52 IEEE Spectrum | March 2005 | INT

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TELECOMMUNICATIONS
March 2005 | IEEE Spectrum | NA 53
BY STEVEN CHERRY
nce upon a time, nuclear power was
going to make electricity too cheap to meter.
Today, the Internet is supposed to do the same
thing for telephone calls.
This time it may be true.
Voice over Internet Protocol, or VoIP, is one of the fastest-
growing, and most misunderstood, technologies in the world at the
moment. Confusion, outdated beliefs, and urban mythology reign
over such simple issues as how it works, the quality of the calls,
and, of course, how much it costsVoIP calls are not free now, and
they never will be. As things are shaping up, though, theyre so cheap
that carriers are letting customers make all the calls they want for a
single monthly fee, typically US $25 to $35.
Simply put, VoIP means doing voice communications over the
same networks that we rely on for data communicationsthe local
networks that connect to our computers and the Internet that links
them all together. If youve ever bought a prepaid phone card, espe-
cially one for international calling, youve probably already dialed
into a VoIP system without knowing it. By crossing national bor-
ders as cheap Internet packets, instead of moving through an expen-
sive switched circuit, an international VoIP call, while still billed per
minute, costs pennies, not dimes or quarters.
In fact, those low costs, and the efficiencies for carriers of main-
taining a single, unified telecommunications network, guarantee
that all telephony will eventually be done over IP. Essentially every-
one in the telecommunications industry agrees on that.
So, not surprisingly, theres a cattle stampede of providers: in
North America alone, some 400 VoIP services are now compet-
ing for residential customers, says William Cheek, an analyst at
Parks Associates, in Dallas.
Even traditional local telephone companies are part of the herd.
In the United States, Verizon Communications Inc., based in New
York City, has been signing up subscribers since last July; rival Qwest
Communications International Inc., in Denver, since August. SBC
Communications Inc., in San Antonio, another regional giant,
announced last fall that it would launch a VoIP service in early 2005.
The market is saturated with service providers already, Cheek says.
And many corporations, lured by the promise of cutting their teleph-
ony expenses by half or more, are turning to VoIPat least for their
internal communications.
The two largest call-anyone VoIP providers in the United States
are each signing up about a thousand new customers a daya rate
that compares favorably with other quickly adopted technologies,
such as the CD player, satellite television, and high-speed Internet.
One of these leaders is Vonage Holdings Corp., in Edison, N.J., a
stand-alone VoIP company whose service runs over a households
existing broadband line. The other is Cablevision Systems Corp., a
Bethpage, N.Y., large regional cable TV provider, which began its
VoIP service in November 2003.
Between them, as of January, Vonage and Cablevision had a lit-
tle more than half of the 1 million U.S. households using VoIP. Of
course, thats just a tiny fraction of the total number of homes with
telephone service in the United Statesabout 106 million (out of
109 million households in all).
Still, the momentum is clearly in favor of VoIP. According to the
Telecommunications Industry Association, in Arlington, Va., at some
point in 2006, more than half of all the new private branch exchanges
being installed will be IP based. And the number of residential VoIP
subscribers will rise 12-fold, to about 12 million, by 2009, industry
analysts project. By that time, total U.S. revenue for business and
residential VoIP products and services will be nearly $21 billion, up
from $2.5 billion today, says Aaron Nutt, an analyst at Atlantic-ACM,
a unit of Boston-based ACM Group Inc., which specializes in
telecommunications consulting and market research.
VoIP services fall into two basic categories. The first are those
from commercial providers, such as Vonages and Verizons, or
AT&Ts CallVantage. Then there are the so-called free services, such
as Skype, a relatively new but hugely popular system from Skype
Technologies SA, in Luxembourg, founded by the makers of the
equally popular, and free, Kazaa online music-sharing software.
The commercial systems connect into the traditional public
switched telephone network, so you can use them to call anyone
else with a telephonewhether or not theyre Internet-connected.
Vonage is the oldest of these commercial call-anyone VoIP providers;
yet it just celebrated its fourth birthday in January.
