EXECUTIVE OVERVIEW

Carrying voice traffic over a network other than that of the world's public telephone would have been unthinkable at the beginning of this decade. However, as it has done to so many other preconceived notions, the internet has changed that thought. Voice calls that were traditionally carried by standard telephone networks are now being made across the internet. While an AM radio sounds somewhat more clear than an internet phone call, technologies are being created which are making internet telephony a reality to users and a threat to phone companies.

The limits of this technology rest in the network infrastructure itself. Internet networks have finally reached the speeds and capacities necessary to handle not only the vast amount of web traffic flowing across the internet, but also the extra data which voice calls add. However, given the decentralized nature of the internet itself, it will take some time for enough networks to upgrade to a level at which service will be as reliable and easy to use as the public phone network.

Another limitation is that of locating users on the internet. In the telephone network, each customer is identified by a unique phone number, which is given out to others for the purpose of communication. In the internet network, users are identified by a unique IP address, but most people are dynamically assigned this IP address each time that they log on. The number for this IP address is likely to be different each time a user logs on to the network. This means that simply "calling" your friend at his or her internet address is not as simple as it might seem. Directory servers provide listings of users on-line and scheduled calls are helping to make the call process easier.

The largest obstacle for this technology is the question of how Internet Service Providers (ISPs) will price internet access in the near future. Today, almost all internet subscribers, both dial-up and dedicated, pay a flat monthly rate. This allows users to "surf the net" for as long as they want without paying per minute charges like they would on a phone call. ISPs have made it clear that flat-rate pricing will not last, and usage-based pricing will become a part of the internet. To date, the large ISP's have delayed the implementation of usage-based pricing for various reasons, the most pressing of which is that there are other revenue-based issues that need to be addressed. For instance, in today's internet environment, when one internet carrier passes traffic to another carrier, there is no "toll" paid to the receiving carrier. This gives smaller networks providers total access to the larger backbone networks for free, creating a situation with which the backbone providers are not happy. Once these types of problems are resolved, it will be more feasible that the internet presents a true alternative for making inexpensive long-distance phone calls.

The current limitations of the internet are in no way hindering the development of this technology. Large, well-known companies as well as small start-ups are constantly developing new ideas and new methods for handling internet voice traffic. In fact, many of these companies are betting their futures on voice over the internet products. Users are also driving development efforts by making it clear that if voice over the internet technologies are built, they will be put to use. Today, these users suffer through choppy, AM radio-like calls; however, quality is improving each day. Even the telephone carriers, the companies which have the most to lose from widescale usage of these technologies, are jumping on board, perhaps giving the "voice-over-internet industry" an official seal of approval.

While voice over internet technology is developing rapidly, there are not many companies that should be looking at this technology today. Most businesses not only require, but often times demand, high sound quality and reliability. Neither of these attributes is consistent with today's voice over the internet technologies. Some players in the internet industry are also creating hybrid pstn/internet technologies which will blend today's data communications applications with voice applications. An early example of this type of technology is MCI's V-Class product line, codenamed "Vault," which is described in this paper. These products hold the greatest promise for serious corporate use at this point. It is not only a single-line solution - it also allows both voice and data traffic to traverse the network that is best suited for each type of traffic. This will help the quality and reliability issue greatly.

While it is not recommended that companies immediately begin wide-scale deployment of voice over the internet technologies, it is highly recommended that these organizations begin research on how they might incorporate these technologies into their networking plans. By introducing these technologies, they will be able to move quickly into deployment when quality and reliability levels reach acceptable levels.