VoIP Blog - Tehrani.com

VoIP 2.0: The Future of IP Telephony

Rich Tehrani, VoIP evangelist and industry luminary will be discussing the transition of VoIP from its infancy to where we are now… VoIP 2.0. In addition to covering the entire VoIP market, he will focus on how to make money selling the latest VoIP equipment and services. VoIP is constantly evolving and selling today’s solutions is different that selling solutions from a mere year ago. To keep up with the VoIP market you need to know about VoIP 2.0. and Mr. Tehrani will make sure you understand all about this exciting new paradigm shift in VoIP.

Here is the Vonexus Global Partner Conference Agenda.

I will be speaking in the morning of January 25, 2005

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The Best VoIP Investments in 2005

I get this question a lot. Where would you invest in the VoIP space? How would you position yourself to profit from the hyper-growth of the voice over IP market? I figured a column on the topic made senses so I could share my thoughts with hundreds of thousands of people instead of just a few at a time.

I purposely stayed away from obvious companies such as Net2Phone, Vocaltec, Avaya, Cisco, Nortel, etc. I stayed away because there is already tremendous analyst coverage or the company does much more than just VoIP. I am really focusing more on areas of VoIP that I believe will do better than average.

Each of the following ideas will be augmented with supporting reasons as well as potential pitfalls. It also should be noted that I have some sort of business relationship with most of the companies mentioned as they are all potential/actual customers, etc. Some of these companies are private and some public and some private ones mentioned below aren’t looking for capital.

Furthermore, for the sake of being responsible, we need to realize that communications costs are plummeting and products such as Skype are getting millions of people used to free telephony. In such an environment, it is obvious that the price for VoIP service will continue to fall as more people get used to downloading software from the Internet, buying a headset or a number of other VoIP compatible products and then making free calls.

In such an environment, service providers will have to differentiate themselves with sticky features such as distinctive ringtones, second and third lines, virtual numbers, conference calling and more. A war of differentiation and services will have to occur because if we continue to have a price war until no one pays for telephony, no one will be left.

Peer to Peer

Peer to peer products from companies such as Skype, Nimcat Networks and Popular Telephony are in a great position to benefit from the interest being paid to p2p. The latter two companies focus on the enterprise and work with phone vendors to embed their technology into phones that eliminate the need for a central PBX. Both the consumer and enterprise model make great sense. Skype makes its money with management features, as well as at the intersection between VoIP and the PSTN.

The downside to this technology is the potential for ILEC and cable companies to intentionally damage the quality of VoIP calls. This is a very real threat to our industry and the FCC needs to provide a free and fair market for adequate broadband competition so the VoIP market can flourish.

VoIP Peering

Many people get peering mixed up with peer-to-peer. They are not the same or even similar but can work together. Peer-to-peer products communicate with one another without the need for a central server while peering is the interconnection of networks. Companies that are strong in VoIP peering are Stealth Communications, Telx, Terremark, and Infiniroute networks.

Open Source Telephony

Two of the more visible companies in this space are Digium the maker of Asterisk open PBX and Pingtel. Digium was first to go open source and Pingtel has been around longer but went from focusing on making IP phones to IP PBXs to now open-source software. The business models for these companies is similar to Red Hat in that they give you a free product and you choose to pay for support, consulting, some ancillary equipment (if needed), etc.

The downside here is if there is a move towards more hacking attacks on Linux servers. These products would be at risk and as we all know it is much worse to have your phone system go down than your e-mail system. This last statement is not true at TMC anymore but for many other companies phone systems are more important than e-mail servers.

Government Suppliers

The government is spending on VoIP like never before. Each year, more conferees sign up to our Internet Telephony Conference & Expo. When you talk with these conferees they tell you that VoIP is becoming more and more critical in the government and military sectors. A number of companies sell to this market including Net.com and Telecommunications Systems.

Triple-Play

The companies in this space (too many to mention – see triple-play coverage in this issue) are doing a great job coming out with products that are compelling for service providers to install and sell services with. Surveys tell us consumers want a single bill. Bundling is a great way to reduce churn. All service providers need to consider the triple-play opportunity and see if they can offer it in the future or be part of a broader offering.

Cable companies have the easiest time with this as they have already mastered TV and broadband and VoIP is an easy addition. ILECS are going to have a tough time gaining share in the TV market in my opinion. It will take a while for them to get their systems up and running so it is premature to rule them out. There is the possibility that WiMAX providers will appear as well offering triple-play service. WiMAX is the cheapest way to provide triple-play meaning lower costs to whoever uses wireless to deploy triple-play service.

The question is, will we need triple-play providers in the future? A concern is that sooner or later TV will be streamed to users over broadband connections that can be viewed on any TV. In other words, TV may not be TV in the future… Or at least not the way we look at it today. You may just subscribe to Yahoo! TV and stream your channels. This would make the triple-play a double play as you don’t need a TV provider if you have Yahoo!

The incumbent providers have pretty much blocked access to the fiber they are laying down and they may block access or reduce the quality of streaming video as well. We will have to wait on this one.

