). Interest and acceptance has been driven by the attractive cost
efficiencies that organizations can achieve by leveraging a single IP
network to support both data and voice. But cost can never be the only
consideration: cost alone is not enough to complete the evolution;
service and feature parity is also very important. Customers will not
accept voice quality or service that is inferior to what they are used
to with a PSTN and, until now, VoIP fell short in delivery (Voice over
IP (b)).
VoIP:
Today, VoIP’s appeal has risen primarily due to the low-cost, flat
rate pricing of the public Internet. VoIP allows people to make
telephone calls using a computer network, over a data network like the
Internet. The technology converts the voice signal from the telephone
into a digital signal that travels over the internet then converts it
back at the other end so it becomes possible to speak to anyone with a
regular phone number. VoIP may also allow the making of calls directly
from a computer using a conventional telephone. However, in order for
VoIP to be successful, many components will have to be designed to
accommodate these networks, such as the access gateways that link the
data and the telephony networks among others. Applications that offer
Voice over IP services will have to include a comprehensive technology
set that reduces the impairments caused by sending voice over data
networks that were not equipped to handle it. Quality of Service needs
to be considered by network designers as an important factor. A Voice
over IP application meets the challenges of combining legacy voice
networks by allowing both voice and signaling information to be
transported over IP (Slater, 2001).
Typically there are three styles of Voice over IP calls. VoIP calls
can be placed either from PC to PC, or it could be from a PC to phone
or from phone to phone. The principal components required for the
process are the gateways, which adapt traditional telephony to the
Internet. A call connects from the local public switched telephone
network (PSTN) to the nearest gateway server, which in turn digitizes
the analog voice signal via pulse code modulation, then compresses it
into IP packets, and transmits it onto the Internet for transport to a
gateway at the receiving end (Dunne, 2001).
Advantages of VoIP: One of the main reasons and probably the most
significant interest in the race to send voice over IP is the cost
advantage that this process offers organizations due to the flat rate,
low cost of Internet traffic. Generally the benefits of technology can
be divided into three categories:
Cost reduction: For long distance communication, reducing telephone
costs is always a popular topic and provides a good reason to introduce
VoIP, but the actual savings over a long term are still under analysis
and debate. These savings from lower prices are however, based on
avoiding telephony access charges and settlement fees, rather than
actually reducing resource costs. Economies of scale are also created
via VoIP as the sharing of equipment and operations costs across both
data and voice users can also improve network efficiency, since excess
bandwidth on one network can be used by the other (Wright, 2001).
Simplification: It is common knowledge that through the use of VoIP,
an integrated infrastructure comes into being that supports all forms
of communication. This allows more standardization and reduces the
total equipment complement. The economies of putting all forms of
traffic over an IP based network will attract companies towards this
option, simply because IP will act as the binding factor regardless of
the underlying architecture. This combined infrastructure can support
dynamic bandwidth optimization and a fault tolerant design (Wright,
2001).
Consolidation: People are the most significant cost elements in a
network, so any opportunity to combine operations and eliminate points
of failure and to consolidate accounting systems would definitely be a
plus point. In the enterprise, SNMP based management with the
appropriate MIB structures can be provided for both voice and data
services using VoIP. Universal use of the IP protocol for all
applications will reduce complexity and provide more flexibility
(Wright, 2001). Transmitting Voice over Internet Protocol is also
beneficial for the following reasons.
Reduction of Redundant Networks: This comes out to be a significant
element in the cost-reduction category because typical PBXs (public
branch exchanges) are usually also very costly to operate. Hence, use
of VoIP would result in substantial savings in infrastructure costs
even within a single building or facility (Wright, 2001). Toll Bypass:
It is the general view of the business community that via VoIP,
convergence will result in savings on long-distance toll calls. This
will be especially true for long distance communication because in
international voice calls, a substantial part of the cost is derived
from regulatory fees. In most cases, these surcharges don’t apply to
circuits carrying data traffic. VoIP would result in a much less
expensive way to make voice calls (Wright, 2001).