VoIP is, in some respects, further along elsewhere than in the
United States. Businesses in South Korea, Ireland, and the United
Kingdom are first, second, and third in the use of VoIP, according
to the 2004 International Benchmarking Study, a survey of infor-
mation technology usage thats conducted annually by the UKs
Department of Trade and Industry.
The free VoIP services, as such, typically let you contact only
other users of the service youre on, and possibly users of some of
the other free services. You generally cant tie into the public
VoIPis turning telephony
into just another
Internet applicationand
a cheap one at that
switched telephone network. Nor can you call into a free account
from the regular phone network. So the free services realm is like
a telephony archipelago, with limited ferry service between the
islands and none to the mainland.
Much of the start-up ferment lately surrounds the free serv-
ices, which dont charge for the calls but do require a broadband
Internet connection and other resources (more on those later). Two
of the most popular are Skype, mentioned earlier, and Free World
Dialup in Melville, N.Y. Free World Dialup started as a 1995 exper-
iment by serial entrepreneur Jeff Pulver, who was also involved
in the start-up of Vonage and an earlier, pioneering VoIP ven-
ture, VocalTec Communications Ltd., in Herzliya, Israel. Formally
launched in 2002, Free World Dialup is a labor of love more than
a business, but it does a growing side business reselling Internet
Protocol telephone equipment to those new to VoIP.
Skype, meanwhile, was launched in September 2003 by Niklas
Zennstrm and Janus Friis. They had already become famous, or
infamous (depending on your point of view), as the creators of
Kazaa. In its first three months, Skype had over 2 million regis-
tered users worldwide. Probably many were just novelty seekers
trying it out, but a little more than a year later, on 20 October 2004,
VoIP hit a milestone when Skype first surpassed 1 million simul-
taneous users. If there is a specter haunting traditional telephony,
Skype may be it.
The numbers are all the more impressive when you consider that
VoIP as we know it today is barely a decade old. Before 1995, voice
communication through a personal computer was virtually impos-
sible. (As a technology, though, it goes back to the 1970s.) With per-
sonal computers lacking any-
thing like a dial tone, there
wasnt an established way for
one computer to channel voice
communication to another; nor
could one signal to another that
digitized voice data was being
sent to it.
In 1995, VocalTec released
an application, InternetPhone,
which could handle those
details, and VoIP was born.
When the software was run-
ning on two computers, each
created a buffer to receive
audio data from the other.
InternetPhone used an exist-
ing Internet chat system as a
way for one computer to find
another in cyberspace, relying
on an add-on microphone and
the computers sound card to
convert analog voice into dig-
ital packets and back to analog.
InternetPhone had plenty of limitations. Both computers had
to be running the application at the time the call was placed; if
your computer was off, or if it wasnt running the software, you
simply missed the call. The early versions werent fully duplex
you spoke and then waited for a reply, la Citizens Band radio.
And many things we now expect from a telephone application,
such as three-way calls, were basically impossible.
Still, by eliminating per-minute charges for simple, two-way teleph-
ony, InternetPhone foreshadowed a revolution in communications and
earned its place in the technology pantheon. But there was still plenty
of work to do to turn Internet voice communication into a mainstream
service. In 1999, the Internet Society, in Reston, Va., published a stan-
dard for Internet telephony, the Session Initiation Protocol. SIP is a
general way for an application to make one computer user aware that
another user is online and available for communicationits the
Internets virtual dial tone. With SIP in place, the barriers to Internet
telephony today have more to do with the financial issues of who, if
anyone, gets paid for the call, rather than with the technical problem
of getting an Internet-phone-enabled device to ring.
SIP went on to enable other Internet applications besides teleph-
ony; its the protocol that lets a friends name pop up in the buddy
lists of instant messaging software. Its showing up in other appli-
cations, too, such as games. In fact, today, the easiest way to make
a free Internet phone call is with a network-connected Xbox or by
playing a multiplayer online video game. Headsets are pretty com-
mon in the game world these days, and with them, gamers talk to
one another routinely, as teammates blasting away at virtual ene-
mies in cyberspace.
VOIP IS FREE.
