Making the Connection Between Voice Calls and Computers

Two years ago, I said hello into my PC’s microphone and then listened with amazement as some stranger’s voice came crackling back over the Internet. It was the first generation of Internet telephony software, made by a tiny Israeli start-up called VocalTec, and it was strictly for the hobbyist who was willing to put up with Darth Vader-like voice quality and the complete absence of practical applications.

Last week, computer-networking manufacturer 3Com and telecom equipment vendor Siemens--companies with combined revenues of $17 billion--announced a partnership focused squarely on the proposition of Internet telephony. Citing the growing demand from businesses that wish to consolidate their separate voice and data networks, the two companies announced products they say will allow voice calls to be delivered seamlessly over the Internet.

The announcement came on the heels of a similar partnership between Cisco Systems and Alcatel--two other data and telecom giants--as well as announcements from international telephone companies and U.S. Internet providers that are introducing the first commercial Internet telephony services.

It took just two years, in other words, to topple the telephone empire.

Let me explain. There has been a war going on between two camps: the folks who run the telephone network and those who run the Internet. Both have strong--some would say religious--views on the right way to design and operate a network.

It’s been clear for a while now that it would make a lot of sense to consolidate and have a single network. There would be fewer wires running into offices and the network backbone equipment wouldn’t have to be duplicated, yielding cost savings all around. The unresolved question has been, who would run the unified network? Now we have the answer. Despite having deeper pockets and more experience, the telephone companies simply can’t compete against the inexorable growth of the Internet.

“While voice traffic has been growing at about 7%, data traffic has been growing at 300%,” says Vint Cerf, one of the creators of the Internet and now a vice president at MCI Communications. “That means the Internet will pass by the phone network [in traffic volume] sometime around 2000 or 2001. Pretty quickly thereafter, voice will really just be ancillary traffic.”

The fact that giant telephone equipment vendors like Siemens and Alcatel are now putting themselves in the humbling position of partnering with much smaller data-networking upstarts shows that they, too, can read the writing on the wall.

All of which is interesting from an academic perspective, but it begs the questions: Does anything really change? Or is Internet telephony going to be just like conventional telephony?

The most obvious difference is price. It’s difficult to make an exact comparison, but it’s safe to say that a call over the Internet goes for a fraction of the cost per minute of a standard telephone call. Part of this cost advantage is essentially artificial and may go away over time, but most of it comes from how the Internet works.

The artificial advantage is due to the taxes and tariffs that many countries levy on their national phone companies. Because the Internet is so far unregulated, users can sidestep those fees. But, admits Scott Wharton, a product manager at VocalTec, “as governments see their revenues decline because of Internet telephony, they may try to regulate the Net as well.”

In the end, Wharton says, that won’t matter. Internet telephony’s real advantage has to do with how it transmits the signal.

The difference is stark. Think of a network as a freeway system where the cars represent voice signals. In the phone network, a lane is reserved for each conversation. Even if neither party is talking--no cars are going down the road--that lane stays reserved.

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On the Internet, cars can use any lane that has space. Voice signals from one conversation can slip in between the silences of another conversation. The result is that a lot more traffic can be squeezed into the same amount of bandwidth, and that means dramatically lower costs.

The trade-off is slightly inferior voice quality. But even if you don’t think that’s a worthwhile exchange, the shift is important for another reason: Once voice is digitized, it can become part of the multimedia stew. With Internet telephony, voice can now be manipulated, stored, forwarded, compressed and transformed in a million ways with ease.

Peter Alexander, director of marketing at Cisco, suggests that we will start seeing Web sites that integrate voice capabilities. Click on an icon and you’ll be speaking with a customer-service representative at the company. And MCI’s Cerf talks about how Internet telephony will let users easily add custom features like “follow-me” routing. By standardizing one ubiquitous protocol for data and voice--the Internet protocol--a new round of innovation will become possible.

All of this will come about far quicker than you may think. Thanks to Internet telephony gateways, which allow a standard voice call to be converted into Internet calls and vice versa, the transition will be at first largely invisible to end users who can continue to use the telephone they are used to.

A new breed of company, known as Internet telephony service providers, are exploiting this fact to roll out cheap phone service. It works like this: A subscriber calls from a normal telephone and punches her ID number and the number she is trying to call into an Internet telephony gateway.

The gateway then digitizes her voice and routes it over the Internet to another gateway that is closer to the person she is trying to reach. That second gateway then converts the voice signal back and makes a local telephone call to complete the connection.

“This is not a paradigm shift for the end user. You pick up your phone and the damn call goes through,” says Ravi Gururaj, a spokesperson for Dialogic, an Internet telephony gateway manufacturer.

Sure, there are still some bugs to be worked out.

But the trend line has been established. Now it’s up to the telephone companies to decide if they will adapt or hide their heads in the sand. Says Gururaj: “The large carriers realize voice over the Internet is here to stay. Often one wing is wary of the tech and sees it as an adversary. But the other wing realizes, ‘We better cannibalize our business before someone else does.’ ”