VoIP is Accelerating:

Are you on board?

Jon Arnold John Lazar

VoP Program Leader, Vice President of
Frost & Sullivan Sales & Marketing,
MetaSwitch

AT THE HEART OF THE CONVERGED NETWORK

Nov 20 ‘03
AGENDA
• Introductions
• Analyst’s View
• State of the Market
• Industry Challenges
• Competitive Landscape
• Future Outlook
• Vendor/Service Provider View
• Why VoIP?
• Deployment Considerations
• Deployment Options
• Case Studies
• Lessons from Deployment
• Conclusion
INTRODUCTION

• Jon Arnold – VoP Program Leader, Frost & Sullivan

• Responsible for managing Frost & Sullivan’s subscription
service for Global VoP Equipment Markets (Voice over
Packet)
• Leads consulting assignments across a variety of telecom
sectors.
• Author of numerous reports and articles on VoP trends,
including VoIP and softswitch technology

• Frost & Sullivan

• Founded in 1961 in New York City with a specific mission: Provide
world-class market consulting on emerging high-technology and
industrial markets.
• Works interactively with clients to develop innovative growth
strategies.
STATE OF THE MARKET

• Optimism for VoIP has returned

• VoIP offerings maturing and the pieces are becoming better
integrated – ready for prime time
• Vendors continue consolidating to align themselves more
with how SPs do business
• End-user demand starting to develop in both enterprise and
residential markets
• VoIP starting to attract mainstream attention
• True competition is heating up among service providers –
both conventional and non-conventional
• Investment is returning after a long hiatus – VCs are
spending selectively, and valuations are rising
• In the U.S., regulatory climate now appears to favor VoIP
INDUSTRY CHALLENGES FOR CARRIERS

• Packet technology is here and now

• IP communications solutions are ready and able from many
types of service providers
• Traditional TDM wireline offerings – local access and LD –
are in decline, and do not warrant further Capex
• IP technology is cheaper to deploy and enables services
that are priced less than PSTN services
• New service providers and IP services are up and
running…fast
• Second line IP services taking revenue from incumbents
• Regulatory uncertainty
• Is it data or is it telephony?
• What about Emergency Services and CALEA?
• Standards still evolving
COMPETITIVE LANDSCAPE
• RBOCs
• Starting to deploy IP out from core to edge
• Expanding out of region
• Been using IP for long haul to reduce transport costs
• MSOs
• Advanced trials in progress, with growing number live now
• Extensive cable networks – many upgraded for 2-way service now
• Rigorous PacketCable standards ensure carrier-quality VoIP
• RLECs, CLECs, IOCs
• Aggressively moving to VoIP, VoATM
• Disruptive Service Providers
• Gaining traction
• Vonage, Skype, 8x8, Free World Dial-up, Net2Phone
• WiFi
• Booming
• Adding VoIP makes a compelling alternative to wireline
FUTURE OUTLOOK
• Early adopters
• have realized most of the Capex/Opex benefits of VoP, and are
migrating packet deployments from the network core out to the
edge and access – shifting focus to customers and revenue growth
• Large service providers
• have more faith in VoP now – offerings have matured, vendors are
more carrier-centric, track record is there
• US service providers – RBOCs, IXCs, ISPs
• competing more intensely with each other, and must offer multiple
services to survive – IP is the only way to go – cannot do this via
PSTN
• Enterprise
• has been leading this market – trend is clearly away from PBX to
IP PBX and IP telephony
FUTURE OUTLOOK (2)
• IP Centrex/hosted telephony
• gaining steady momentum among smaller carriers, and RBOCs
will begin commercial rollouts this year
• SIP
• is a key enabler of real-time, multimedia applications, and support
is steadily increasing among both carriers and vendors
• Session Border Control (SBC)
• is the last piece of the nextgen network puzzle – truly expands the
market by allowing “islands of VoIP” to become linked seamlessly
and securely
• Major MSOs moving from trial stage to commercial deployment
– will have a domino effect among Tier 2/3 MSOs
• Global market for telephony still largely untapped – IP is the
fastest, cheapest and best way to meet burgeoning demand
• End-user demand is just now starting to drive demand for VoIP
INTRODUCTION