Even the free VoIP services arent really free. First
of all, you need a broadband Internet connection
(which many already have); it will set you back $25
to $60 a month, depending on where you live. In
addition, youll have to have some equipment. At a minimum, a spe-
cial microphone, one with a built-in analog-to-digital converter
and a USB or serial connector, is all thats needed to turn your com-
puters sound card and speakers into a phone. Most users spring
for a $30-to-$50 headset that plugs directly into a USB port.
Alternatively, you could buy
a phone designed for the task,
which also plugs directly into
your computers Ethernet or USB
port. Leading telecom manufac-
turers, like Avaya, Cisco, Lucent,
and Nortel, make Internet
Protocol telephone equipment,
mainly for the corporate market
but increasingly for small busi-
nesses and home broadband
users as well.
Avayas corporate equipment
is particularly cost-effective,
because the company, which was
spun off from Lucent in 2000,
specializes in upgrades to exist-
ing private branch exchange sys-
tems instead of to systems that
require completely new hardware.
For most businesses, though, the
move to VoIP can still cost $200
to $400 per employee.
Lately, Skype has started blurring the line between free and for-
pay services by offering its users the ability to call anyone, includ-
ing people outside its service. In July, it introduced low international
calling rates, generally 1.7 to 2.2 euro cents (2 to 3 US cents) per minute,
covering most of the world. Thats half, at most, of the rate of the
cheapest prepaid calling cards.
Because most of a VoIP call, whether its going 20 kilometers
or 20 000, usually travels over the Internet, Skypes only real
expense is for the last few kilometers, paying the local telephone
company to ring the recipients phone and complete the call. So
the rate to call someone in, say, London, is the same whether
youre calling from Beijing or the flat next door.
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The commercial VoIP systems, which let you call anyone with
a phone number, charge subscribers a monthly fee for unlimited
nationwide calling. A large part of that cost goes toward the access
charges that these companies pay the local phone companies for
letting calls cross into and out of the public telephone network. For
that privilege, the VoIP companies pay about 1 cent per minute at
the wholesale level, according to Daniel Berninger, a technology
analyst who was involved in the start-up of Vonage. Another VoIP
service, Packet8, marketed by 8X8 Inc., in Santa Clara, Calif., has
distinguished itself by including more and more calls to Europe
in its fixed monthly price for North American subscribers.
By letting you make an unlimited number of calls, these com-
mercial VoIP operators are basically making an actuarial wager on
how much calling youre going to do. According to a Vonage
spokesperson, the company makes money on every subscriber who
uses its service for fewer than 400 outgoing minutes a month.
The calculation must break down a bit for start-up RNK Telecom.
In December, the Dedham, Mass., company rolled out a lifetime
VoIP service for a one-time payment of $999.
THE ONLY DIFFERENCE BETWEEN
VOIP AND REGULAR TELEPHONY
IS THE PRICE.
Internet telephony and regular telephony are
unlike one another in almost every possible way.
Internet telephony depends on turning voices into packets of
data and sending them through a relatively dumb networkthe
Internet. Those packets are sent to relatively smart devices: com-
puters, PDAs, and IP phones.
The traditional phone companies do the exact opposite. They
send voice as an analog signal through a system of wires and cables
connected to incredibly smart central computers, called switches.
At those switches, the voice signals are digitized and routed to other
switches, which then ultimately route them to quite stupid devices,
old-fashioned analog telephones.
Because of that setup, two other differences emerge. For a tra-
ditional phone network to roll out a new service, such as caller
ID, those incredibly smart, complex switches need to be repro-
grammedno trivial task. A VoIP sevice can easily provide new
programs for smart end-user devices, on the other hand, in much
the same way that any software manufacturer comes out with a
new feature. The VoIP companies, therefore, are continually offer-
ing new services that their switched-telephony world counter-
parts would find difficult or expensive to match.
To begin with, all the commercial VoIP services let you pick your
area code and keep your number when you move, two things that
are impossible with the geographically based traditional telephone
system. In Europe, VoIP operators even let you choose which coun-
try your phone will be local to.
