April 26, 2011

Internet Telephony – An Upcoming Trend In India

Introduction

Simply to define Internet it can be said as “An interconnected system of networks that connects computers around the world via the TCP/IP protocol (A rule for communication between computers, used as a standard for transmitting data over networks and as the basis for standard Internet protocols, which is communications protocol developed under contract from the U.S. Department of Defense to internetwork dissimilar systems.)”. It can be also called as a large network made up of a number of smaller networks. This is the largest network in the world. It is made up of more than 100 million computers in more than 100 countries covering commercial, academic and government endeavors.

Internet today is fundamentally changing every industry, including telephony. For many years, the telephone network and data networks have existed side by side. In early 1995, led by Vocal Tec Ltd, an Israeli company with offices in New Jersey, Internet Telephony has emerged. By digitizing audio signals into packets, computer users are able to shriek in steady time using the existing Internet infrastructure. With the development in modern gateway technologies, telephone users can also take the advantages of the Internet.

Overview of Internet Telephony

Internet Telephony allows the real-time conversation to be transmitted through the Internet in a similar way as that in the regular local or long distance circuit telephone networks. As the connection to the Internet is local, this technology can provide anyone with a virtually unlimited free long distance call service.

This form of connectivity using PCs was the primary focus for the first stage of development of internet telephony technology, the extension of PC connectivity from a single network across the internet was the greatest advantage made possible through the early application of Internet telephony technology. Access to advanced integrated services as well as to access to services enabling internetworking across the public switched telephone network (PSTN) to and from the internet is still at an early stage due to small bandwidth, processing power, service development and interoperability.

The development of voice communication capabilities, using the internet protocol (IP) over the internet has progressed to where these capabilities may be viewed more accurately as IP telephony than as internet telephony. The limitations of the circuit switching techniques of conventional telephony may now be overcome through integration with IP technologies

A key element in making effective exercise of the emerging IP telephony technology is the development and use of gateways that bridge the IP environment of the internet and circuit switched environment of public telecommunication network. Such gateways are devices that make it possible to construct application specific network structure that provide for real time, two way communication between circuit switching and packet switching technologies to originate an integrated, network fabric. Enabling interoperability between the public telecommunication network and internet, as can be done with the gateways, is the original unbiased in the formation of the Internet Telephony.

Comparing between circuit telephony and internet telephony, internet telephony is not as yet a significant snort competitor in the field of voice telephony as has been shown below:

Circuit Telephone Network

Circuit Switching

Continuous real-time speech

Gracious QoS

Local and long distance charges

Internet Telephony Network

Packet Switching

Efficient asynchronous data transmission

Poor QoS

Local ISP charge, free long distance service

As from the customer’s point of view, the customer may not even know or care that her deny was carried across a packet network rather than a circuit switched network along a section of its transmission path.

Requirement for VoIP

A broadband Internet connection is required to make VoIP calls. Some services allow you to use a regular telephone, as long as you connect it to an adaptor. Some companies allow you to gain calls from a computer or a VoIP phone that doesn’t require an additional adapter. If you are calling a regular telephone number, the person you are calling does not need any special equipment, just a phone will do.

Benefits from VoIP

Telecommunications carriers around the world have already introduced IP into their networks because it provides economic benefits over worn telecommunications networks.

Greater Efficiency: The conventional circuit-switched technology of the PSTN requires a circuit between the telephone company’s switch and the customer’s premise to be inaugurate and occupied for the entire duration of a call, regardless of the amount of information transmitted. In contrast, on IP networks, all content — whether voice, text, video, computer programs, or numerous other forms of information — travels through the network in packets that are directed to their destination by diverse routes, sharing the same facilities most efficiently.

Lower Cost: IP systems will offer a more economical means for providing communication connections. Also — and this is one of the sources of concern on the part of incumbent voice long distance carriers — Internet technology makes available to anyone with a personal computer and modem the ability to bypass the long distance PSTN.

Higher Reliability: In some respects, IP networks also offer the potential for higher reliability than the circuit-switched network because IP networks automatically re-route packets around problems such as malfunctioning routers or damaged lines. Also, IP networks do not rely on a separate signaling network, which is vulnerable to outages.

Supporting Innovation: IP is a nonproprietary standard agreed on by hardware and software developers, and is free to be used by anyone. This open architecture allows entrepreneurial firms to develop new hardware and software that can seamlessly fit into the network. In contrast, the circuit switched network operates as a closed system, thus making it more difficult for innovative developers to build and implement new applications.

