Just when cable engineers thought they were beginning to get the technical issues surrounding the provision of broadband data services under control, up jumps an unexpected opportunity—or distraction? Now that operators are putting their plans to offer fullscale cablephone service on hold, they are starting to take a hard look at what it would take to provide various incarnations of Internet telephony, or voice over IP services via the cable network, and which applications would make money.

"I don't know that it makes sense to try to do Internet telephony to replace your 911-grade basic POTS dialtone," says @Home Network's VP of Networks Milo Medin, "but certainly, you can do some interesting things like (eliminate) the need to have a second phone line for faxes."

Toll quality voice?

The technology could also open some doors for smaller systems. Bill Bauer, president of the small but innovative WindBreak Cable, believes that the technology has some significant opportunities for long distance bypass services. "I'm actually looking at it a bit differently, where we would use the IP network that we've built as the transport back to our headend, and then hop onto an IXC—not the complete connection where we go all the way over the Internet, say, to Europe," explains Bauer. "I'm looking at true, toll quality (voice), not much lower. But I don't have all the answers. All I know is, I can do it—now, what do I do with it?"

"We are looking at Internet telephony very seriously," echoes Steve Craddock, vice president of new media development with Comcast Corp., another partner in @Home, who adds that while the MSO has been aware of the potential of IP voice for quite some time, both the necessary hardware and software "are not ready for prime-time yet."

"We have seen some promising stuff, but there are so many things that still have to come together," adds Craddock.

Technology not mature

The technical challenges of Internet telephony exist on both the software and the hardware side, ranging from voice codecs to gateway servers to modems, and even the PCs (or Macs) themselves. While cable modems could, theoretically, offer a clearer, higher-quality conversation with less delay than current 14.4 or 28.8 kbps telephony modems (see sidebar), the cable modems available today were not designed to carry constant, sequential voice traffic, but instead, to launch cable operators into the packet data business.

But execs like Craddock are now taking the business case for IP voice seriously enough that they are holding discussions with the MCNS cable modem standards group on the issue of building into the modem chips the capability to handle voice service. The voice service though, notes Comcast's Craddock, is still very much secondary to the goal of making interoperable cable modems available to consumers at retail.

The speed of the user's personal computer is another limiting factor. "If you are using a 486, you can forget it," says Craddock. "If you have a really fast Pentium, it's not so bad."


Another crucial issue is how to make certain that the data services cable operators have worked so hard to set up would coexist peacefully on the same pipe with voice. "Until you get Quality of Service that you can implement all the way to the desktop," says Craddock, "it's really tough to guarantee that a voice stream will have priority" (for more on QoS issues, please see the cover story, page 34).

To ensure a successful voice transmission, operators would have to make tradeoffs like buffering the voice packets; however, too much buffering could equate to serious, and noticeable, delays in a conversation. "All of a sudden, you begin to look like a badly-dubbed Italian movie," jokes Craddock. "And if you don't engineer it right, you start to get echo as it interfaces with the PSTN, or clipping caused by jitter, and that's ugly, too."

"Those voice packets have to have priority," says Bauer. "You get a heavily-loaded network, and you've got some concerns. But it's nice that this is happening at the time we are actually starting to build the MCNS modems, which means we can provision for that."

And then there's the question of application priorities on the PC itself. While IP voice "hobbyists" today are probably willing to tolerate the disconnection of their calls when they open another software application and their PC dumps the VON application in favor of, say, a spreadsheet program, future business users probably wouldn't be too thrilled to have their PCs making those decisions in the middle of calls.

Regulatory uncertainties

While cable operators have dropped full-scale telephony services down on their priority lists for many reasons, regulatory uncertainties seem to dominate the pack. Not surprisingly, the future regulatory picture for Internet telephony is also murky.

And as WindBreak's Bauer notes, "The telcos are not going to stand by and allow that revenue to disappear."

In fact, a trade association of interexchange telecommunications companies called ACTA (America's Carriers Telecommunication Association) petitioned the FCC in March of 1996, asking for the regulation of the Internet as a telecommunications service.

The group's arguments, says Brian Cute, associate with ACTA's counsel, Helein & Associates, P.C., are both legal and policy-driven. As for the legal argument, under the Federal Communications Commission's rules, if an entity offers telecom services to the public for a fee, then that entity is treated as a common carrier, says Cute. ACTA is basically concerned about the disruption of a level playing field for telecommunications carriers. Cute adds that to date, the FCC has not acted directly on the petition.

