Crowe: VoIP the Biggest Thing Since AT&Ts Breakup

IP and WDM have hit the industry with such force that they have created a tsunami that is overturning communications and creating new opportunities, says Level 3 Communications Inc. CEO James Q. Crowe, yesterdays keynote speaker.

Over the centuries mankind has been through three revolutions — agricultural, industrial and information, Crowe says, with each revolution taking place in a shorter span of time. The information revolution, he notes, is about processing information, storing information and moving information. But while the price/performance rates of processing and storing information has long been improving between 50 and 60 percent a year, until recently, the cost of telephone service has been largely stagnant, probably at least in part because the industry followed a utility model.

Of course, thats all changing now. The dam broke, in 1995, as Crowe puts it, with the emergence of the Internet and IP and optical/WDM technology. That signaled that the old, expensive ways of moving information are giving way to the new, he says.

He adds that neither of these developments came from traditional companies; instead, they came from startups. Cisco Systems Inc. is credited with much of the IP technology, while companies like Ciena and JDS Uniphase popularized WDM, which allows carriers to multiply the capacity of their fiber by using multiple wavelengths. Also, importantly, both IP and WDM are based on market standards and not centrally planned by industry committees, says Crowe, and thats changing the face of this industry.

The move to VoIP is one of the most significant developments since the breakup of AT&T, says Crowe.

VoIP is important given the sheer size of the voice market today, he says. Crowe notes that six years ago, voice represented 92 percent of all revenues in the telecommunications industry, but less than half of the bits on the global network. Today if a user pays $30 a month for broadband at 12 to 13kbps, they pay 1/100th of a cent for voice calls; whereas voice is 15 cents a minute on the PSTN, he says. That 1500:1 difference is exciting many in the industry, he says.

Over time, he says, voice will trend away from a centrally-controlled utility business and toward just one type of communications over the IP network. Now VoIP is becoming simply digital media, he says, which expands the scope of voice to be part of a wide variety of applications. Were going to find the next iPod and iTunes in VoIP, I have no doubt, he says, adding that he believes the consumer market will lead with VoIP.

He says basic functions consumers will look for in VoIP include interconnection (the ability to work with more than just PC-to-PC communications); reliability; quality; security; and value and this doesnt necessarily mean just low cost.

Bundling also will be a key consideration in driving VoIP forward, he adds. In fact a Level 3 study reported 74 percent of respondents will switch their voice service if its part of a bundle. Other key aspects of VoIP will be personalization and mobility, he adds, noting that nearly every service and equipment provider now has plans to include Wi-Fi into their mix.

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