Why Voice over IP Is on Hold

Voice over Internet Protocol (VoIP) technology, which allows enterprises to transmit voice calls over data networks, was supposed to make copper telephone networks obsolete and save companies millions of dollars in communication costs. But those ambitious goals have yet to be realized, and vendors are trying to unravel the mystery behind the technology's slow acceptance.

Call quality, unstable technology, and the perceived oddity of migrating an enterprise's voice communications to its data network used to be the main reasons cited for VoIP's lackluster adoption rate. No more.

"You don't hear a lot of talk anymore about voice quality or QoS (quality of service)," Frost & Sullivan VoIP analyst Jon Arnold told NewsFactor. "There's enough confidence and faith in the technology. A lot of the gap has been bridged, although it's not perfect."

So, why are enterprises still hesitant to deploy VoIP on a wide scale -- and why are service providers still twiddling their thumbs?

Education Needed

The slow pace of VoIP deployment is connected not only to the economic downturn, but also to a lack of customer education or acceptance, according to Ralph Santitoro, director of network architecture at Nortel Networks (NYSE: NT - news).

To remedy that shortfall and educate enterprise customers, he said, Nortel now offers a network assessment program in which Nortel business partners "crawl through" a company's Ethernet network to determine its fitness for IP telephony.

Cisco Systems (Nasdaq: CSCO - news) also is trying to teach customers about the business benefits of voice over IP. "Customers aren't aware they can get QoS in a corporate network," said Hank Lambert, director of product marketing in Cisco's enterprise voice and video group. "When they talk about voice over IP, they confuse [it] with voice over Internet. That's a very different application of voice over IP."

Currently, most corporate applications send voice calls through a company's data network and tie in to the standard copper-wire phone system at some point, avoiding the open Internet altogether.

Currently, most enterprises adopting VoIP are focusing on voice virtual private network (VPN) applications, said Bob VanSickle, vice president of the Americas at Vocaltec, the company that introduced the first PC-to-PC voice client back in 1995.

With this technology, companies with numerous remote locations can use small gateway appliances that interface with their PBX (private branch exchange -- a private telephone switching system) to place calls that bypass the phone companies' legacy networks, creating a secure voice connection. And one large retail chain is using its frame relay links, which are idle during the day, to do unlimited calling between stores, VanSickle said.

He noted that return on investment for such VoIP projects usually can be achieved in less than six months. "You're not spending money to hear a lot of garbles, clicks and buzzes," he said. "Interoffice communications are also lower risk."

Of course, VoIP is better suited to some applications than others. For example, some service providers that offer IP voice clearly state in their ads that they do not support 911 emergency services. "That might slow the adoption for certain applications," Santitoro noted. Cisco, for one, has addressed this problem by introducing an emergency responder server that gathers information about the location of an IP phone.

Static About Security

Unlike VPN-based voice over IP, the adoption curve will be steeper for IP PBX devices that allow users to place calls over the open Internet, VanSickle said. Slower acceptance of this technology will be due partly to technical problems -- packet jitter, missing and dropped packets, and compression hurdles -- and partly to security concerns.

Sending voice packets across firewalls, for example, is a potential nightmare for some IT managers. "When you packetize everything, the networks don't know how to distinguish very well," Arnold said. In other words, identifying which packets are or are not acceptable in terms of network security is a difficult task.

VoIP handsets also have their share of security vulnerabilities. Theoretically, hackers wanting to eavesdrop would not need to establish a physical connection to tap a VoIP phone line because the phone is connected to computers over the open Internet. VoIP phones also have IP addresses, which means anyone with a browser could access the phone's Web page and modify its features and options.

But tapping an IP phone call is a lot harder than it sounds, VanSickle said, because packets follow multiple geographic paths and pass through different gateways to reach their destination. "Where do you place the tap, and how do you reassemble the packets?" he said.

Integration Obstacles

Security issues aside, interoperability, or internetworking, is also key to promoting widespread adoption of VoIP over the open Internet. For example, in today's technology market, one vendor's flavor of session initiation protocol (SIP) -- a signaling protocol for Internet conferencing, telephony and instant messaging (news - web sites) -- may not be identical to another vendor's.

"Although the equipment meshes 90 percent of the time, there will always be glitches," Arnold said. "Until you can throw everything into the pot and have it all work, no carrier in their right mind is going to have a large-scale deployment."

Although these obstacles to adoption are not insurmountable, overcoming them may take time.

Inert on IP

Service providers are the final piece of the VoIP puzzle, and they have been slow to deploy the technology and QoS-level agreements, Lambert said. But there are positive signs for VoIP on the horizon: Domestic RBOCs (regional Bell operating companies, such as BellSouth (NYSE: BLS - news), Ameritech and Nynex, among others) will need VoIP technologies in order to offer local phone service to customers outside their home regions, according to Arnold.

"If RBOCs push further down the road, they're going to need IP packet technologies to do it," he noted. "They're not going to build out their copper networks. That could serve as a big stimulus" to sales of VoIP services and equipment.

Even so, the RBOCs currently are dragging their heels on VoIP trials, putting the small, innovative equipment vendors running on limited capital resources in jeopardy. "There's nothing pushing [the RBOCs]," Arnold said. "Everyone is hoping they are going to do it all."

But there is an "X" factor that could change the RBOCs' tune: Cable companies, such as Cox Communications, are rolling out IP telephony services over HFC cable networks. If cable operators begin to make inroads into homes and businesses, the RBOCs may be forced to pick up the pace.