VoIP Toolkit

VoIP threatens to outsmart backend

Ben Charny and Marguerite Reardon CNET News

Published: 29 Dec 2003 14:20 GMT

As cable and telephone companies begin offering Net telephony services to consumers in earnest, complications on the back end threaten to crimp cost savings for providers and ultimately dampen expectations for the much-hyped technology.

Broadband providers with dreams of nationwide voice over Internet Protocol (VoIP) services are already encountering unexpected difficulties stemming from subtle differences in the way various carriers have set up technology used to carry voice calls over the Internet, executives said this week.

While relatively harmless if the calls remain on a single operator's labyrinth of fibre or copper, cable and phone companies are finding that the jump from one network to the next is proving to be an expensive problem.

"The lack of interoperability at a technology level and on an operational level have slowed end-to-end deployment of VoIP," said Lisa Pierce, a research fellow for Forrester Research.

The victim in the border war could be the high expectations surrounding VoIP, a cheaper way of making a phone call by using the Internet rather than traditional phone networks, which rely on less efficient and more expensive transporting methods.

Currently, about 11 percent of all phone calls use VoIP at some point in the connection, with some analysts forecasting a $10bn (£5.63bn) business for broadband providers selling a majority of the world's phone calls. Most of this VoIP shuttling takes place in delivering international calls, through IP network providers such as iBasis and ITXC. Calls are handed off to traditional circuit-switched networks at either end, but make long-distance jumps using cheaper packet switching, or IP, technology.

As more calls shift to IP, these handoffs will grow in volume and complexity, raising significant technical and contractual issues for carriers, experts said.