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Telephony Internet phone service becomes viable as infrastructure costs decline

According to local executives and independent industry analysts, the voice-over Internet protocol is the most misunderstood niche in the telecom industry.

Venture capitalists don’t understand it; neither do most industry insiders, they said. But the technological advancement in optical networks is driving down the cost of the infrastructure and could help struggling start-ups turn into opulent enterprises.

Voice-over the Internet is a phone call transmitted digitally from the sender’s computer to their Internet provider’s equipment and then onto the Internet. The receiver’s Internet provider pulls the message off the Internet and routes it to the receiver’s computer. The individual computers must have microphones and sound cards to complete the call.

Telecom analysts such as Jeff Kagen believe telecom firms could utilize the infrastructure to offer subscribers the chance to add or subtract additional phone lines to their homes at any time.

Still some firms, such as San Diego-based Nuera Communications Inc. and Tierra Telecom, are focusing on developing gateways for long-distance carriers. Gateways are a combination of hardware and software that interconnects otherwise incompatible networks or networking devices.


– An Efficient Way To Communicate

Voice-over Internet protocol “is less expensive for carrying a voice. It also allows you to not have two overlaying networks,” said Neil Salisbury, Nuera’s vice president of marketing. “So instead of having a voice network and a data network you can converge the two together.”

Tierra Telecom intends to become “the carriers’ carrier,” said Dave Vit, marketing manager for Tierra.

“VoIP is really still in its infancy stage,” he said.

While neither Nuera nor Tierra are profitable right now, both believe they will operate in the black soon. Salisbury and Vit said VoIP would become a more acceptable form of communication as infrastructure costs decline.


– Technology To Be Implemented

Independent analyst Kagen said the current misperceptions of VoIP hurts the industry as a whole.

“VoIP means different things to different people and it doesn’t always mean the same thing,” the Atlanta-based analyst said. “It can range from the basic bare-bones voice over the Internet, voice over your laptop, voice over your computer, and that’s what most people think about. That’s always going to be a segment, but that’s not going to be the big story.”

The “big story” will be how telephone and communication companies and communication networks use the technology to become more efficient, Kagen said.

“When we talk about voice over IP we’re talking about a more efficient way to send voice; which is over data lines, so your voice comes in an e-mail,” he said.

Already long-distance telephone carriers use gateways developed by Tierra, Vit said. Tierra entices the carriers to use their gateways by giving the devices away for free. The firm recoups the lost revenue by charging the carriers for use of the gateways.

“You may have made long-distance calls to your aunt on the East Coast and that call may have been carried in the VoIP format without your knowledge,” Vit said.

Because fiber-optic technology has “made leaps and bounds” in the past few years, companies such as AT & T;, Sprint and Global Crossing are starting to use VoIP gateways more, Salisbury said.

Increased availability of open communication circuits and lowered latency (the time it takes data to travel from the source to the destination) are the main incentives for carriers, he said.

However, if VoIP is to succeed, analyst Kagen believes a greater importance must be placed on getting the service to the end user.

“You have these high-speed, super (information) highways being built with no on- or off-ramps,” he said. “To connect to the customer is important.”

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