Then there are other benefits made possible by the end-to-
end-digital nature of VoIP. For example, Vonage voice-mail mes-
sages are just digital audio files. You can play them on your
computer after logging into the companys Web site, or you can
even have them e-mailed to you, as attachments that can be stored
on your local computer for as long as you like. Vonage also offers
its customers an additional 800 phone number (that is, one that
is toll-free to callers) for $5 per month. AT&T lets CallVantage
customers set up as many as five different phone numbers for a
call to be forwarded to, and they can choose whether the phones
should ring in sequence or all five at once.
VoIP systems dont differ just from traditional telephony; they
differ from one another. Cable companies arent known, for exam-
ple, for their ability to deliver the five 9s reliability that tele-
phone companies like AT&T and Verizon traditionally aspire to.
A 99.999 percent uptime means being down only 5 minutes per
year. Cablevision, whose service area includes northern New
Jersey, the traditional home of the old Bell Telephone network,
doesnt even deliver three 9s, which would work out to 8 hours
of downtime per year.
For one thing, sending voice as data packets willy-nilly through
the Internetthe dumb network part of the VoIP equationmeans
that a VoIP call is at the mercy of the weakest link in what might
be a very long chain. Packets must follow a path through various
cables and wires and routers as they make their way from the caller
to the people called and back again. Of course, that chain is much
more robust than in the early days of Internet telephony. Indeed,
in some ways, Internet service in the New York City metropolitan
area withstood the 9/11 collapse of the World Trade Center complex
better than the landline phone network. A key Verizon central office,
located just north of the twin towers, was destroyed that day.
QUALITY OF SERVICE ISN'T
AN ISSUE NOWADAYS, BECAUSE
THERE'S PLENTY OF BANDWIDTH
IN THE NETWORK.
A traditional phone call sounds as good as it does
because it commandeers a data channel thats 64 kilobits per sec-
ond wide. The channel is completely devoted to the single call
that occupies it. We call that system a switched network, because,
originally, telephone operators flipped physical switches to open
a dedicated electrical circuit between two phones. In addition, the
phones that the parties use, and all the electronics in between,
have always been optimized for the human voice and ear. All this
means voice call quality is rather good, and consistently so. Cellular
calls, by contrast, often get as little as 10 to 15 kb/s, and we all know
how they sound.
For VoIP calls, especially ones made with the free services that
depend on the Internet from end to end, a network designed for
data is being used for voice. While the network may usually have
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far more than 64 kb/s in available bandwidth to accommodate a
new phone call, congestion can arise at any moment and cut the
data rate to almost nothingat least briefly. And the slightest
hiccup in the connection, at any point, results in dropped pack-
ets and momentary gaps in the conversation.
The same hiccups mean nothing in e-mail, where a delay of sev-
eral seconds is unnoticeable. Although telephony doesnt involve
large amounts of data, the time constraint makes it far more demand-
ing than most other Internet applications.
There are three things to worry about in an Internet phone call.
Latency occurs when data packets are delivered too slowlyusually
because of network congestion. Jitter is a variation in the delays of
packetssome arrive on time or only a bit late; others, sent just before
or after, arrive much later. Finally, when packets are extremely late,
the network drops them, resulting in packet loss. Latency and packet
loss can create awkward momentary silences in a phone conversa-
tion or make it seem that one party is interrupting the other. These
delays can cause echoes and other odd sound effects.
Hiccups generally dont harm one-directional streaming audio
and video, because those applications create data buffers several
seconds long. When theres a problem, data is drawn from the buffer.
As long as the problems in the network are solved before the buffer
is completely drawn down, the recipient never notices. An Internet
phone call, with data flowing in real time and in both directions,
cant be buffered.
The situation is far from hopeless, though. In principle, a VoIP
call can be given an arbitrarily large amount of bandwidth. Thats
especially true within a corporate phone network, which often has
optical fiber between buildings on a campus, and often between dif-
ferent campuses in a wide-area network. Voice packets are given
special priority that ensures that the congestion preferentially affects
applications other than VoIP calls.
Likewise, for commercial VoIP services like AT&Ts and Verizons,
the core network has more bandwidth than it usually usesthe
industry term for this is overprovisioning. So the main problem in
making Internet phone calls has usually been the last milethe
connection between a household and the core network. But nowa-
days, home broadband more or less solves that problem: even an
unimpressive 500-kb/s broadband connection has more than enough
bandwidth for a high-quality phone call.