Points to ponder over IP telephony

The appearing of internet telephony has stirred fears from long distance carriers around the world. The potential of internet service providers (ISPs) becoming long distance resellers poses significant competition to the long distance service providers (IXCs). Since ISPs already have major customer bases, their marginal cost of providing both data and long distance internet telephony is minimal. ISPs may also provide easy billing for customers which further give the ISPs vital cost advantage over IXCs.

The current long distance market may also split with the emerging Internet Telephony into two groups, one using the traditional circuit switching network that provide quality sound at higher cost and other using the internet telephone that provides lower sound at lower cost, will reduce the existing market share of IXCs. Historically IXCs are heavily regulated by the government. They are subjected to various restrictions, rules, and tariffs, which are not currently placed in the IT currently.

Myths Prevalent

Regarding the intake of VoIP technology obvious myths prevails in the minds of people and policy makers which can be summed as:

• The first relates to the adoption rate amongst corporate, which has not made significant inroads.

• The second myth held by the industry about addressable consumer cross for this kind of service

• The third, the industry had expected the policy guidelines restricting calls within the country to PCs only to be major hurdle in the take off of services

• The fourth is ITSPs thought that cheap net telephony would stem the tide of grey market

Realities

The realities which were found are based on the results of several surveys which are summarized as:

• All India’s 160 ISPs are expected to offer VoIP phone service because it costs only Rs.10, 000($204) to amend their licenses to do.

• Mr. Amitabh Singhal, Secretary of Internet Service Provider’s Association said that a year from now there wont be an ISP which is not providing VoIP service

• Domestic VoIP revenue will be negligible as the government has authorized only computer to computer calls within India.

• Recent IDC survey of India’s 1000 largest companies found 32% were using VoIP or considering till last year but has shown a significant rise of 53%

• IDC projected 135% compound annual growth rate in VoIP through 2005 which has shown an increase of about four times than expected.

Convergence of VoIP and PSTN- Strict Regulations and their reasons- (CISCO Example)

Cisco Systems® established engineering operations in India in 1996 and has continued to expand its presence to include a number of sites throughout the country, it’s the network supports more than 4500 users. Because communication is so valuable between sites in India and the United States (particularly San Jose, California), Cisco IT extended its global WAN network to connect Cisco India, providing cost-effective voice communications through bid over IP (V0IP) technology. VoIP is an integral part of the Cisco AVVID (Architecture for Voice, Video and Integrated Data), and is supported mainly by the Cisco Call Manager, a server that utilizes software-based call-processing on the AVVID network. In deploying VoIP in India, Cisco IT had to adhere to regulatory constraints that forbid the interconnection of VoIP and the Public Switched Telephone Network (PSIN) in India. These rules were established to protect the revenue evil of local- and long-distance service providers in India. Enhanced services, such as broadband or Multiprotocol Label Switching (MPLS) are nearly nonexistent in India, and the incumbent local exchange carriers (ILEC5) and inter exchange carriers (IXC5) must rely almost exclusively on basic telecom services for revenue.

The potential for revenue loss due to PSTN and VoIP interconnection can be seen in the following example. If a residential or business telecommunications customer in India calls a friend or business associate in the United States, they are routed over the PSTN and pay the toll-call rate. If they were able to use their PSTN phone to access a VoIP network local connection, the VoIP network would carry the call to an exit point in the United States closest to the number they were calling (a technique known as tail-end hop-off), and the call would then interconnect to the local PSTN in the United States. The IXC in India would receive almost no revenue, and the ILEC might receive little or nothing for the local call. Fearing substantive loss of revenue from such arrangements, the telecommunications regulatory body, known as Telecom Regulatory Authority of India (TRAI), established stringent rules against PSTN and VoIP interconnection.

Impact on recent Telephone Markets

In123 countries VoIP is used and in India there are about 24 VoIP service providers, e.g. Aimsoft, Amtel, Ascent Telecom, Fass-Tel VoIP Solutions, Net4India.etc.

India has spelled out a very clear policy framework for IP convergence in its Tenth National Economic Plan, 2002- 07. The Telecommunications section begins, Telecommunications is one of the prime support services needed for rapid growth and modernization of various sectors of the economy. It has become especially well-known in recent years because of enormous growth of Information Technology (IT) and its significant impact on the rest of the economy. India is perceived to have a special comparative advantage in IT and in IT-enabled services. However, sustaining this advantage depends critically on high quality telecommunication infrastructure.

