EXCLUSIVE INTERVIEW

VoIP Inc.’s Rodriguez Discusses State of Telephony

Once criticized for unreliability, Voice over Internet Protocol (VoIP) is now making headlines for its flexibility. Once accused of being difficult to deploy, VoIP is today being touted for its ease of use and manageability. Indeed, VoIP technology has come a long way in just a few years. The “not quite ready for prime time” claims are falling by the wayside as the technology moves into the mainstream.

How mainstream is it? Research consultancy Atlantic-ACM predicts the retail VoIP market will grow at a compound annual growth rate of 64 percent through 2009. The technology will penetrate 12.1 million households by the end of the decade, accordingto Jupiter Research. That represents about 10 percent of U.S. households. Moreover, enterprise adoption of VoIP spending was up 46 percent last year, according to Infonetics Research. The firm predicts 29 percent of large, 16 percent of medium and 4 percent of small enterprises in North American will have adopted VoIP by the end of 2005.

Security, one of the last remaining challenges, is now being addressed by industry vendors and researchers that have banded together to form the VoIP Security Alliance. The alliance is entrenched in defining security requirements for Internet telephony networks. Analysts say the outcome could be a significant boon for the industry.

TechNewsWorld caught up with Albert Rodriguez, vice president of VoIP Inc., a global service provider of VoIP solutions for residential and business customers. Rodriguez discussed industry trends and challenges — and where VoIP is headed.

TechNewsWorld: VoIP is certainly gaining momentum. What are the mostencouraging signs that this technology is set to explode?

Albert Rodriguez: The fact that we see Vonage and AT&T advertising onnational television is certainly indicative of the mainstreaming of VoIP. It’s amazing that you can simply walk into your neighborhood big box electronics retailer and have your choice of VoIP providers. What is not as obvious — particularly to the layman — is the paradigm shift among enterprises. In the most recent quarter, IP PBX shipments actually outnumbered legacy PBX shipments for the first time. Anecdotally, I recently met with several enterprise CTOs and telecom mangers and was astounded that very few of themactually questioned whether VoIP worked; their primary focus was how VoIP could work for them.

TechNewsWorld: What challenges remain to be tackled?

Rodriguez: Aside from the obvious e911 concerns, most of the technical issues related to basic functionality have been addressed. At this point, VoIP providers are focused on adding additional functionality to their hardware and service offerings to stimulate consumer adoption. The true challenges lie in increasing customer awareness and comfort level with enabling technologies, and promoting a favorable regulatory environment.

TechNewsWorld: What steps is the industry taking to overcome those challenges?

Rodriguez: Avaya, Cisco, Vonage and AT&T are spending a fortuneadvertising on national television and making great strides in educating the general public. Smaller equipment and service providers are also meeting the challenge by increasing advertising and marketing budgets in trade magazines, shows, and other industry-focused media. Just a glance at how VoIP-related publications have swollen from advertising clearly indicate the marketing commitment the industry has made.

TechNewsWorld: What are the biggest myths about VoIP?

Rodriguez: That it is inherently not as reliable or does not meet the quality of legacy TDM service. What is not understood by the general public is that most long distance telephone calls today already traverse a VoIP network at some point on the carrier’s backbone. The key to assuring quality and availability lies not in VoIP, but the management of the underlying IP network.

TechNewsWorld: How are deregulation issues impacting the VoIP industry?

Rodriguez: The FCC has time and again ruled in favor of protecting the deregulated status of VoIP to ensure that the technology is properly incubated and continues to deliver on the mandate to foster competition in the telecommunications industry. As a disruptive technology, VoIP has allowed a new breed of telephone company to emerge that delivers true competition with enhanced functionality and downward price pressure. While some sort of regulation and/or classification is imminent, the current environment points towards a light-handed approach that will not impede upon the growth of VoIP. In fact, many in the industry are calling for some regulatory activity to ease the concerns of the investment community.

TechNewsWorld: You mentioned e911. What about 911 issues? The FCC is pushingfor VoIP providers to provide 911 support. What challenges does that presentto the industry?