Nevertheless, because of the bursty nature of digital communi-
cations traffic, even the most overprovisioned network will have
hiccups. Most networks exhibit a huge difference between their
average and peak loads. Even the conventional U.S. telephone net-
works still have trouble keeping up with demand on Mothers Day,
their biggest day of the year.
VOIP CAN'T REPLACE REGULAR
TELEPHONY, BECAUSE IT STILL
CAN'T GUARANTEE QUALITY
OF SERVICE.
VoIP is a relatively new network application, so it
should come as no surprise that its particular quality-of-service
problemslatency, jitter, and packet lossare still being worked
out. But fundamentally, these are problems of network conges-
tion, and network engineers have already devised some clever
methods to guarantee a minimum bandwidth for a particular appli-
cation. The latest scheme, Multiprotocol Label Switching, or
MPLS, is still being refined by the Internet Engineering Task
Force, an international volunteer organization sponsored by the
Internet Society.
In an MPLS network, data packets are assigned labels by spe-
cialized routers, called MPLS routers, in the phone companys net-
Hello, China?
In 15 Minutes
SkypeOut, a commercial voice over
Internet Protocol service from
Skype Technologies SA, in Luxem-
bourg, not only makes telephony
remarkably inexpensiveits hard to imagine VoIP being
made much easier.
One cold January evening, on the way home from
work, I stopped into a CompUSA store for a USB head-
set from Logitech International SA, a popular Swiss
manufacturer of computer accessories based in
Romanel-sur-Morges. It cost US $34.99about as
much as a cheap phone. Once at home, I plugged the
headset into my Macintosh and downloaded and
installed the free software from Skypes Web site
(http://www.skype.net).
The Skype softwarewhich for the Mac platform
was, in January, still labeled a beta releaseappears
as a small window. You can add contactsother
Skype usersand if theyre online, theyll show up on
a contact list, just as they do in an instant messaging
buddy list. You can highlight a contact and then press
a large green Call button to dialand it doesnt cost
anything at all.
With Skype and a growing group of other VoIP
providers, you can also call anyone with a telephone,
but, of course, those calls have to go through the tra-
ditional switched network, so they arent free. But
theyre remarkably cheapprices vary by country and
range from 1.7 to 2.2 euro cents per minute. You need
to give Skype money on account, in blocks of 10 or
25. Its all remarkably hassle free, no matter where
you live; you just fill out a simple e-commerce form with
your credit card information and billing address.
I called my wife to try it out. She could hear me, but
at first I couldnt hear her through the headset. It turns
out I hadnt specified the headset as the selected device
for sound in my Apple Macintoshs Systems Preferences
menu (as I could have learned from a quick glance at
the accompanying Logitech instructions). A similar
adjustment has to be made by Windows users. With
the change made, I was ready to call China, specifically,
my colleague Jean Kumagai, on assignment in the west-
ern city of Chengdu.
When I reached her on her hotel room phone, the
sound quality was close to that of an ordinary landline
call. The only difference was that each of us had a lit-
tle trouble being sure the other was done talking. It
wasnt as bad as a satellite call, and there were no
echoes or gaps in the conversation.
Oh, and one other difference: an 18-minute phone
call was only 42 euro cents, about 54 U.S. cents. My
regular long-distance company would have charged at
least $3.49, almost seven times as much as SkypeOut.
S.C.
March 2005 | IEEE Spectrum | NA 57
work. These labeled packets are forwarded not by the usual
algorithms that best serve the Internets overall traffic needs, but
according to decisions that are tailored to the labels. Among the
information these labels provide are the packet's origin and desti-
nation, its bandwidth needs, and its sensitivity to delays. The MPLS
router then figures out a path for the labeled packet and sends it
to the next router. The router can also store, and use, that path for
all the other packets in the VoIP call.
The main point of these specialized paths is to route around con-
gestion, although as a side benefit, routing by label is also faster
than the usual methods, which require reading more of a packets
data. While MPLS is still a work in progress, a form of it is already
being used in many VoIP networks.
