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IP Telephony news wrap-up for Dec 5 - 2007

Verizon Wireless: Open Access and Much More

Story by Charlotte Wolter

The announcement by Verizon Wireless that it is preparing to open its networks to third-party devices and services comes at a time when wireless itself is poised for a change. The announcement was not dignified by a formal press release but rather came in the form of comments made to reporters by CEO Lowell McAdam and others with the company.

Verizon's willingness to offer some access to its network may be more of a concession to the change looming because of the upcoming auction of 700 MHz spectrum by the FCC in January, as well as the clear trend in congress and elsewhere to favor opening previously closed telecom networks.

A Fulcrum Point

The Verizon move comes a little more than a month before the critical
auction of spectrum in the 700 MHz range. The players in this auction have yet to be named, but must apply by this week in order to participate.

The 700 MHz spectrum is highly desirable because it is a part of the spectrum in which radio transmission can propagate more easily, making it possible to offer services at distance even greater than 30 miles. This means that acquiring it could become very expensive for parties not as well endowed as Verizon or AT&T. Some of the likely interested parties, such as Sprint or Covad may not have the wherewithal to bid on their own, while Google, long rumored to be in the hunt, lacks experience in operating a service network. This could make for some interesting bedfellows as the bidding opens.

Thinking ahead to that auction Verizon is considering how they can position themselves. We don't know if they are going to try to get some of spectrum. Covad could also, says telecom analyst Jon Arnold, principal, J. Arnold & Associates. But we don't know how far wireless can go as a proxy for land lines.

Verizon has been vocal in its opposition to the existing open-access provisions of the auction. Those provisions have remained and may also be a factor in Verizon's open network decision. At a high level what Verizon is doing is recognizing that the momentum is toward this in the market and that eventually it is going to come to this, says Arnold. They are not going to be able to protect these closed networks and walled gardens forever, and the sooner they get on the right side of the curve the better
it is going to be in the long term.

Arnold notes that Verizon missed out on the Apple iPhone. They turned it down the first time, because they didn't want to play ball with Apple, and couldn't get it because they don't have GSM.

But iPhone is just the beginning of a new generation of devices for wireless networks. Certainly Verizon doesn't want to miss the next big thing that comes down the wireless market, and I think the next big thing be (Google's) Android. And that is all about open systems.

How Open Is Open?

A critical question is how open the network will be. Verizon executives, in statements to the media, avoided specifics.

Lowell said, We've decided to encourage the development of new devices and applications by further opening our network. CTO Dick Lynch spoke of devices that were not phones at all but performed other functions using the network.

Verizon is moving deliberately. The company first will publish its technical standards. Then, as an unspecified time in 2008, will hold a developers conference to specify further what it will do and to connect with the developer community. What was made clear was that Verizon will test devices and applications carefully to be sure they do not harm it network.

With those caveats, the degree of openness remains in question, and may depend on what Verizon actually hears from developers. If the company feels some applications could cannibalize its revenues, it is likely they won't get on the network.

One way that Verizon could mitigate the openness of its network is simply with price. Dave Burstein, industry analyst and publisher of DSL Prime, points out, Verizon could make this worthless by simply pricing too high, as often seen in naked DSL. However, he adds, I'd bet they will play it straight, but that's a crucial open question.

Verizon Wireless
Story by Charlotte Wolter

After months of assembling funding and making acquisitions, wholesale service provider Zayo Group has revealed its structure and service strategy that has the company engaged in three separate businesses.

The company will continue its focus on high-bandwidth fiber for other services providers, but has added managed IP communication services and a unit devoted to traditional telephony services for smaller phone companies and other local service providers.

The three lines of business of the new Zayo Group are:

Zayo Bandwidth, which provides fiber-based bandwidth services for carriers and large companies and organizations

Onvoy Voice Services, which provides traditional voice services, such as tandem switched access, long distance, SS7, directory assistance and operator services, to local exchange carriers (LEC) and other small communication providers

Zayo Managed Services, which provides hosted communication services to businesses, including a hosted PBX service called VoicePipe.

The three lines of business will function independently, each with its own sales team. There are three different customer sets, three different go-to-market strategies, says John Scarano, cofounder and COO, Zayo Group, but bandwidth is the largest and still is the core emphasis of the company.

With bandwidth still the main business of the company, Adding these other services will help Zayo in building up a business, says Cindy Whelan, senior analyst, business network services, Current Analysis. She notes that, for the wholesale segment, though the market for wholesale services is getting better in terms of pricing and ability for some of the carriers to have better margins, this is still a challenging market, especially for bandwidth services.