There are also standards issues which need to be resolved before progress can be made. Right now, the industry is moving to a defacto standard of either G.723.1, backed by Microsoft and Intel, or G.7291, of which AT&T is a proponent.

These standards would make the quality of IP voice actually better than that of toll-quality voice, according to Bauer.

Will users bite?

Ultimately, the question becomes, is it worth it for cable operators to pursue IP voice services—would consumers use them? "Right now, voice over the Internet is a hard to use, low-quality service—but it's really cheap," says Gary Kim, a telecom industry consultant and president of Itibiti Ventures Inc.


"IP voice is a new type of voice quality that is becoming available to consumers for the first time. There will be room in the marketplace for absolutely reliable, high-quality voice, and I think that digital PCS will move the expectation for wireless a lot closer to wireline. And I also think that there will be a continuing and huge market for people who say, for a cheap enough price, I don't mind having this Internet connection . . . It doesn't replace your standard phone; it's a supplement to your standard phone."

Where cable operators could shine would be in the combination of video with voice and data in multimedia versions of Internet phone. Suppliers of packet-telephony products like VocalTec, VDOnet and others now have products which include support for video connections.1

"There are real possibilities for videoconferencing and streaming video and those kinds of things," says Bauer, "but it's not quite there yet. You're going to do some struggling. You have to come out of your network and hit the Internet, and there will be some delays, jitter, etc. It's not the panacea that we want, that would enable full-motion, full-screen video, and hearing the other person in CD quality sound."

For now, both the technology, and the market, are still maturing. As for cable's involvement, when will the market see significant movement on the part of MSOs?

"This will be very exciting about a year from now," says Craddock.

  1. 1. "Ops study voice over modems," by Fred Dawson, Multichannel News, February 3, 1997, Page 47.
  2. 2. "FAQ: How can I use the Internet as a telephone?," copyright 1995–96, Kevin M. Savetz and Andrew Sears, Version 0.5, July 25, 1996.

As it is currently, and perhaps most widely being configured, an IP voice call requires that both callers have personal computers with sound cards or built-in audio, as well as microphones and 14.4 kbps modems (14.4 is probably the minimum for good sound quality; however, some programs will run at 9.6). In addition, they must have a direct Internet connection (a standard PPP or SLIP), and both must be running the same software package. (Actually, two callers using different phone software could, theoretically, talk to each other if their software shared the same type of compression and utilized the same transport protocol, in addition to a few other technical requirements. In practice, however, few of the applications will work together.2) There are now dozens of companies which are offering IP voice software.

In addition, all parties to the call must be on-line at the same time, which requires some type of advance communication to actually set the call up (possibly a voice call over the PSTN, or an e-mail, etc.).

In this application of the technology, software codecs are translating the analog voice conversation into packets of data, and at worst case, the process can cause delays in the hundreds of milliseconds.

The compression/decompression process can also be accomplished in hardware, in the form of a card that plugs into the PC.

There's also a new wave of Internet telephony applications arriving on the scene which will give users the power to make phone-to-phone calls via the Internet. VocalTec Ltd., which introduced its Internet Phone software in 1995, has introduced its Telephony Gateway servers which connect the Internet to the PSTN. As VocalTec's literature explains the application, a user would dial the gateway from any phone; an Interactive Voice Response (IVR) system asks the caller to enter the number he wishes to dial; the call then travels over the Internet to a second gateway and the call's destination. If the phones at either end of the connection happen to be linked to their gateways via a PBX, the only charges incurred would be those of the Internet connection. The Telephony Gateway also contains features for security, billing and call monitoring, according to the company.

In December of last year, VocalTec announced that Telecom Finland had integrated the company's Internet telephony technology into its new Web-based telephone services.

Another company, IDT Corporation, which entered the Internet access business in 1994, says that its Net2Phone technology makes it possible for users of Internet telephony systems to call regular phones. A caller with a "sound-equipped" PC would make the call from his/her computer. The call is then transmitted over the Internet to IDT's central telephone switch, which relays the call to a telephone. "The result is real-time, uninterrupted, full duplex voice communication between two parties," according to literature posted on the company's Web site.

The company also reports that callers can use any ISP to reach the other party.

While there is a charge for the call itself, the company says that its service can reduce phone bills "by up to 95 percent off the cost of traditional long distance calls."