VOIP IS JUST ANOTHER
DATA APPLICATION.
Oddly enough, most companies today assign the
task of installing their VoIP networks to the
in-house information technologies division, even
though that group typically has little or no experience managing
the firms voice communications.
Management says, You should be able to do this, but theres
a knowledge gapIT doesnt understand phones, insists Todd
Grafton, a telephony engineer at CDW Government Inc., a com-
puter services and consulting company in Vernon Hills, Ill. Almost
always, the corporate phone system was run by an outside organi-
zation, Grafton adds. It was contracted out. And the service
requirementsfive 9s and all thatare very different from what
they are in many data centers.
Those service requirements include being able to dial police, fire,
and ambulances in an emergency, which in the United States means
dialing 911. Thats not always easy to do. A school district has five
or six buildings, says Grafton. You can dial 911, but where are the
paramedics going to show up? Conventional phone networks have,
by and large, solved the problem of forwarding a phones location
information to emergency personnel. But to do so in a VoIP net-
work, corporations usually have to bring in consultants with expe-
rience in both traditional telephony and Internet Protocol networking
to design and set up the system.
Then theres quality of service. Its a myth that you can man-
age VoIP with the monitoring tools you already have, says Jim
Su, a senior product marketing manager at Avaya Inc., in Basking
Ridge, N.J. You have to check each voice patheach end-to-end
pathand troubleshoot it, says Su. You need monitoring and
management tools that are especially designed for that. Naturally,
Avaya makes just such tools.
VOIP ISNT SECURE.
To the extent that VoIP is just another data appli-
cation, it has no inherent protection against eaves-
dropping, but in practice VoIP is even more secure
than old-style telephony. That wasnt always the
case. Going over an IP network, you could potentially intercept
packets, says Su. It was always possible to tap a phone call, but
you had to tap into a physical line.
VoIP, on the other hand, is in cyberspace, in principle accessi-
ble from anywhere. But while that was true at one time, Su says,
nowadays all IP telephony equipment, from the cheapest to the
most expensive, uses encryption schemes that make it probabilis-
tically impossible to listen in on an Internet phone call.
The typical encryption system uses public-key cryptography.
Skype, for example, uses a method called the Advanced Encryption
Standard, with encryption keys that are 256 bits long. Users log into
the Skype application on their personal computer and are then rec-
ognized by a Skype server across the network. The server gives each
party in a phone call a key to decrypt the packets sent by the other.
The exchange of data between the end users and the Skype server
is itself encrypted.
A PHONE IS A PHONE IS A PHONE.
With IP telephony, calls arent limited to tradi-
tional telephone devices. For example, when
Avayas Su leaves work, he reroutes his office
extension to his home computer. With SIP in place,
he says, My colleagues can see that Im available, even if they
dont know what device Im on, or if Im at home. I can also just
switch from voice to instant messaging or a videoconference.
The telephony doesnt just reside in the computerits in the
network. The industry even has a term for the way a software
program, even the original VocalTec application, can turn a com-
puting device into a phonesoftphone.
Those new phones and other devices, of course, have features
and interfaces that most users wont bother to learn, just as we
already ignore most of the features of our cellphones.
Bjarne Stroustrup, the redoubtable computer scientist who
20 years ago invented the C++ language while working at Bell Labs,
once famously said, I have always wished that my computer would
be as easy to use as my telephone. My wish has come true. I no
longer know how to use my telephone.
Bjarne, we have good news and bad news for you: its going to get
betterand worse. As phones become full-blown computers in their
own right; as computers, PDAs, and other devices become phones;
and as the boundless Internet becomes a phone network, well be
surrounded by telephony choices that dazzle, delight, and befud-
dle us. Welcome to the world of VoIP. I
TO PROBE FURTHER
Skype and Vonage are easily found on the Web at
http://www.skype.com and http://www.vonage.com. The
topic of quality of service was taken up in more detail in a
September 2000 article in IEEE Spectrum, The Cost of
Quality in Internet-style Networks, by Amitava Dutta-Roy.