Phone industry facing VoIP threat

4 Jan 2005

What started as a trickle has become a flood. Voice-over internet protocol (VoIP) services have been around for over a decade but a crumbling copper telecoms infrastructure and the immaturity of the necessary technologies to make packet-based phone calls a reality have withheld the advance of these services.

The past year, however, has seen a number of major advances in VoIP systems and services. Thanks to the advent of an enlightened regulatory approach to internet telephony and enterprising efforts and vision on the part of various entrepreneurs Irish businesses and consumers are well on their way to enjoying cheaper phone calls and an interesting array of offerings.

VoIP services are already available to Irish computer users who use DSL through the provision of services online by players such as Net2Phone and Skype. Major call centres in Ireland are already practicing VoIP as an efficient means of intelligently routing and managing calls, and reducing the cost of calls to branch offices in other countries.

However, the coming of age and realistic grasp of VoIP’s potential happened in recent weeks when it was revealed that Enterprise Ireland’s (EI) enterprise centres across the country are to use VoIP as the delivery system for their telecoms needs. The South East Enterprise Centres Association (SEECA), with the support of EI, has recognised the potential of VoIP to cut communications costs efficiently, while maintaining a high standard of quality. The SEECA has joined forces with new telecoms player VOIP Ireland to deliver the service for all enterprise centres across Ireland. According to Brendan Carroll of VOIP Ireland, the service will be rolled out to more than 100 enterprise centres countrywide, bringing internet telephony to between 1,500 and 2,000 companies. “DSL-ready areas will be our first obvious target but we are also looking at the possibilities for connectivity over wireless broadband,” Carroll said.

This enlightened approach to managing phone costs is only the latest development in a rapid train of events that have occurred in Ireland in recent months. While various players such as VOIP Ireland, Cicero Networks and Wireless Projects have been readying services for well over two years, recognition of VoIP as a real factor in Ireland’s telecoms future occurred in October when the Commission for Communications Regulation (ComReg) introduced a new ‘076’ number range for forthcoming VoIP services. Under this system, businesses and home internet users can also arrange to have existing phone numbers or new numbers pertinent to their local prefix in the country set up.

One of the first companies to secure authorisation from ComReg for the new VoIP numbers is Dublin-based Wireless Projects, which has secured the 777 0000 to 777 9999 range of numbers. The company intends to offer users of its secure Wi-Fi broadband service Invisible Access to these numbers this year. Allan Brennan, managing director of Wireless Projects, said the company expects a healthy demand for VoIP over the coming years and cited the fact that 25pc of apartment owners in the Irish Financial Services Centre’s Customs House Harbour development have signed up for the Invisible Access service.

He said business and home users will immediately save €300 per annum in landline charges as the new numbers are adopted, “not to mention the call savings as the per-minute landline prices will be more than halved”.

Brennan said that as more applications move in the direction of IP, quality issues that traditionally hampered call quality will be phased out. “If you are using a broadband technology such as wireless broadband whereby it’s completely digital then the call quality is 100pc digital. It is only when any part of the communication involves copper cabling that quality gets eroded. It is for this reason that we don’t work with Eircom on homes that use asynchronous DSL because that involves elements of copper networking.”

There is a growing school of thought that with the advent of VoIP and the tying together of internet telephony with wireless broadband services — such as Wi-Fi and forthcoming services such as WiMax, which can provide up to 10MB of broadband over a range of up to 30 miles — the mobile industry could be badly hit. Carroll’s colleague Brian Powell says that the advent of cheap internet calls on mobile phones that work over Wi-Fi and VoIP will have an adverse effect on mobile operators. “VoIP will be a disruptive force. The real cost to consumers of telephony services is landline to mobile calls. That is going to change once WiMax comes into the picture in 12 to 18 months. Once internet phone calls over WiMax hits, mobile operators are going to lose 80pc of their revenues,” he says.

Established fixed-line operators are also nervously eyeing the advent of internet telephony and its potential to eat into their revenues. However, one young Dublin company has the answer. Rathfarnham-based Cicero Networks is developing technologies that will help fixed-line telecom operators to participate in the mobile communications business by allowing businesses to make massive savings on calls by making clever use of Wi-Fi, Bluetooth and VoIP.

Using Cicero, subscribers can make and receive calls using standard wireless devices such as mobile smart phones, PDAs and laptops at home, in the office or at any public hotspot location. Cicero works by routing calls on to lower cost networks, such as the fixed-line PSTN or the internet, through broadband IP connections. Elaine Treacy, vice-president of marketing at Cicero Networks, said the average price of a peak rate business call over a mobile phone was 75 cent. “By turning this into a VoIP call the cost of that call could be reduced to 15 cent,” she said.

Ross Brennan, chief executive officer of Cicero Networks, demonstrated how the service can also be used on PDAs. The user downloads the company’s Cicero Phone product on to their mobile phone or PDA in a process similar to installing a ringtone and the user can make VoIP calls when they are within a wireless local area network. According to Brennan, the company is close to closing deals with two locally based fixed-line operators as well as a fixed-line operator in the UK.

“VoIP is a hugely disruptive technology and we see it as a mechanism to allow fixed-line operators to reduce the prices for wireless services. Voice is still the killer application on the mobile phone but the cost of calls are restrictive,” Brennan concluded.

Pictured at the launch of VoIP services to Enterprise Ireland’s enterprise centres across Ireland were: Minister for Enterprise, Trade and Employment Michaél Martin TD; and Brian Powell, managing director VOIP Ireland

By John Kennedy