During the late 90s, IP telephony was widely regarded as little more than an interesting curiosity that allowed you to make long distance and international calls of variable quality over the Internet – often for free or at worst for the cost of a local call. Since then, the underlying technology has become a serious proposition for business systems where IP-based PBXs are now supplanting digital PBXs in the same way that digital previously supplanted analogue. In public voice networks too there are now huge savings to be made by combining voice and data onto one network and most telcos have now embarked on big change-outs.

The home environment, though, has been a tough challenge and has therefore lagged behind. Now this is beginning to change with Voice over Broadband (VoB) services becoming more widely offered. So, does VoB now represent a real threat to traditional telephony services?

Japan leading the charge

VoB implies the use of IP telephony technology to gain an extra telephone line (or possibly several lines) over a single domestic broadband connection. With the number of broadband connections to the home now growing rapidly across the world, it was only a matter of time before VoB came to centre stage as a new telephony offering.

Japan has shown an early lead in this. According to a recent report from Brunel University, one in four Japanese homes now have broadband connections compared with less than 10 percent of UK households. Furthermore, broadband connections there are typically 12Mbps as against only 512Kbps in the UK. Voice over IP has then been a major factor in the successful take-up of broadband in Japan, with the ability to make inexpensive or even free phone calls becoming something of a killer application that helps to pay for the overall connection cost. Other reports suggest that there are already over 5 million Internet telephony users in Asia.

The US is way behind these sorts of figures, with an estimated 150,000 Internet telephony users, but this is still comfortably ahead of the UK where such services are just getting going. In the UK there are several smaller players – such as Call UK, ET Phones, Mistral Internet and Telco Global – who collectively formed the Internet Telephony Service Provider Association (ITSPA) earlier this month, others like Skype, a London-based VOIP firm that recently raised new finance to develop its service, and BT.

Indeed BT has been quick to be in the front line of introducing such services in the UK, which begs the question of whether it sees such services as an opportunity or potential threat. Called Broadband Voice, BT’s service was launched last December and looks to be particularly aimed at the cable subscribers of NTL and Telewest, although it reportedly works just as well with an ADSL connection.

Getting connected

There are a number of different ways to install VoB in the home, depending on the type of broadband connection. In the UK, the typical method is to buy a box that plugs into an Ethernet router, modem or cable set-top box (depending on what is already there). A standard phone is then plugged into the box. Voice calls can then be sent via the Internet to a broadband voice switch that provides a bridge to the Public Telephone Network.

In BT’s case, the box costs in the region of £60. Users are charged £7.50 per month, plus 3p per minute for daytime landline calls. Evening and weekend calls are free for the first hour, then 1p per minute thereafter. This way, BT claims that users can save about £100 in the first year. The opportunity as far as BT is concerned is to gain a foothold in the cable companies’ installed base by offering an inexpensive second telephone line into the house that offers cheap calls. It will be interesting to see how this pans out.

Elsewhere in Europe, pan-European ISP Tiscali has also been active in this area. Last month it announced that it had partnered with NetCentrex to provide residential broadband telephony to its ADSL subscribers across Europe. This service should be up and running by the Autumn and clearly broadens Tiscali’s package of service offerings to include low cost telephony. Other ISPs offering ADSL are no doubt looking to do the same thing.

But is it a PATS?

This leads to the issue of regulation – and whether this should apply to VoB or not. In the UK, telecoms are regulated and in the past this meant obtaining a license from Oftel – now part of Ofcom. However, since the introduction of the Communications Act 2003 there is no need for a license.

There is a catch though. Anyone operating a telephone service has to meet 21 obligations of the Act which cover such things as Emergency services, lifeline support (for consumer services), itemized billing, directory enquiry services, facilities for people with disabilities and other administrative responsibilities. This includes VoB operators. Oftel’s position in the past has basically been that the technology used to transport the voice was not important, it was the voice services themselves that counted and this position has not substantially changed.

However, in the old switched environment everyone operated a Publicly Available Telephony System (PATS), with the ‘publicly available’ being the most important bit. This means that a home user should not lose the ability to make a phone call even if there is a power cut. Also, they should always be able to phone the emergency services  - even if they have not paid their bills.

Also, when using a standard fixed telephone service for calling emergency services, the location of the user can be obtained easily from the phone number cross referenced to user name and address. This enables the call to be routed to a local emergency services base, and for the emergency services to know where the call originates from. These requirements may not be practical for VoB, though.

Ofcom have taken the view that if VoB services are offered they should either be fully PATS compliant or they should be treated completely differently and should not be PATS compliant at all, with resilience to power cuts and emergency services specifically not being offered. Further, they need not then provide directory enquiry services, facilities for end-users with disabilities, itemized billing or operator assisted services. Their view is that VoB will actually be used as a second line and all the PATS services will in fact be provided over that primary line.

As part of this they have also proposed that all VoB services should be provided over a new number range beginning 056 rather than geographically based numbers (like 020 for London). The main reasons for this relate to difficulties of number allocation and the added complexities introduced to existing telephone systems that need to be programmed with all the different routes for numbers allocated geographically.

However, the newly formed ITSPA does not think much of these proposals, claiming that they could weaken the UK’s nascent voice over IP (VoIP) market and condemn it to be used only as a second line for ever. For example, allocating a non-geographic number such as 056 would make them hard to call from some foreign telecom networks, and even some UK networks. It also pretty much ensures that they could not be used for emergencies. On the other hand, of course, non-geographic numbering could provide advantages, with for example a user being able to move between London and Manchester and keep the same number.

Ofcom is currently conducting a consultation into how Internet telephony services should be offered and regulated, with recommendations later this year. In the meantime, it looks like VoB is here to stay and is likely to have an increasing impact on the fixed telephony market in future years.

 © e-principles 2004

Robin Duke-Woolley