The Plan describes very well the implications of convergence for the sector, noting that, Convergence of services is leading to a paradigm shift in the service composition, the structure of the industry and the way markets are organized (Para. 43). It calls for the review of restrictive policies and makes specific reference to Internet telephony and WLL mobile services, and recommends a series of progressive reforms. Where these reforms have been implemented effectively, India has experienced dramatic growth and sector development. Unfortunately only limited success has been realized so far with respect to the design and implementation of necessary changes to facilitate IP convergence and VoIP development.

Will there be a drop in GDP if VSNL looses revenue to VoIP companies? The retort may be no as new markets may come resulting in decrease in cost. This should be furthered to end-users. Moreover, around two-third of net users in India do it from cyber cafes. So, India have a very superb potential for launching value added VoIP services further on the road.

Pitfall of IP telephony in India

There was much hype and frenzy both in media coverage and amongst ISPs scrambling to offer Internet Telephony when the sector was legalized on April 1, 2002, but six months down the line, ITSPs are finding the going tough with revenues not living up to the expectation and market not maturing quickly enough. We as Indians can never ever imagine of paying penalties for talking too much on phone. This is certainly a challenge to India’s telecom planners. It is rather strange that in India a user will be penalized for using the telephone ‘too much’ which means per-minute charges rise, instead of decreasing, if you make long calls. As generally, one expects discount for buying in bulk, not penalties. It appears that bandwidth is considered a scarce resource in the country, and so is rationed. We hope that the threat from the new technologies will cause the planners to believe creating more bandwidth (or allow third parties to do so) and figure out some ways of profiting, rather than blocking progress. Secondly, the adoption rate amongst corporate, which has not made any significant inroads. When the service was launched service providers expected business to adopt the current technology in a big way. Even small and medium businesses (SMBs) have rejected the services after experiencing the poor voice quality. The most probable reason behind it can be that business people have problems understanding the English spoken by foreigners and to top it poor voice quality makes business conversation almost impossible.

Internet Telephony Market Today

Suitable now the market is flooded with Internet Telephony software that computer users bypass the telephone company and send voice message over the Internet at almost no cost. These software are usually prices $50 to $60, and the beta versions are available free over the Internet. Although the sound quality is limited and delay could be a bothering issue, the free long-distance has convinced more that 20,000 individual people and small business to try this new technology. Some companies also provide software and hardware for Internet conversations that use special DSP technologies to provide higher quality sound and full-duplex capabilities that boost Power of the current software. The system available on the market today can only let computer users talk at a predetermined time. However IPG is being developed and is under testing by the gateway equipment and service providers such as Dialogic and IDT to provide a system between the novel Internet Telephone products and the insensible musty telephone system (POT). It was not fully moral in India until April 2002, but Internet Telephony is already changing the face of voice and data communications in countries across the world-from Chile and China to Brazil and Belgium.

Scope of Internet Telephony

Mr Madanmohan Rao from the first iLocus Internet Telephony conference in Bangalore quoted in his narrate titled IP Telephony to Have a Dramatic Impact on Asian Voice, Data Communications Markets that Mr Tom Evslin saying that by 2010, all voice traffic will be over IP networks. Rao further added Evslin’s quote as “India may be one of the countries to benefit most significantly and quickly by VoIP services; since tele-density is at a mere three percent today and there is a huge emerging market for value added services like call centers. In fact, by 2005, we may see the majority of international voice traffic for India going over IP networks”.

The IP telephony market in India has immense potential. According to an industry research picture, the narrate market in India is estimated to be worth around Rs. 33,000 crore (international long distance and national long distance put together) of which internet telephony is likely to grab a share of 2 to 3 percent. IDC expects the IP telephony market to grow at a compound annual growth rate of 119 percent to touch Rs. 13,000 crore by 2006. By the widespread emergence of IP telephony state owned Mahanagar telephony Nigam ltd and Bharat Sanchar Nigam Ltd could not be wiped out as there is plenty of room for all players in the market today. Perhaps the biggest threat to the telephony market in India comes from the thriving gray market in the international long distance telephony space. Studies snow that majority of companies, especially medium to larger sized companies, are gradually upgrading their PBXs hybrid IP/TDM solutions. This allows corporations to migrate to IP telephony at their own pace, rather than completely overhauling their telephony network. The study estimates that by 2009, 74% of all corporate telephony lines will be IP lines IP telephony market in India in 2005 and 2010 .Enterprises are looking positively at IP telephone developments in India. Most vendors are hopeful that the adoption of IP telephones will grow in India in the years to come. With the withdrawal of the TRAI regulation which restricts the use of IP telephones to a closed user group within the organization, IP telephony adoption is bound to increase tremendously in India.

