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
Analysts 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 & Sullivans 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
runningfast
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
DS1/DS3

POTS+DSL
Digital
Loop Carrier

SS7/
TDM

GR-303
DS1/DS3
data
DS3/OC3

Class 5 Switch
IP Router

Internet

PSTN

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
Ethernet

POTS+DSL

SS7/
TDM

IP Router

Broadband
Loop Carrier

PSTN

VoIP/Ethernet
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)

POTS
Phone

ATA

VoIP
DSL/Cable
Modem

IP (via
customers ISP)

Internet

VoIP

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

Alaskas 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
TDM

MetaSwitch VP3500
Next Generation Class 5 Switch

PSTN

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