Diverse Voice Call Routing: Although the telephone services are very
reliable, large companies often buy multiple, diverse circuits to the
local telephone company’s exchange to act as a reserve system or as
backup in times of emergency. However, these circuits are rarely
utilized and ultimately result in increased fixed costs and doubling of
the cost per month the company must pay for leased-line telephone
access circuits. However, with VoIP, if a failure occurs on the primary
telephone circuit at one location, the data network could be used to
route calls temporarily to PBXs at other company locations. Hence,
there is no longer the need for a redundant telephone circuit by
leveraging the company’s data network (Wright, 2001).
Facilitation of Adds/Moves/Changes: For a company, it is often
expensive to maintain a typical work area that includes data and
telephone connectivity, especially when individuals are constantly
moving from one desk to another. With a DHCP (Dynamic Host
Configuration Protocol, which enables dynamic assignment of IP
addresses to devices on a network), moving a PC from one LAN to another
will become simpler due to auto-configuration functionality. However,
moving a phone extension from one desk to another (or to another
building) is not as simple, usually requiring reconfiguration of the
office PBX systems. As VoIP is becoming more popular and widely used, a
new type of PBX and IP telephone station has entered the marketplace.
An IP Phone can automatically configure itself as a DHCP client. Now a
desk needs only a single data jack, and the IP Phone can double as a
hub or switch to provide a data port for the user’s PC. One or more
PCs, or perhaps an IP fax machine, can be directly connected to the IP
Phone, and all of them can utilize the local IP network. Moving
employees from one desk to another is now less costly and more
economically feasible for the organization (Wright, 2001). Falling IP
Equipment Costs: When voice is converted to packets, this puts
computing power for data networking equipment near the endpoints of the
network, where the packet-switching equipment shows a faster
improvement in price/performance than switched equipment. With many
companies feverishly developing new features for IP equipment, the
price/performance of packet-switching equipment should continue to
improve. Packet-switching equipment technology is able to keep pace
with the increase in demand for IP.
Data Manipulation: A single network connection on the Web (via VoIP)
also allows the Internet to host multiple forms of communication such
as voice mail, e-mail and video images instead of using a conventional
(and costly) telephone line. Information will be able to be accessed
and delivered in several forms.
Internet-based information (such as e-mail and e-commerce) can now
be accessed by telephone by using voice commands. A desktop computer
(in addition to receiving e-mail) can now function as a business
telephone and fax machine. Therefore, because of VoIP, organizations
now recognize the potential for closer interaction with their customers
(and potential customers). For example, instead of breaking a phone
connection to transfer a potential buyer to customer service (or worse,
losing them to a competitor’s customer service rep or Web site), a
sales representative can access the appropriate customer service rep or
Web page and provide the information while maintaining the original
connection (Dunne, 2001).
Since the Internet is a packet switched or "connectionless" network,
the individual packets of each voice signal travel over separate
network paths for reassembly in the proper sequence at their ultimate
destinations. This makes for a more efficient use of network resources
and more reliability than the circuit switched PSTN (Slater, 2001).
Private voice networks require n (n-1) access links, whereas private
data networks require only ‘n’ access links.
Voice has per-minute distance sensitive charge, whereas data on the
other hand has flat time-sensitive charges. Data transmission has no 64
kbps bandwidth limitation, which means that we can provide high
fidelity voice transmissions very easily (Wright, 2001). For the above
advantages that VoIP systems offer to organizations, their growth is
predicted to be stellar. Research firms estimated that the compound
annual growth rate for IP-enabled telephone equipment was 132% over the
period from 1997 to 2002. Industry analysts had estimated that the
annual revenues from IP fax gateway market will increase from less than
$20 million to over $100 million by the year 2000. These forecasts
themselves are impetus enough for firms to invest in technologies that
involve the transmission of voice over IP (Minoli & Minoli, 1998).
