Soon enough, time will no longer be money, at least as far as telephone service carriers are concerned. The 100-year-old method of calculating charges based on time and distance is falling before an onslaught of new Internet-based technologies.
That point was hammered home recently when Hewlett-Packard Co. and Cisco Systems Inc. announced plans to build equipment to integrate the so-far discrete networks that carry data and voice communications.
By building a bridge between data and voice–and eventually video–HP and Cisco aren’t just opening new markets for phone companies and Internet service providers. They are also making possible a wide range of new services like universal messaging, “click-to-talk” and single-number phone services.
But alongside the carrot of new services and new ways to make money, HP and Cisco wield a big stick to encourage phone companies to buy their new hybrid equipment: competition.
Mainstream voice carriers are the dinosaurs of the new world communications age, declared John Chambers, president and chief executive of Cisco, the leading provider of the technology that routes, manages and tracks data networking.
“Traditional service providers rely on voice traffic for 98 percent of their revenues, and 99 percent of their profits,” Chambers noted. “And that’s quickly becoming a commodity marketplace. When they only get 5.7 cents for a long-distance call, their business model changes dramatically.”
Already, HP estimates that more than half the traffic over telephone lines consists of data that travel across the country virtually free. As voice becomes just another form of digital data, the concept of long-distance calls becomes obsolete.
The not-so-subtle message: If carriers don’t start making money by packaging a wide array of new services based on Internet technology–known as Internet telephony–somebody else will.
The fundamental change in voice communications is the growing ubiquity of the Internet, and its ability to transfer packets of data and now voice inexpensively across vast distances without incurring the higher per-call tariffs that traditional telephone companies have charged. Besides being cheaper, it’s also more efficient, as existing communications links can transfer more data via packets than they can through the old analog telephone network.
Right now, a host of issues, including the reliability of service, the latency inherent in reassembling packets of sound bites and the interoperability of older telephone networks and the newer Internet-based systems–generally lumped together under the heading quality of service–has prevented Internet-based telephony from being widely available.
The difference in quality reflects two primary differences in the way voice and data networks operate now, and the way they were originally designed.
The technology traditional telephone services rely on is known as circuit switches, which link users via a dedicated, direct connection that remains in place for as long as the conversation lasts. Although that method is relatively expensive and demands a comparatively high percentage of bandwidth, the quality and reliability are extremely high.
Instead of that dedicated connection, Internet communications breaks down data into relatively small packets of information, which are sent across the network using whatever links are easily available. The packets are then reassembled into a coherent whole at the other end of the connection.
Although that works fine for sending data-based messages, such as e-mail, where a slight delay in reassembling the packets into a single message simply doesn’t matter, delayed or missing packets could make voice communications over the Internet a nightmare.
The quality that telephone customers have traditionally demanded has been substantially higher than what computer customers have required.
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The reliability of HP’s current high-end computers, for example, is a promised 99.95 percent uptime rate, meaning that equipment failures might cause a server or a network to be out of service for 4.5 hours a year. While that reliability is generally considered good enough to power a corporate customer’s mission-critical applications–those that are crucial for the company to operate–it falls far short of the communications industry’s “five 9’s” service standard.
Telephone service providers generally promise to be up and running 99.999 percent of the time, meaning an average of only five minutes a year where service is interrupted because the equipment goes down. HP and Cisco are promising that level of reliability by the end of 2000.
“Quality of service is a real issue, and it’s still not quite here yet for Internet services,” said John Armstrong, a senior industry analyst for the market research firm Dataquest. “But the solutions have been developed, they just have to be implemented. It’s strictly a matter of time.”
HP and Cisco’s new family of OpenCall Multiservice Controllers will start shipping in early 1999, the companies said, when the ability to handle Internet packets is added to HP’s existing OpenCall software.
OpenCall–which already works with most of the telephone network equipment on the market–will offer a wider range of telephone services over the Internet that go beyond simply being able to talk and hear a reply. At the same time, software developers will be able to develop new features–such as click and talk for responding to an audio e-mail, for example–that will work over a wide variety of networks simultaneously.
Nortel Networks–the newly named result of Northern Telecom’s $9 billion acquisition of networking company Bay Networks–last month announced it plans to introduce a series of products similar to those promised by HP and Cisco. Nortel’s line will bring standard telephone services such as call forwarding or call waiting to Internet-based communications.
Lucent Technologies–like Nortel one of the major providers of traditional circuit-switched technology to carrier companies–is also moving aggressively to add Internet-based services to its traditional lineup of telephone switching equipment, including a joint effort with Sun Microsystems to offer Internet service providers the ability to provide customers universal messaging services that would let ISPs store voice mail, e-mail and faxes.
“What you’re seeing is an evolution/revolution,” said Kathy Meier, general manager of Internet applications for Lucent. “You’re seeing a revolution in the kinds of services that companies want to provide in integrating voice, data and media. but at the same time we see it as evolutionary as they don’t want to give up the infrastructure they’ve built up over the years.”
But the HP and Cisco announcement–coupled with other alliances such as Cisco’s relationship with Bellcore to essentially provide Internet-based telephones with a standard dial tone–may herald another fundamental change in the way communications networks are built.