The Letter

Posted: 09/1997

The Letter

AT&T Commits to IP Voice

Though our words in this space have come as small comfort to
many in the resale community, we have continued to argue that
sweeping changes in the long distance business are headed our
way. Among the challenges and opportunities we have discussed is
the use of Internet Protocol (IP) networks to carry voice bits
around the network, thereby bypassing the traditional
circuit-switched network altogether.

In late July, reality crept closer as AT&T and VocalTec
Communications Ltd. announced an agreement with ITXC Corp., a new
company that will provide interexchange services to Internet
telephony service providers (ITSPs). ITXC stands for Internet
telephony exchange carrier, and its new CEO is Tom Evslin, the
AT&T vice president formerly in charge of AT&T WorldNet,
that firm’s Internet service provider business.

As part of the agreement, VocalTec will also provide ITXC with
technology and software products to support point-to-point
telephony services based on Internet protocol (IP). VocalTec
Communications Ltd. develops software supporting voice and
multimedia communications over IP networks such as the Internet.
The same software also works over private intranets.

More important, perhaps, VocalTec is generally recognized as
being the company that invented Internet telephony. ITXC
executives obviously think the industry is at a watershed and are
prepared to back that belief by fielding technology that bridges
IP voice and the public switched networks.

Make no mistake: IP telephony, like its cousin IP faxing, will
develop as a major alternative to traditional circuit-switched
voice and fax. The impact will be felt first in the international
markets where the ability to arbitrage unreasonably high tariffs
is greatest. Businesses that do a lot of faxing within North
America will be next to move significant portions of their fax
traffic over to IP providers.

Voice will take a bit longer, since the ability to originate
and terminate a voice call on a standard phone using IP in the
middle to slice long distance charges is still under development,
or, when available today, is not widely enough deployed in U.S.
end offices to allow seamless call completion.

But that’s only a matter of time. For resellers feeling
battered and pinched by sinking minute-of-use rates, IP telephony
won’t sound reassuring. And it won’t be, unless competitive
carriers figure out how to participate in the new business
themselves. We can’t ignore IP telephony, because it isn’t going

Until Next Time,
Gary Kim

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