Rodriguez: It is important to view 911 as an opportunity and not an issue. The convergence of voice and data on a single network provided almost limitless possibilities to enhance emergency services. There are hospitals today using wireless IP (WiFi) phones that allow teams sharing a single channel to broadcast messages without dialing an extension. Nurses broadcast their requests for help to move patients without the need to recall extensions or rely on paging systems. Efficiency increases and patients benefit from improved bedside attention. The enhanced emergency system of the future will make available a variety of devices allowing us to alert relatives or neighbors with an e-mail, telephone call or text message.

TechNewsWorld: On a scale of 1 to 10, how reliable is VoIP connectivity today?And how soon before those connections are 99.99999 percent reliable?

Rodriguez: In today’s world, data communications can be as important, and in some cases more important than voice communications — think eBay — therefore, IP networks can be engineered with a high degree of redundancy and fault tolerance. Keep in mind that the Internet was originally developed by the Defense Department to provide a distributed network with limited single points of failure. As VoIP is as reliable as the underlying IP network, it can be engineered to provide the degree of availability requiredby the specific application.

TechNewsWorld: Some analysts have said that the VoIP boom is beginning tostrain some ISPs, which could cause a degradation in network performance.What steps is the industry taking to address this issue?

Rodriguez: During the telecom boom of the ’90s, service provider networks were built out extensively and are generally running below capacity at the moment. While VoIP is certainly one of the “killer apps” that will stimulate Internet consumption, the relatively small bandwidth requirements should have little impact on these networks. Multi-media applications such as videoconferencing do pose a threat to network performance, however given advances in networking technologies such as DWDM (Dense Wave Division Multiplexing) that utilize existing physical infrastructure to deliver significantly higher bandwidth, the network service providers should be ableto keep pace with growing demand.

TechNewsWorld: What should CEOs look for in a VoIP service provider?

Rodriguez: Enabling technologies and trends such as deregulation, open-source applications and cheaper more powerful processors have significantly lowered the barrier of entry to becoming a service provider. While these trends foster competition, they also encourage the entry of providers that may not be able to provide the level of service required for business class IP Telephony. With this in mind, it is critical for the decision maker to learn as much as possible about the potential provider. Ask for references from existing customers, look for industry recognition and awards, ask about underlying carriers, and most importantly — make sure you are able to test the service extensively before committing to an individual provider.

TechNewsWorld: What should CEOs look for in VoIP equipment?

Rodriguez: Is the system SIP- or H323-based, or does it use a proprietary protocol? Will it support generic IP phones or does it require proprietary handsets? How does it support remote survivability?

TechNewsWorld: There’s talk about WiFi headsets and VoIP as a combo that could conceivably replace cordless phones in homes and small businesses. How far are we from that picture?

Rodriguez: Equipment vendors are approaching this with a two-phased approach. Several leading phone vendors are unveiling standard 5.8 Ghz cordless handsets with integrated VoIP adapters that work with multiple handsets throughout the home. Very soon, we will see dual-mode GSM cellular and VoWLAN dual mode devices and a variety of innovative and economical services accompanying these products.

TechNewsWorld: What’s it going to take to push VoIP into the mainstream?

Rodriguez: It already is in the mainstream — you can pick up a device at your local big box electronics or office supply retailer. On the business side, VoIP port shipments are already outpacing legacy PBX and Key System shipments.

TechNewsWorld: Do you see any other issues coming down the pike that areencouraging or discouraging for VoIP?

Rodriguez: As the number of subscribers increases, it will be incumbent upon the industry to proactively respond to legitimate policy concerns about challenges like 911 emergency services. In the early years of cellular adoption, that segment wrestled with the need to better triangulate user locations in the event of an emergency. Since we know that mobility introduces heightened technical complexity, the VoIP sector will evolve similarly.

Improvements will arrive through an evolutionary — not revolutionary — process. What is particularly encouraging, is the adoption trend overall. Some projections place the number of U.S. residential VoIP subscribers by the end of this year to be 1.6 million. While this is a relatively small number compared to the total number of residential voice customers, it becomes quite significant when we realize there were only 600,000 suchsubscribers at the end of 2004. The breadth of equipment options, enhanced feature benefits, inherent network efficiencies and promotional efforts make VoIP an inevitability.

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