This is where the tight relationship between SBC and Yahoo! Comes in. Imagine if Yahoo! were to work a deal with SBC so you need SBC service to access Yahoo! TV. Watch this area closely. By the way both www.yahootv.com and www.yahoo.tv are already taken by Yahoo.

One final note: it is possible that the company with the best wireless network, Verizon will just clean house by providing a superior quadruple-play offering and continuing to market their strength in the wireless market.

Consumer Electronics

You may not need to read this column to know that this market is hot but what you may have missed is how every product is becoming VoIP enabled. All telephony devices will have to support VoIP whether they are wired or not. I predict MP3 players, mobile video games and 10 other categories of products I can’t even imagine will somehow integrate and leverage VoIP.

There will be a continual worldwide upgrade of all wireless phones whether they be cellular or the 2.4 GHZ cordless kind found in our homes. They will all need to support WiFi, bluetooth and WiMAX and in that order. The cordless phone in your home will be thrown away as often as your cell phone. This of course assumes you don’t just have a single device.

There will also be a tremendous need for ATA devices that convert analog to VoIP. As the VoIP market grows, these devices are necessary. Eventually the phone itself will deal with the conversion.

HMP or host media processing will eventually be standard in all equipment meaning specialized DSPs won’t be needed. Phones and cameras will continue to merge and we won’t need tapes, disks, etc. Everything is going to plain old flash memory.

VoIP Chips

These chips are finding there way into everything from routers to hubs to cell phones to PDAs. You name it there is a reason to put a VoIP chip in it. Please note HMP comments from above.

Hosted Communications

This market has finally arrived. The worst is behind us and there was an extensive weeding out process that left the strongest providers. The value of hosted providers will only increase. I don’t se a downside here unless major players such as Saleforce.com have a disastrous financial problem.

SIP

SIP is good. It is becoming great as more companies and service providers support this open standard. Anything SIP has potential to do very well. The market for SIP products is still young and there is ample opportunity for many players.

Downside to this one is a new standard or protocol eclipsing SIP. It happens all the time. It happened to H.323. So far this is the standard. Let’s see what happens next. Also Skype could become the defacto standard for VoIP in the future. It is possible and at the pace of downloads they are receiving so far (over 50 million so far) they may just be on everyone’s desktop and make SIP irrelevant. Niklas Zennstrom basically mentioned this in his keynote at a recent Internet Telephony Conference.

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VoIP Market To See 100% Growth in 2005

It is now official... We are now 100% higher in pre-registered attendance for Internet Telephony Conference & Expo on a year-over-year basis, the same number of days out. To put that in perspective, this is what was said in the VoIP Industry about our Miami show last year (February 2004):

"This place is a mad house"
- Debora Glennon, Nortel Networks

"I Haven't seen a show this busy in three years"
- Mark Straton, Senior VP, Siemens

"...it was the most active conference that I have been at in nearly three years"
- Howard Kendall, Intertex

The total attendance at last year's event was 3,629 btw. If this trend continues we will have over 7,000 attendees. No VoIP show comes anywhere near us in terms of attendance. In the TMC tradition of under-promising and over-delivering we would rather be conservative and predict we will have 4,500 attendees at this show.

Here are more testimonials http://www.tmcnet.com/itexpo/m05/testimonials-m04.aspx.

Many people ask me how the VoIP market will progress in 2005 compared to 2004. If our pre-registration numbers are any indication and the trend of hyper-growth continues, the industry could be up 100% year-over-year! The best part of all of this is we are seeing a surge in service provider attendance and thousands of enterprise and government attendees as well. There is also a dramatic uptick in the reseller attendees and our conference track for resellers may be be maxed out with conferees in the next week!

ITEXPO is still the only VoIP industry marketplace, where buyers and sellers come together. We are 100% dedicated to generating buyers. We are not an industry insider/regulatory event by nature... People come to this show because this is where the sellers are and many of our exhibitors will not be found at any other event. You will kick yourself if you aren't there to witness this for yourself!

Hope to see you Feb 22-25, 2005 in Miami.

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Ready For Voip?

Alan Clark, the President and CEO of Telchemy has done a lot for VoIP. First off he runs a site called VoIPTroubleshooter.com which is a great help to developers and IT people. More recently he came out with a document called Six Steps To Getting Your Network Ready For Voice over IP. The document is a good reference if you are looking to get started with the VoIP deployment process.

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New Baby Named Yahoo

I get the feeling irrational exuberance is right around the corner.

Couple who met on the Net name their baby "Yahoo":

[World News]: London, Jan 14 : A Romanian couple that met each other on the Internet has named their baby "Yahoo", the Daily Times reported today.