IP phones will provide users considerable better voice quality than conventional phones as they use less bandwidth. It is also supposed that existing companies like BSNL in India may be reluctant to switch completely to newer IP solutions.

Main Issues of Concern

1. Whether VOIP & Internet Telephony should be treated separately or can be merged under one category (IP Telephony) as the distinction between managed and unmanaged networks is blurring?

2. Whether the Internet Telephony access devices at customer premises to be made technology neutral as newer and newer devices are appearing and it’s not possible to monitor/ enforce any technology at CPE?

3. What should be the QOS requirement for Internet Telephony vis-à-vis normal circuit switched/ managed VOIP telephony?

4. Whether the ISPs network should have a full (both-way) interconnection with PSTN/ PLMN by treating it at par with telecom network?

5. What should be the numbering scheme for the Internet Telephony provider (E.164 or similar to NLD/ILD or separate access code or E.Num or IP addressing)?

6. How to ensure access of Internet Telephony subscribers to emergency numbers?

7. How to balance issues between Internet Telephony providers and long distance telecom operators (revenue share, USO, ADC)?

8. How to address the security related issues for Internet Telephony?

Policy Recommendation

We have concluded that, although Internet telephony is not currently a threat to PSTN long distance carriers, it has the potential to compete directly with those carriers at some point in the near future. Further, we have concluded that regulation of IAPs will have the adverse effect of decreasing competition in the Internet access market. Based on these conclusions, we make the following recommendations:

1) Refrain from regulating Internet telephony at this time for the purpose of allowing the technology to used to a level where it may compete effectively with novel PSTN long distance services.

2) Revisit the instruct at a beneficial time in the future, taking into account how technological advances have improved the quality and availability of Internet telephony service and the corresponding impact on markets of long distance carriers such as the ACTA members.

3) Future regulation, if deemed necessary, should be structured in such a way as to not provide LECs with a competitive advantage in the market for providing Internet access.

Acknowledgement:

I extend my thanks to my co-author Mr Satyendra Kumar Singh, Lecturer, IISE, Lucknow for the help and support.

List of sources:

1. See T. B. Costain, Chord of Steel: The Story of the Invention of the Telephone (1960); A. M. Noll, Introduction to Telephones and Telephone Systems (2d ed. 1991).

2. Barry M. Leiner, Vinton G. Cerf, David D. Clark, Robert E. Kahn, Leonard Kleinrock, Daniel C. Lynch, Jon Postel, Larry G. Roberts, Stephen Wolff A Brief History of the Internet

3. Elizabeth Herrell,Stan Schatt and Benjamin Gray Resolving Security Risks For IP Telephony- What Companies Need To Judge When Deploying Voice On Data Networks

4. Government of India, Tenth National Economic Plan, 2002/07 (2001) Chapter 8.5 Communications, Para. 43, 1027.

5. http://www.isoc.org/internet/history/brief.shtml#References

6.http://www.cisco.com/pcgibin/search/search.pl? searchPhrase=VoIP+security&nv=Search+All+cisco.com%23%23cisco.com&language=en&country=US&accessLevel=Guesthttp://www.itu.int/newsarchive/wtpf/China/

7.http://www.cisco.com/web/about/ciscoitatwork/downloads/ciscoitatwork/Cisco_IT_Case_Study_India_VoIP_Regulations.pdf

8. http://www.isoc.org

9. http://www.answers.com/internet&r=67

10.http://www.l1associates.com/technology2.htmhttp://www.marketwire.com/mw/release_html_b1? release_id=95786&tsource=3

11. http://www.fcc.gov/cgb/consumerfacts/voip.html

12. http://www.setuinfocom.com/news.htm#9

13. http://www.ciol.com/content/special/itelephony/

14. http://www.isoc.org/oti/articles/0601/rao3.html

Share and Enjoy: