Voice Over Internet Protocol (VOIP) is Here to Stay
By Steve Davis, CEO- Silverback ASP
VOIP , people are beginning to understand the value of the Internets true capacity and we are still only in the infant stages. VOIP is a key instigator for a paradigm shift in communications technology: this shift is from a circuit switched network structure to a packet switched network structure. The direct benefits are much lower costs for International phone calls and free IP to IP dialing anywhere in the world.
Traditionally, only 10 years ago, consumers were paying $4.30 per minute for a phone call to the United States. This high price is primarily due to interconnect fees between Telecommunication Companies (telco) internationally. Essentially, if you were calling New York from a Manila phone your call would pass from the local phone company to Reach, to Hong Kong Telecom to AT&T to Atlantic Bell to Quest, which would then connect you to the local phone in New York. Each step of the way your local phone company would have to pay interconnect fees to each telco, thus, gross profitability for them would have been around $030 cents per minute. As the backbone technology for VOIP became better and the Internet more robust, by 1998 all telecommunications companies were fully connected into the Internet rather than the traditional interconnects. In this manner the local phone company could connect directly into Quest’s network and only pay $0.17 per minute in 1998. Prices of course did not drop until a few years after.
However, the great savings by the telcos had unwelcome side effects as well. VOIP is not the traditional switched telephone network rather it uses one of the founding protocols of the internet called User Datagram Protocol (UDP) and send the information in packets. The technology is basically email , but instead of your email message going to another person and waiting for them to read it now rings a computer or a gateway on the other side of the world and waits for a response to open a data stream between the sender and receiver. A VOIP phone call looks like this:
Phone#@silverbackasp.com sending gatewayIP#@silverbackasp.com forwarded to World Wide Land Line Phones.
The above expression looks a lot like email because it is email.
What this means is that as the VOIP hardware became better with higher functionality, even Internet companies providing email could also provide voice services at much more competitive rates and at close to the same quality as the telephone companies. The telecommunications companies had unexpected competition.
There are many laws and regulations still in place to protect the telephone companies so that they they do not all have a landslide exodus of customers moving towards more integrated Data and Voice Solutions with VOIP; however , those laws cannot last as progress must continue.
VOIP is just beginning and is presenting itself in many forms: we have our traditional Voice Over the Internet with IP devices such as Soft Phones, IP phones and Analog Telephone Adapters (ATA’s) making VOIP easily accessible to all for a reasonable price. There are also discount –dialing cards using VOIP solutions. There are software PBX’s turning all office networks into IP based calling solutions making traditional PBX’s obsolete very fast. But, the biggest packet switched network being built for VOIP is 3G. 3G is a Packet switched Network using Wideband Code Division Multiple Access (WCDMA), Enhanced Data Rates for GSM Evolution (EDGE) and migrating into Universal Mobile Telecommunications System (UMTS). Mobile phones will no longer roam as you travel from Manila to the UK. They will just utilize VOIP with perfect integration. Enabling all calls to be local or Free with little International calling. We are still a few years away from true 3G but the groundwork is being installed., the phones being prepared , licenses purchased and R&D moving to production systems faster every day.