SIP it and see

1 Feb 2005

At the dawn of 2005, voice-over internet protocol (VoIP) appears to be the buzzword de jour as new global operators ratchet up millions of new customers and locally a mixed bag of old and new players such as VOIP Ireland, Leap Broadband, Smart Telecom, Esat BT, Wireless Projects and even Eircom is revealing its hands on what it intends to do with VoIP.

In recent months, the Commission for Communications Regulation revealed a special 076 prefix for VoIP numbers in Ireland and has paved the way for consumers to use their existing phone number for a VoIP connection. It is estimated that most phone users could save up to €300 a year.

For the new players in this field, VoIP represents a fresh canvas upon which to redraw the Irish telecoms landscape but for existing players, VoIP combined with new technologies such as session initiation protocol (SIP) represents a double-edged sword. Get it right, you’ll be okay. Get it wrong, prepare to be liquidated. The arrival of VoIP services using peer-to-peer technologies offering CD-quality phone calls for a fraction of local call costs could sound the death knell for traditional telcos.

Few people actually realise that when they make a phone call today, whether to a friend, customer or to book a theatre ticket, they are already using VoIP at some point during the call. Most existing or future VoIP customers are most likely to be adept at using instant messaging (IM) or chat, play computer games, download music and may have used a webcam on their computer. Combined and made cheap, all of these represent an explosive mix that could save or destroy a telecom operator. SIP is the technology that will make this happen.

Last week in Paris at the 2005 SIP International Conference, renowned telecoms expert Henry Sinnreich, a distinguished member of engineering at MCI, quoted the chairman of the Federal Communications Commission, Michael Powell: “I knew it was over when I downloaded Skype.”

Skype, a US VoIP firm that only last week opened up in the UK, is rapidly becoming one of the biggest voice carriers on the planet though it has no infrastructure of its own.

Sinnreich added: “Peer-to-peer presence, VoIP and IM has taken the world by storm. Skype has more users than all VoIP providers in the world by two orders of magnitude. I predict that the biggest telco in the US in 2005 will be Skype. As of 5 November 2004, Skype had notched 14 million users and some 37 million downloads.” According to market research firm Evalueserve, Skype’s customer numbers are expected to jump to between 140 million and 245 million by 2008.

Sinnreich says this is a wake-up call to the telecoms industry. “Globally telecoms companies generate US$45bn worth of combined cash flow annually. This was US$1 trillion a few years ago. The market is shrinking. Wireline is shrinking and sometimes not profitable. In the US, the telecoms industry alone is responsible for destroyed equity of US$1 trillion and one million lay-offs. VoIP start-ups hope to be profitable but there are no goldmines so far.” The combination of SIP, the technology that makes it possible for multimedia communications sessions on the internet, ones that allow voice, video, chat, interactive games and others to run all at the same time, Sinnreich reckons could change all of this.

SIP is an internet engineering task force standard protocol for initiating an interactive user session that involves multimedia elements such as video, voice, chat, gaming and virtual reality. SIP can establish multimedia sessions or internet telephony calls and modify or terminate them. The protocol can also invite participants to unicast or multicast sessions that do not necessarily involve the initiator. Because SIP supports name mapping and redirection services, it makes it possible for users to initiate and receive communications and services from any location, and for networks to identify the users wherever they are.

But it’s not just consumers that could be wooed away from traditional telecom plays, businesses are in the vanguard of true VoIP adoption, especially in the enterprise or call centre space. Last week in Paris, communication company Avaya’s chief technology officer, Mun Yuen Leong, revealed that SIP’s open architecture will play a major role in the evolution of enterprise communications by enabling easy integration with many other internet technologies and provide enough flexibility to accommodate economic migration to new applications. This, Leong said, will contribute to a reduction in total cost of ownership and enhanced productivity in organisations.

The importance of SIP to the enterprise, Leong argues, can’t be underestimated. In fact, last week, Skype revealed its entry into the business world by introducing a solution for corporate road warriors and remote workers that enables them to reduce long distance and cell phone costs. Leong said that VoIP and SIP combined are crucial to converged applications both in call centres and in situations such as voice and videoconferencing.

Leong revealed that the use of SIP technology was central to Avaya’s US$103m all-cash acquisition of Irish conferencing firm Spectel last year. “Spectel’s compatability with SIP technology was a prerequisite,” Leong said, adding that Spectel’s integration into Avaya is continuing apace. “Its product will play a key part in the whole communication range of products. We acquired them for its audio conferencing product, which is attractive for enterprise and service provider markets.

“For example, one Spectel product Data Exchange is a SIP-based client that enables data sharing such as collaborative working on vital documents amidst video and audio conferences taking place across the world. This is a key part of the whole Avaya solution set and not a separate product,” Leong said.

While most consumers and businesses will be gradually becoming familiar with the term VoIP, it is important to remind existing or future telecom players hoping to take part in this fundamental revolution that technologies such as SIP may never become buzzwords on the street. SIP will be a technology that will bubble quietly beneath the surface making possible future voice, video, chat, gaming and conference services that we take for granted in the same way as we do text messaging on our mobile phones.

By John Kennedy