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Operator Calls Time: Old-Style Telephony Is On Its Way Out. In Its Place Comes T

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November 13, 2003

By Ben Hammersley

Much cheaper telephone calls, cool added services and numbers that can follow you around, no matter where you are in the world. Technology called voice over IP (VoIP) can give us all of this, and after seven years in development, it's about to hit the mainstream.

The idea is simple: why don't we put our telephone calls on to the internet? Treat them like any other piece of data: digitise the voice, chop it into little packets, send each one over the internet, and let the receiving party put them together again in the right order. No worrying how the packets get to where they are going, nor whether each one arrives, and no bothering about owning or renting the wire between you and the other person. Just like email, or the web, the internet's infrastructure could take care of it all.

When the phone system was built, it was based on an idea called circuit switching. A call actually made an electrical circuit between two handsets. A switchboard was precisely that - a board of switches - and an exchange was a massive room of mechanical widgets that physically moved to patch a call through.

Everything happened physically. This is why long distance calls have always cost more: there are more switches to go through, and more mechanical parts to move. The further apart the two phones, the more wear, tear and effort needed.

Then came packet switching. By digitising the voice and breaking it into little chunks, phone companies could use electronics rather than mechanics to get the voice there. This still required dedicated wiring, but a lot less, and it was much cheaper than doing it with brass and springs.

Now that the internet is fast enough, and better technology is available to digitise calls, companies have gone a step further: instead of using dedicated wires, they use VoIP.

Now comes a system called Enum. Previously, any Voip setup had to know exactly where to send calls. It worked well for a formal arrangement - BT using it to talk to a specific telecoms operator in Brazil, say - but was no good for making a call between two Voip companies that didn't know each other. The data could go over a single dedicated data link (and you can do this over the internet in a clever way), but letting it loose on the internet, like web traffic or email, was out of the question.

Today, however, the Voip world has agreed on two major standards: SIP (Session Initiation Protocol) and Enum (e164 Number Mapping). SIP is the way the internet phones talk to each other to make a call, much like the standard (called HTTP) used in looking at websites.

Enum is the way a Voip phone knows where to send the call in the first place. By using Enum, once a telephone network turns over to Voip and Enum-aided addressing, the way it connects a phone call becomes exactly the same way your browser connects to a web server. It ceases to matter where the call is going, and there need not be any formal connection between the two parties, as the general workings of the internet will ensure it gets there.

Given that, and an agreement on the format the voice data arrives in, the two Voip companies need not have heard of each other. The phone looks up the number in the domain name registry, finds the IP address, and off it goes over the internet.

The ramifications are huge. First, it radically changes the way the telephone business works. In the medium term, operators who only offer old-style telephony will be able to use the system once the call gets into the "backbone". You'll still have a dedicated phone line to the exchange in the old-fashioned way, but the operator can make great savings as it moves the call routing to the net.

But in the long term, as the technology gets cheaper and moves closer to the end user, the massive overhead of the old technology will become a burden. New operators will be able to offer all the same services on the proviso that the end user supplies the bandwidth - by placing cheap servers on to the internet - with geography becoming irrelevant.

This is now happening.

The obvious place to start is within organisations that already have a computer network - any office-based company. The investment needed to put calls over the corporate network instead of the telephone company pays off against savings made in not paying a phone company: in 12 to 18 months, according to industry studies.

After that, Voip can save large organisations a great deal of money. The RSPCA recently switched to Voip and expects to save £2m over the next three to five years. On a bigger scale, Johnny Barnes, a vice-president of IBM, last week told a conference that his company plans to migrate at least 80% of its more than 300,000 employees to VoIP-based phones by 2008.

Voice over IP is not just for large corporate customers. There are a few companies offering Voip directly to the American consumer. The most well known, Vonage, is typical in its offering: you get a small adapter that plugs into your DSL socket, and which takes an ordinary telephone handset. For a subscription, currently $34.99 a month (on top of their DSL line), customers can get unlimited calls within the US and Canada, and low international rates.
Sixty thousand people have signed up, and Vonage says it aims to launch in the UK towards Easter. Until then, it won't ship internationally, but says that if you can arrange a delivery address in the US, it has no problem with the system being used here.

In fact, this highlights one of the curious effects of putting telephone calls over the internet: it doesn't matter where you are in the world. Vonage will give you a local phone number from the city of your choice. Although this doesn't make any difference to the cost of the call, it does mean that, for example, you could buy a number apparently within your parents' city. When they call you, it is charged as a local call, even if you are on the other side of the world.

Indeed, treating voice calls as just another form of data has many other benefits. Voice mail, archiving and encryption are all easy to do. Conference calls, annoyingly clunky to set up, could be a matter of dragging and dropping icons on your computer's desktop. Voip companies see these added services as the way to make cash: phone calls getting inevitably cheaper, and charging customers $5 a month to record calls or to send voice mail messages to email inboxes is tempting for both sides.

While Vonage and competitors aim to appear as close to a normal telephone as possible, some Voip companies are doing the opposite, and embracing the computer as the obvious place for voice communication. You don't need special gear, just a downloaded application and your PC's built-in microphone and speakers.

The most impressive recent entrant to that market, in terms of uptake at least, has been Skype. Rhyming with "hype", it is fittingly being pushed as "P2P telephony that just works". Aided by its developers' reputations as the people behind the massively successful music sharing application KaZaA, Skype is claiming more than 2m downloads since its launch at the end of August.

But for all their bluster, Skype is nothing new for the end user. It is really an instant messaging network, offering nothing more than Yahoo Messenger's Voice Chat facility has done for two years. That it doesn't need the expensive infrastructure Yahoo or AOL require, for example, is of no interest to the end user, as instant messaging has always been free.

Skype says it aims to make money by selling the same premium services that other Voip networks are planning - voice mail and so on - but is still a little vague on the most important aspect of a telephony network - whether you can call an ordinary telephone or call in from one. Skype doesn't use SIP or Enum, relying instead on its own secret technology. As yet, the two do not work together.

"We think networks should interoperate," says Janus Friis, Skype's vice-president of strategy, "and we think there should be interoperability, but we haven't had the time".
Useful, then, for voice chat between people who have arranged to have the application on their respective Windows machines, but not so good for ordering pizza or calling an ambulance.

If you want to remain tied to your computer, as Skype requires, you can go one better, and have video-over IP. Windows' users have been able to do this for a long time with the NetMeeting application, and Windows XP already has SIP built in. Apple's latest version of OS X, Panther, comes with a video-enabled version of its messaging client, iChat. Tiscali, an ISP, is offering video conferencing software written in Flash, called VMail, to customers. None of these video systems interoperate, but they are a lot of fun.

Alas, the sudden maturation of the Voip market has not escaped the attention of government. In the US, the Federal Communications Commission is to consider whether to regulate US-based Voip companies, forcing them to pay the same taxes that traditional telephone networks pay: to provide the 911 emergency call number, among other things.
If this happens, US-based Voip companies will have to raise prices, or move offshore. Either way, the days of telephone calls paid by the minute will soon be over.

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