• John Lazar - Vice President, Sales and Marketing

• Responsible for worldwide sales, marketing and
partnerships for MetaSwitch

• MetaSwitch
• MetaSwitch VP3500 - True Next Generation Class 5 Switch
• 32 switches installed
• Division of Data Connection
• Leading independent provider of networking and
IP applications technology
• Privately-owned and self-funded
• Consistently profitable since establishment in 1981
• 2003: Revenue $40M, Earnings $12M
• 275 employees in US and UK
• Offices in Alameda, Reston and Dallas
WHY VOIP?
• Simplified network for data and voice
• Voice and data (and other applications such as IP video) all on
the same packet network
• More cost-effective equipment – Ethernet bandwidth
increasingly cheaper than SONET
• Redundant routers and resilient packet ring (RPR) deliver
reliability at least equivalent to TDM / SONET
• IP was designed for resilience and network path redundancy
• Potential for new applications - e.g. IP phones, IP Centrex,
Web Self-Care, integration with unified messaging, etc.
• Platform for introducing competitive services over flexible
access network
• Protection against competitors offering creative packages that
undermine your revenue stream, e.g. “Non-geographical” service
providers like Vonage
VoIP DEPLOYMENT CONSIDERATIONS
• Service Set
• Which services are needed?
• Class 4 - LD/Business VPN
• Class 5 - Local Service
• Primary (service equivalence), secondary, tertiary, etc
• IP Centrex
• Which terminals will you support?
• POTS Black Phones through IAD/CPE
• PBX and key systems
• IP phones
• Soft clients (PC)

• Choice of signalling and device control protocols

• MGCP, H.248, SIP, H.323, SIGTRAN, …
• VoIP access interoperability is still relatively immature – watch out
for proprietary extensions
• Good work going on standards bodies, e.g. MSF
VoIP DEPLOYMENT CONSIDERATIONS (2)

• Bandwidth
• Most current VoIP implementations carry large “header tax”
overhead
• Various mechanisms for compressing or MUXing RTP – but
need to look carefully at available equipment

• Quality of Service
• Must control jitter on shared voice/data
• Various protocol/schemes with different trade-offs
• Diffserv/RSVP/MPLS/Data Fragmentation

• Echo cancellation required on trunks facing PSTN

VoIP DEPLOYMENT CONSIDERATIONS (3)

• Reliability and Management

• IP addressing complexities
• Voice and data networks may use overlapping address ranges
• Requirement for NAT / firewalls / SIP proxies (“session border
controllers”)
• Redundancy and fail over in distributed multi-vendor
environments
• Management of multiple devices in distributed softswitch
environment

• Lawful interception
• Security
 DEPLOYMENT OPTIONS – GR-303 REPLACEMENT

• Existing TDM network: Traditional Digital Loop

Carrier (DLC) terminates POTS and DSL, converts
to TDM (T1/3, GR-303)
• DLC and DSLAM may be separate or combined

TDM MUX
GR-303
POTS+DSL DS1/DS3 SS7/
PSTN
GR-303 TDM
Digital DS1/DS3
Loop Carrier data
DS3/OC3 Class 5 Switch

IP Router

Internet
 DEPLOYMENT OPTIONS – GR-303 REPLACEMENT

• Broadband Loop Carrier converts POTS to IP

• This equipment is available today
• Requires an IP interface to the switch – MetaSwitch VP3500
is ideal solution as it has this capability on-board

VoIP+data
POTS+DSL Ethernet SS7/
IP Router PSTN
TDM
Broadband VoIP/Ethernet
Loop Carrier
data MetaSwitch VP3500
Next Generation Class 5 Switch
Internet
 DEPLOYMENT OPTIONS - BROADBAND VOICE

