Small Players Team Up In Big VoIP Play

Several smaller companies that specialize in making voice over Internet protocol networks are banding together to provide an alternative to the larger carriers like AT&T and Vonage.

The wild growth in the VoIP (define) sector has seen the Baby Bells and cable firms hopping aboard the bandwagon. The likes of SBC, Verizon, BellSouth and Qwest are all planning VoIP offerings and, according to the Synergy Research Group, the boom has created a 50 percent growth rate in the worldwide market for enterprise IP telephony, generating almost $864 million in vendor revenue last year.

Forrester Research statistics also paint a rosy picture. The analyst firm says VoIP’s Internet Protocol-PBX (define) will continue to grow through 2007 to 1.7 million lines from 100,000 lines today. Similarly, a report from research firm Stratecast Partners, says by 2007, the U.S. VoIP market is forecast to grow to more than five million subscribers, a five-fold increase over 2002 levels.

AT&T is readying a large scale VoIP rollout this year, while TI recently forged an alliance with VoIP pioneer Vonage. The two companies are currently at odds with each other in a patent infringement lawsuit.

As the way to break out of the grip of carriers, however, many of the smaller vendors at the Spring 2004 Voice on the Net (VON) Trade Show & Expo say they are exploring Session Initiation Protocol, also known as SIP (define), VXML (define) and other industry standards.

Used as a basis for Internet conferencing, telephony, presence, events notification and instant messaging, SIP initiates call setup, routing, authentication and other feature messages to endpoints within an IP domain.

Take for example Vancouver-based Convedia, which announced deals last week with PointOne. The partnership is expected to result in a nationwide VoIP network that will connect 90 U.S. cities and several international markets. Austin, Texas-based PointOne said Convedia’s Media Servers are at the heart of its SIP-based prepaid calling card service, which PointOne says will again be used for its upcoming IP telephony rollout. Currently, PointOne said it processes more than half a billion calls per month.

The deal is one of several that Convedia has secured in the past two weeks. The firm said it has also completed interoperability testing between the IPeria ActivEdge unified communications platform and its IP media servers. The partnership is expected to pave the way for network-based communications applications such as voicemail and auto-attendant for wireline, wireless and broadband service providers. Convedia also said it has worked out a 3GPP IMS-compliant solution with Redwood City, Calif.-based Ubiquity.

“Service providers are increasingly utilizing IP media servers as an integral network element to facilitate the delivery of enhanced applications,” Gartner analyst David Fraley said. “Multi-service IP media servers like those from Convedia are enabling a broad range of enhanced services and applications which are integral to the success of the next generation network.”

The trend to work away from major carriers and on a smaller scale is not as unique as one might think.

“We’re finding that we can offer a suitable cost savings to companies with as little as six employees,” Z-Tel Communications CEO Greg Smith said. The Florida-based firm counts Covad Communications as a major supporter, but retains a host of small customers like law firms that make lots of long distance calls.

Still, regulatory issues remain. To date, the Federal Communications Commission has signaled that VoIP should be as regulation-free as possible. But there are many issues that still need to be resolved and there is concern about the impact of state regulators establishing different and opposing standards, either from each other or the federal government.

Over the next six to 12 months as several regulatory boards, including the FCC, will gather information about VoIP before making key rulings. A reinforced VON said it will be there to offer its input.

“Some issues can be resolved sooner than that timeframe,” FCC spokesperson Michael Balmoris said. “For example, the AT&T petition will likely be resolved before the 12-to 15-month timeframe.”

Adapted from

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