The path to the Zayo Group, headed by CEO Dan Caruso, formerly CEO of ICG Communications, was started about a year ago when Caruso with Scarano raised approximately $225 million to fund acquisitions of smaller fiber operators, creating Zayo Bandwidth. The focus of this first line of
business was fiber services for other service providers, such as backhaul to mobile towers.

VoicePipe was a hosted service offered by ICG while Caruso headed the company. When the fiber assets of ICG were sold to Level 3 Communications, VoicePipe was retained. That resource eventually was folded into the new Zayo Managed Services, along with some hosted-voice assets of Onvoy.

Onvoy Voice Services is built on the TDM voice that Onvoy had offered to small or rural phone companies, independent cable operators and other small service providers.

The mix of bandwidth, TDM and hosted services is unique. Managed services is a departure from what they said when they initially launched , which sounds like wholesale and large enterprise, says Whelan. But the Zayo principals already had the hosted and managed services, So I think they wanted to make something of them and keep them going, particularly if they were having some success prior to acquisition. And managed services is a growing area for small and medium-sized business.

Hosted PBX requires development of a strong sales channel. Some of that had been accomplished while VoicePipe was part of ICG, while Onvoy provides a sales channel through its service provider customers. Still, taking hosted PBX to small business customers requires different sales and technical skills than supporting traditional PBX interconnection, and many providers have found it challenging to support this new line of business.

Whelan observes that segmenting the company the way they have, if they decide that they don't want to be in managed services business, they are in position to sell off that segment. While the company says it is committed to all of its businesses, is kind of a new area for them, so they want to proceed carefully and make sure they do not get locked into something.

Zayo Group
The acquisition of J6 Technology by U4EA Technologies Inc. significantly
broadens the U4EA product line from a focus on customer-premises devices to
offering larger devices designed for carrier-edge deployments.

U4EA now can offer its carrier customers a much larger range of
gateway-type devices that can be used for hosted services or with the PBXs
favored by larger enterprise customers.

J6 Technology has been known for voice signaling systems and protocol
translation for TDM-to-IP conversions. The company's devices support the
alphabet soup of TDM protocols, such as CAS (channel-associated signaling),
PRI, BRI, DPNSS, and QSIG, as well as IP transport, such as RTP, SCCP and
SIGTRAN.

The acquisition gives us access to a different part of the market, says
Jim Greenway, vice president of marketing, U4EA. The company's existing
line of products focuses on premises gateways for service provider
deployments of hosted services to customers in the range of 25 to 100
employees.

J6, on the other hand, Is expert at taking legacy PBX protocols, such as
CAS and other signaling, and converting that to IP using RTP, says
Greenway. Their products allow carriers to take any range of enterprise
PBX protocols and convert those to next-gen protocols for transport using
RTP, SIP or SIGTRAN, etc. Designed to be deployed at the edge of a carrier
network, the J6 devices can support traffic from many larger legacy PBXs.

U4EA's existing product line includes its 200 and 400 series of premises
gateways. The products include a router, FXS/FXO ports for legacy phones or
lifeline service in the event of an outage, firewall, DHCP, intrusion
detection and admission control. The gateway function supports both SIP and
MGCP, and the access supported includes T-1/E-1, Ethernet and ADSL. The
devices are sold to carriers offering hosted services, and support both IP
voice and video.

U4EA
J6
Revenues from retail IP telephony globally grew from $1.834 billion in 2005
to $6.908 billion in 2006, according to analyst firm Point Topic.

By region, Western Europe and North America accounted for most of that
revenue. Europe, which has the largest number of subscribers to VoIP,
generated $2.639 billion. North America, though just third in the number of
VoIP subscribers at 8.6 million, had $2.4117 billion in revenue.

The Asia-Pacific region has almost the same number of subscribers as
Europe, about 14.5 million. However that region produced approximately
$1.750 billion in revenue.

North America was the leader in average monthly revenue per user at $20.
Western Europe and South and East Asia were slightly lower at $15, while in
both the Asia-Pacific region and Latin America average monthly revenue per
user was estimated at $10.

The difference in revenue per user can be attributed to the bundling of
VoIP with other services by some providers in North America.

Although many in VoIP have stated the industry cannot prosper by offering
merely lower prices, Point Topic says cost is still the leading factor in
VoIP adoption.

For the longer term, the firm projects that VoIP will dominate the
residential market as it is beginning to dominate the business market.
Rather than shopping for independent services, Point Topic sees consumers
expecting to get VoIP from their broadband operators in the same way a TV
and broadband bundle is expected from cable operators.

