VoIP Today & Tomorrow

Voice over Internet protocol (VoIP) has become one of the hottest Web-based applications to shape the changing voice and data industry. Growing fast, the future looks bright as providers explore new dimensions in delivery and integrate features that move away from plain old telephone service (POTS) toward mobile convergence of voice, video and text telephony.

The Federal Communications Commission (FCC) reports there are currently 1.6 million VoIP users, and the number is growing daily. Regardless of the direction the technology is headed, contractors are among the big winners in this emerging market.

“I think we are going to see increased spending on outside plant because both Verizon and SBC have major efforts underway to increase their penetration of fiber-optic cable to residences,” said Robert Rosenberg, president of Insight Research Corp. “The CATV industry went through that big spending spree 10 years ago and telcos are following.”

It doesn’t matter how VoIP is delivered, even if it is wireless, IP infrastructure requires cabling and peripheral hardware to provide the core system’s operation ranging from twisted pair to Category (Cat) 5e and beyond. According to Bruce McLeod, engineering manager of VoIP development at Atlanta-based Cox Communications, the current links to the Internet are evolving to fiber.

“The vast majority of connections from the customer side are still 10/100 Ethernet. Fiber delivery at the gigabit Ethernet level into a distribution router is becoming more common, as are fiber-terminated devices such as passive optical networks, but these systems have specialized terminal adapters that are integrated with a transmission control device at the service provider,” said McLeod.

VoIP essentially converts analog messages into digital packets that are carried over the Internet or a network and then converted back into analog format. One executive at a small VoIP service provider said, “It’s like sending an e-mail, but it’s voice and it’s real-time.” Additional features that make it so attractive to customers are its international reach and its mobile-phone-like pricing.

Although Internet telephony is in its infancy, VoIP already has its own universe filled with big players from every segment of the telecom industry—from the traditional phone company and cable businesses, to IT managers and Internet content providers like eBay and Web-savvy homeowners.

“Regardless of where you fit among that constellation, you’re looking at the same motivators,” Rosenberg said. “It’s essentially the idea that from an operational point of view, VoIP means having voice services along with many other rich media services so you don’t have to run them parallel.”

IP fuels exponential growth

The focus and demand for VoIP currently is driven by new applications and delivery systems that enable users to switch from a POTS to an IP service offering a versatile platform on a universal protocol. PCs work as a stand-alone or a VoIP phone and link up to a residential gateway connected to the Internet by a cable.

Another operation scenario is for the VoIP phone or PC to send voice traffic over the Internet through a DSL modem. Privately owned and managed networks transmit the voice over the IP or use the Internet browser as a handset. Networked VoIP can integrate multiple functions and deliver messages to a multitude of handheld devices.

None of this would be possible without the thousands of miles of traditional CATV and fiber-optic lines installed over the last three decades. Unprecedented growth for the telecommunications sector in the 1990s came to a screeching halt with the bursting of the “dot.com” bubble in 2000, due to great expectations placed on the Internet phenomenon.

Telecom has ramped up again. The U.S. broadband market—a primary VoIP conduit—is expected to reach an estimated 56.9 million subscribers by 2008, up from 5.1 million in 2001, according to The Telecommunication Industry Association’s (TIA) 2005 Telecommunications Market Review and Forecast.

Today, the study says, broadband comprises cable modem (17 million users), DSL (12.6 million), fixed wireless (2.2 million), fiber-to-the-home (0.2 million), satellite (0.4 million), mobile wireless (3G) (0.1 million) and broadband over power line (less than 50,000).

TIA also reports that the United States reached a significant milestone in next generation broadband deployment. In October 2005, more than 652 communities representing 46 states were wired with fiber optic lines to the home (FTTH). Connections grew to more than 322,000 homes compared to 146,500 homes in 2004.

Many of the FTTH communities illustrate the “exurban” trend in growing areas throughout the country. Developers are building 30 to 40 miles past city limits to give homeowners more affordable housing options away from suburbs.

Growing pains

VoIP is not immune to growing pains. Unlike traditional phone lines, the most critical problem is that IP-based systems must use a powered modem to deliver the broadband networking capabilities. Currently, there is no reliable backup power during outages.

Other deficiencies with systems lacking primary line replacement include periodic blocked calls, limited 911 connections, breached security, spam threats and no directory assistance. Until issues are resolved, purely VoIP customers are being advised to keep cell phones handy for emergency calls.

Understanding that the VoIP compass points in multiple directions is one step toward securing future contracts. Here are some primary VoIP players and projections of where their markets are headed:


Incumbent telephone companies are likely the biggest losers with VoIP technology. Insight Research data shows that fixed lines, which represent the majority of phone communication in U.S. homes and businesses, have been declining at a 3 percent rate for the last several years, while cell phone usage is increasing. VoIP is poised to speed that decline as a landline alternative that, at least in the short term, eliminates local and long-distance charges and taxes.