Nonu and Cornelia Dragoman say they had a virtual relationship for three months before seeing each other. Cornelia told Libertatea newspaper:

"We named him Lucian Yahoo, one name after my father and the other from the computer. These were the two elements which guided my life." The baby was born a few days after Christmas last year. (ANI)

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Ruggedized WiFi VoIP

Tom Keating made some great VoIP predictions in his blog recently and one of them came to mind this AM when I happened upon a new product, the mNode300 from Telabria, a ruggedized WiFi access point with a separate radio for backhauling network traffic. This device is aimed at students and other public sector locations. Tom's prediction about this topic is below:

7) Colleges ramp up on VoIP
When I was in college 11 years ago they just added Ethernet to the dorm rooms. Too bad VoIP didn't exist back then as I often had $100 phone bills. But that's nothing. Many students had $200-$500 phone bills due to the ridiculous prices charged by colleges. Most colleges built their own phone system acting as their own little phone companies so they could charge students a "premium" and rake in the profits. Well, the colleges are really starting to hurt with cell phone market penetration as well as students using Skype and other VoIP solutions. Many colleges spent millions on their legacy phone systems and haven't recouped that investment. Well, if you can't beat em' join em'! Many colleges have already started deploying VoIP, often giving the students a Cisco IP phone or other IP phone to use. You can expect more of this in 2005. Fortunately, the easier administration (as compared to traditional PBX/phone systems) as well as the ability to partner with less expensive VoIP termination providers such as Level3 could make the colleges more competitive and with good margins.

Telabria Ruggedized WiFi Solution can be used for VoIP

Obviously when using WiFi you can jump to VoIP immediately without the need for wires. We often joke around the office that "one wire to the desktop," was the VoIP catch-phrase a few years back and now it is obviously no wires to the desktop. Well if you think about it, there is no desktop required anymore either. So I guess this phrase just doesn't work at all anymore. But getting back to Tom's prediction... The use of WiFi will certainly speed the adoption of VoIP in universities making this prediction very likely to happen. Lets see how many colleges jump on the WiFi bandwagon.

If we give students the ability to access the Internet from anywhere, we wills see an even larger explosion in 3 things. Downloaded music, videos and VoIP usage. Well at least the last one is legal. As these students enter the workplace, VoIP will be a necessity for them, not a new technology. The more WiFi access students can get their hands on, the better it is for the VoIP industry.

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Cisco Services Push

Om Malik writes today about Cisco's secret plan to go from from pure hardware to value added services. This is the only option Cisco has in my opinion. It is obvious that Cisco has products that are either 100% commoditized today or will be soon. Witness the rise and acquisition on no-name Linksys in a matter of a few years. Routers and switches will likely all be made by and sold by Chinese companies soon. Competing on price is not a strength of today's Cisco. The company sees the writing on the wall and will have to make money in some other area. IBM and HP have evolved from hardware to services. Cisco is next.

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VoIP Security: Who Will Be The Next T-Mobile?

Today's hot topic is VoIP security and while there haven't been any huge break-ins into VoIP systems that I am aware of I am aware that according to the WSJ, T-Mobile recently had their computers broken into and customer names and social security numbers were accessed. The bold section below doesn't sound too good but I must admit I slept through much of history class so if there was a day we went over "mutual assistance legal treaties," I was either dreaming or absent.

Nonetheless we seem to have one of these with Russia. Who would have guessed? Here is an excerpt from the story:

Hacker Breaks Into T-Mobile Network

By JESSE DRUCKER and JOHN D. MCKINNON
Staff Reporters of THE WALL STREET JOURNAL
January 13, 2005; Page B5

A hacker broke into the computer systems of T-Mobile USA Inc. over several months, viewing the names and Social Security numbers of 400 customers as well as the files of a Secret Service agent investigating the network break-in, the company and government officials disclosed.

According to the Associated Press, the hacker obtained an internal Secret Service memorandum and part of a mutual assistance legal treaty from Russia. The documents contained "highly sensitive information pertaining to ongoing ... criminal cases," according to court records reviewed by the AP. The hacker also accessed e-mails and computer files.

The break-in was discovered during a broad Secret Service investigation, called "Operation Firewall," that targeted underground hacker organizations.

Nicolas Lee Jacobsen, a 21-year-old computer engineer of Santa Ana, Calif., was charged with the break-in in U.S. District Court in Los Angeles.

Deutsche Telekom AG's T-Mobile, the country's fifth-biggest cellphone-services provider with more than 16 million subscribers, said that its systems were broken into in late 2003. The carrier said it notified the Secret Service, which apprehended Mr. Jacobsen in late 2004. According to the AP, court records said the hacker had access to T-Mobile customer information from at least March through October of last year.

T-Mobile said the customers whose records were viewed were notified in writing, but said that customer credit-card information wasn't accessed.

"This same person is also believed to be involved in other attempts to gain unauthorized access to customer information," a T-Mobile spokesman said in a statement. "The Secret Service is investigating these allegations, and T-Mobile is cooperating to the fullest extent, including with regard to the allegations that customer photos have been subject to unauthorized access."

Will this happen to VoIP at some point? Will conversations be hijacked? Absolutely in my opinion. Somewhere out there, an army of hackers is salivating at the chance to listen in as you call Dominos and order your pepperoni pizza. Once we open up telephony by pushing it over IP packets we need to make sure we are 100% dedicated to ensuring VoIP security. Service providers need to understand how important it is to focus on this issue because who knows what "treaty-talk" could be going on over those packets.

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