A research carried out in 1999 of analysts and IT managers proved
that high-quality voice was expected to be placed over data networks in
the near future. The research, which looked in to the current state of
affairs in the voice-over-Internet Protocol (VoIP) technology
throughout the world, found that a majority of the people foresee that
15 to 20 per cent of all voice traffic will be transmitted over data
networks within the “near to mid-term.” The report also found that 83
per cent of respondents believe VoIP will be “broadly used” within the
next five years (VoIP picks up support from high-tech executives).
A large number of people thought that the most common commercial
applications for IP telephony will be voice. Next in the line of
popularity would be fax and it would be followed by video.
Respondents were also asked where they thought the “greatest
long-term applications of VoIP will take place.” The answer most
commonly gotten was large, long-distance or telecommunications carriers
(41.1 per cent), followed by major enterprises with remote locations
(33.8 per cent), ISPs offering voice as content (17.7 per cent) and
competitive local exchange carriers (16.9 per cent). Hence, a large
number of people believed the advantages of VoIP to be greatest for
long distance communication (VoIP picks up support from high-tech
executives).
The regions of the world that are expected to have the largest
concentration of VoIP applications in the short terms are the U.S. (74
per cent) and Europe (61 per cent). Asia, Latin America and Africa
followed in the same order. Some of the people in the survey had
reservations about the use of VoIP technology and these reservations
were, the sacrifice of voice quality, inferior service quality to the
public switched telephone network and diminishing functionality (VoIP
picks up support from high-tech executives).
Less than 20 per cent thought that the problems of initial
investment and the challenge of getting voice and data personnel to
collaborate were considerable obstacles for an organization adopting
VoIP. H.232 was anticipated to be the most likely standard to emerge in
VoIP technologies. Lastly, a large majority, more than two-thirds, of
respondents expected VoIP to take place directly at the desktop on a
user's PC within the next 2 to 3 years (VoIP picks up support from
high-tech executives).
Impact of Voice over Internet Protocol: Beyond the advantages and
disadvantages, in the short term VoIP will bring about major
transformations in the telecommunications business and in the mid term
it will take over from fixed- line calls.
An example of how VoIP will have a strong impact on the sector is
the ongoing debate in the United States, where the FCC (Federal
Communications Commission) must decide whether to classify this
technology as communications or information. This is by no means
trivial. If it is eventually considered as an information service, the
national telephony companies that use VoIP will be exempt from paying
the tariffs that the local telephony companies impose on them for the
use of their local communications infrastructures. If, on the other
hand, it is considered as communications, then the tariff system will
be applied and the growth of IP telephony will be slowed down.
Recently, the FCC rejected the application of AT&T, one of the
largest American telephony companies, to be exempt from payment of
these tariffs on long distance calls made over the Internet. According
to the company, had the measure prospered something between 8,000 and
9,000 million dollars would have been saved. In this case the FCC
considered that VoIP is a communications service. However, other
applications presented before the FCC are still awaiting a verdict so
the decision is not completely closed and it will depend on each case
(Voice over IP (a)).
VoIP may be the first step towards major changes in the
telecommunications market. If they eventually consider VoIP as an
information service, the local telephony companies and the traditional
sellers of communication equipment will be the ones most severely hit.
On the other hand, the new generation of equipment sellers, the TV
cable companies and the long distance telephony companies will stand to
gain most.
The keys to the future of VoIP lie in the type of regulation applied
to the development of new applications around this technology and the
alliances forged between hardware and software companies so that they
can enter this market in a big way. Undoubtedly, VoIP represents a huge
business opportunity that few companies are going to let slip through
their fingers; it also poses a serious threat to traditional telephony
(Wright, 2001).
Organizations are increasingly looking to VoIP as an
attractive alternative to traditional PSTN. However, deploying VoIP is
not as easy as flipping a switch, so it is important that an
organization considers all the functionality they are going to require
from their VoIP network and are aware of the potential issues that go
along with deploying a VoIP network. Just as companies choose various
protocols for their data networks, they will choose various protocols
for their VoIP requirements, depending on the business and technical
requirements at hand. Although the variety in VoIP protocols has caused
some confusion in the marketplace, it is precisely this protocol
flexibility that makes VoIP-based voice systems so much more useful
than legacy voice systems (Mark, 2003).
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