The greater threat, Rosenberg said, is the IP.

“The future of VoIP has nothing to do with replicating what you get in a POTS environment. It’s really about delivering a set of enhanced capabilities that will be converged, image driven and customized for a richer communications experience,” Rosenberg said.


Cable operators typically sell VoIP as part of a triple play of voice, video and high-speed Internet services, which is often discounted when purchased as a package. This bundling of services has allowed cable companies to emerge as a potent competitor to telcos as they have gained more than three million telephone subscribers through 2004.

For example, Cox Communications has been bullish on the potential of VoIP. Cox is migrating its fast growth by leveraging its installed base of circuit switches to serve 6.5 million customers in 17 circuit-switched markets with a VoIP overlay. The company’s partnership with Nortel has resulted in commercially deploying five new VoIP technology markets.

“Cable companies are in the catbird seat right now and they’re going to continue to take phone subscribers from phone companies. But if you look way ahead, their business is subject to the Internet,” Rosenberg said.

VoIP equipment companies

Relatively new broadband phone companies like Vonage—an all-inclusive provider of local and long-distance service in the United States—don’t put cable in the ground, rather they piggyback on existing IP lines.

The service requires a Vonage phone adaptor to connect telephones, PCs and fax machines to a cable/DSL modem. There are an estimated 1,500 companies like Vonage in the United States offering some form of VoIP.

With so much emphasis on Ethernet and now gigabit Ethernet as the primary communications protocols, performance testing is increasingly important, according to Dan Payerle, DataComm product manager at Ideal Industries.

“Then, add the growing success of companies such as Vonage, and it becomes absolutely critical to take the next step beyond simple wiremap testing for residential and SOHO networks,” Payerle said.

Commercial networks

Corporate America is adopting VoIP more quickly than the residential market. Companies start out saving money on long- distance rates, but realize the business value of a cost-model infrastructure that leverages a single wiring infrastructure to carry both voice and data.

“With VoIP, the big savings is essentially staff reduction. You don’t have one set of people managing a data network and another set of people managing a PBX,” Rosenberg said.

According to Nemertes and representatives at Fluke Networks, it’s rare to find corporate IT people who aren’t at least testing the VoIP waters—typically the first phase of a larger convergence project. In a Nemertes’ “Convergence: Reality at Last” benchmark study of 65 IT executives across several industries, about 71 percent of those organizations are using VoIP in some capacity while approximately 30 percent have deployed it throughout the organization.

VoIP Lifecycle Management, a process embraced by Fluke Networks, allows IT managers to navigate the challenges of every phase of VoIP networking.

“Network managers need tools that provide a complete view of networks from edge to core to ensure predictable, consistent application performance,” said Lisa Schwartz, Fluke Networks Solutions marketing manager. “This means measuring and analyzing each step of the VoIP lifecycle, from predeployment testing through monitoring, troubleshooting and expansion.”


Tom Kershaw, vice president, VoIP Services at VeriSign said that like the rise of wireless phones, wireless VoIP isn’t far behind.

“The potential impact of wireless VoIP on the communications market is enormous. Market research firm ABI Research has forecasted that dual model cellular/voice over Wi-Fi-enabled handsets will surpass 50 million by 2009, accounting for 7 percent of the overall handset market,” Kershaw said.

The belief that the evolution to a single handset that could be used in the home and then switched to cellular outside could be very attractive to the nearly 5 million U.S. homes equipped with Wi-Fi networks, not to mention the boon to enterprises.

Broadband over power line

Already available in Europe, American utilities are beginning to use their grid to roll out broadband over power line (BPL). Directly challenging phone and cable providers, the local power grid makes the Internet available in any room with electrical outlets. Setting the pace for BPL players in the country are Current Communications and Cinergy in Cincinnati and Manassas, Va., which have recently partnered with BPL provider, ComTek Communications Technology.

On the horizon

This year promises to bring mergers, IPOs and market-share announcements. With all this activity, it is important to remember that what makes VoIP so accessible also presents an obvious challenge. All VoIP providers are somewhat reliant on someone else’s transport over the unregulated Internet. It can limit quality and availability, but it also will drive growth and consolidation throughout the industry. EC

MCCLUNG, owner of Woodland Communications, is a construction writer from Iowa. She can be reached via e-mail at mcclung@lisco.com.



About the Author

Debbie McClung

Freelance Writer
Debbie McClung, owner of Woodland Communications, is a construction writer from Iowa.

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