• Deliver IP voice to the customer premises

• Over own access network or the Internet
• Can use any IP delivery mechanism (e.g. 802.11 wireless,
cable, DSL, …)
• Customer premises equipment can be
• Integrated Access Device
• Analog Telephone Adaptor (e.g. Cisco ATA) – shown below
• IP phone (many vendors, starting < $75)

VoIP
POTS ATA IP (via VoIP
Internet
Phone customer’s ISP)
DSL/Cable
Modem

MetaSwitch VP3500
Next Generation Class 5 Switch
CASE STUDY 1 – NEW KNOXVILLE TELEPHONE CO
• Rural ILEC
• Set up CLEC arm in 2001
• GoldStar Communications
• Also owns the local cable company
• MetaSwitch VP3500 Next Generation Class 5 Switch deployed
to provide
• VoIP over Cable
• Interoperation with equipment from Cisco, Motorola and Arris
• VoIP “2nd line”
• GR-303 for support of legacy POTS customers
• VoATM over DSL/T1
• All access types supported from a single switch
• Multiple local numbering schemes
• Low cost of entry
CASE STUDY 1 – NEW KNOXVILLE TELEPHONE CO
CASE STUDY 2 – YUKON TELEPHONE CO

• Rural ILEC in Alaska

• Serves remote offices of Ruby and Tanana from
central office in Whittier
• Current offerings include
• POTS
• CLASS features

• Alaska’s geography poses service delivery

challenges
• Migrating from TDM to VoIP over satellite services
CASE STUDY 2 - YUKON TELEPHONE CO

• MetaSwitch VP3500 Next Generation Class 5 Switch

deployed to
• Replace legacy Mitel and Redcom switches
• Provide initial GR-303 for support of legacy POTS
customers
• Provide VoIP over Satellite support for remote offices
• Enable introduction of competitive services over satellite,
cable, DSL and Wi-Fi
• Both access types supported from a single switch
• Eventual migration to an all-IP network

• VoIP benefits for rural customers

• Improved voice quality for remote offices
• Delivery of enhanced services
EXAMPLE: VOICE OVER IP OVER SATELLITE
• Use satellite network for IP transport
• IP voice compression – G.729 at 8kbps delivers good quality
• End-to-end delay is similar to TDM satellite
• Latest IP satellites are even better – 600ms roundtrip!

Satellite

BLC SS7/MF
PSTN
TDM

MetaSwitch VP3500
Next Generation Class 5 Switch
LESSONS FROM DEPLOYMENT
• MetaSwitch has deployed all the above applications (and more)
• IP network is cheaper and can deliver good voice quality
• All deployments require multi-vendor interoperability
• Many flavors of VoIP standards
• Requires extensive pre-deployment testing
• But the good news is the products are there – MetaSwitch has
partners for an end-to-end carrier-grade solution
• Existing data networks may not be sufficient to deploy VoIP
• Design for reliability (e.g. redundant routers)
• Security and Network Address Translation (NAT) become issues
• require firewall and/or Session Border Controller (SBC)
• Carrier-class equipment is vital
• Minimize delay and packet loss, support for quality of service
• On the whole network (e.g. watch out for rogue DHCP servers)
CONCLUSIONS

• Voice over IP is ready for deployment

• Enabler for competitive revenue-generating services
• More efficient access network
• Applicable to rural and urban networks

• Implementation requires careful planning and

equipment selection
• Network design – more than a data network
• Proven products – not all “VoIP” is carrier-grade
• Experienced, stable vendors
John Lazar
Vice President, Sales and Marketing
MetaSwitch
Tel: 510 748 8230
Email: jl@metaswitch.com

Jon Arnold
VoP Program Leader
Frost & Sullivan
Tel: 416 490 0592
Email: Jon_Arnold@frost.com