Point Topic provides market research through a quarterly report series
known as Broadband Money Makers. In addition to subscriber statistics, the
reports include select provider profiles.

Point Topic
JAJAH, a provider of VoIP services for consumers, has launched JAJAH Direct,
a service that enables lower-cost VoIP calls directly from a traditional
phone.

The service gives customers two options: They can call a local access number,
then input the number to be called, or they can obtain a local phone number
that, when dialed, will ring one destination anywhere in the world. Neither
service has a monthly service fee. JAJAH offers competitive international
calling rates as well as conference calling, click-to-dial for Web sites and
SMS messagsing from PCs.

Jajah
Newtel Essence, a division of KPN International, has introduced an on-demand
contact center service based on the CosmoCall Universe platform by Cosmocom.
The new service is offered on a per-month, per-line basis, and can be used by
both operators located on a customerís premises or located remotely. The
service includes specialized routing, email, voice response, multimedia
recording and contact history.

Veraz Networks, a provider of softswitches and media gateways, has incorporated
software by and Telarix, the leading provider of interconnect business
optimization (IBO) and settlement, announced today a joint product to enable
carriers to optimize routing financially on-the-fly as network conditions
change.

This combined system, which includes Verazís ControlSwitch softswitch and
Telarixís iXRoute and iXTranslate routing-optimization system, has been
deployed already at leading global providers of telecommunications services.

Veraz
Telarix
Spirit DSP, a provider of voice and video software for DSP chips, announced today that Inventec Multimedia & Telecom, a manufacturer of multimedia and telecommunication products, will use the TeamSpirit Voice&Video Engine Embedded in the Apollo video phone of Importek, a subsidiary of the Inventec Group.

Importek is a manufacturer of IP terminals and has shipped more than eight
million VoIP phones in the past four years.

Spirit DSP
Importek
Mediatrix Telecom, a provider of VoIP access devices and gateways, has
completed interoperability testing for the Mediatrix 4400 Series with the VoIP
portfolio of Linksys, a division of Cisco. The Medaitrix 4400 series now is
compatible with the Linksys Voice System, including autoprovisioning. The Mediatrix 4400
digital gateways, one, two or four BRI ports and optional power over Ethernet,
provide ISDN port extensions over an IP network. The remote ISDN terminals can be
managed centrally and work with PBX services, such as calling groups and voice mail.

Mediatrix Telecom
Toshiba America Information Systems Inc., Telecommunication Systems Division
has expanded the of the Toshiba Strata CIX40 IP business communication
system. The trunk capacity is increased from six to 11 trunks, the IP channels from
eight to 24, and the voice mail ports from four to eight. The Strata CIX40
accommodates users in a mix of IP and digital end points.

TAIS
Multi-Tech Systems is providing upgade strategies to allow business
custoemrs to add VoIP features to existing PBXs. Besides using MultiTech gateways to
link remote offices economically to the existing phone system, the companyís FaxFinder
Fax Server can route incoming faxes directly to desktops. In addition the new
CallFinder Cellular Gateway can enable toll reduction for voice calls by routing calls
over less expensive cellular networks. The CallFinder also provides emergency
calling if PSTN service is not available.

Multi-Tech
Centillium Communications, a provider of systems on a chip for communication,
has launched an initiative for lower power consumption and smaller form
factors in its next generation of SoC products. The company said the
initiative resulted from customer concerns about, not just cost, but also
environmental impacts of the power consumed by network centers. Products
based on the initiative appear throughout 2008 and will use new process
technologies combined with optimizations in SoC architecture, signal processing algorithms and processor architectures.

Centillium Communications
The spatial-voice technology of DiamonWare, usually employed in audio and
video conferencing systems, has been adopted by Bigfoot Networks, a developer of
hardware to enhance gaming experiences. Bigfoot is incorporating DiamonWareís
spatial-voice software into its flagship Killer network interface card to add
voice chat and to provide realistic spatial positioning of playersí voices in
multiplayer online games. The DiamonWare software is incorporated into
conferencing systems to provide a more realistic conferencing experience
using the spatial-voice technology to make it easier to know who is speaking.

DiamonWare
Empirix has announced a certification program for users of its e-TEST suite,
a product for predeployment testing of Web applications and Web services. The
certification, which is for quality-assurance professionals, consultants and
software testers, is designed to strengthen professional credentials and to
provide a solid understanding of Empirix e-TEST suite.

Empirix