Research Note no. 29 2004–05
The Internet telephone: Voice over Internet Protocol (VoIP)
Matthew James
Science, Technology, Environment and Resources Section
8 February 2005
Phone calls on-line
In an ironic twist, basic telephony has come full circle
to challenge telecommunications incumbents, all through a new and promising
technology—VoIP. The acronym stands for ‘Voice over Internet Protocol’
and uses the same technology as the Internet. VoIP has the potential to
enable cheaper long distance and international telephone voice calls than
the normal public switched telephone network (PSTN), but not without some
upfront costs and technicalities.
A subscriber to VoIP service receives a handset that
resembles and works like a normal telephone, but the service uses Internet
Protocol (IP) technology over the data cable so as to provide more flexible
phone calls. The calls may be cheaper than traditional services, whether
made to other network subscribers or to the public network. VoIP may offer
call waiting, conference calls and user billing plans. A cheaper alternative
is the use of computer microphones and speakers with www.skype.com
software.(1)
However, users face the upfront costs of obtaining
a handset as well as the ongoing Internet service subscription charges.
There is also an issue of service quality and reliability. Muffled sound
levels or feedback issues have plagued some early systems.
VoIP does not necessarily need broadband capacity,
but VoIP won’t work if the Internet connection is down. Note that VoIP
for telephony is quite a separate activity from downloading entertainment
programs or using other multimedia capabilities on computers. The possibility
of having mobile VoIP through wireless is discussed here. This should
not be confused with common mobile phone use.
Following a demonstration project in regional Victoria,
the introduction of VoIP in Australia is proceeding. Regional carrier,
Neighbourhood Cable, installed a cable system providing VoIP services
in Ballarat, Geelong and Mildura, providing subscribers with access to
a range of new services of pay TV, Internet access and VoIP. Nationally,
Telstra and Optus have now decided to provide VoIP services in 2005 to
home customers, building on commercial services.
A number of smaller companies have provided such services
and handsets already.(2) Handsets may cost around $249 with
a $16 monthly subscription, in addition to connection fees anywhere in
the world. Note that the service fees and initial setup connection costs
may be significant and vary among providers.
Technology issues
Each VoIP telephone has an Internet Protocol address
that fully identifies the handset no matter where in the world it is located,
thus offering the ability of a single ID number. The handset can be used
anywhere as long as IP access is available. There are also service variations
available, such as using normal telephones at each end with calls routed
via Internet or broadband service providers.
While a standard telephone call uses up to 64kbps of
data, VoIP technology compresses signals down to 8kbps. Silence suppression
further reduces the required bandwidth by only allowing the transmission
of data packets while someone is actually speaking. The end result is
the need for much less bandwidth, although there are reports of variable
voice quality if the upstream and downstream bandwidths vary.(3)
Corporate VoIP installations now provide always-available
access to private local area networks with intelligent service features.
These allow multimedia support, so that the concept of video telephones
can also become a reality. Such setups may replace links to proprietary
switchboard systems. VoIP-over-mobile networks may be a further new development,
to allow Internet access to be integrated into wireless handsets, provided
that spectrum is cheap.
Technical and legal issues
In the case of emergency calls, PSTN telephone services
have a dedicated emergency priority system where a call to 000 should
provide precedence should the exchange be congested. While VoIP’s access
to 000 is comparable with that of PSTN services, the nature of the VoIP
service means that the location of the caller may not always be certain.
Network operators are working to address this issue.
Current telecommunication performance standards originally
developed for PSTN telephone services may not adequately serve VoIP technology.
To address issues such as voice call quality e.g. echoes, for VoIP services,
the standards are under review. Locally, the Australian Communications
Authority is actively looking at the implications of four billion IP numbering
addresses.
Also being reviewed are matters relating to security,
privacy, law enforcement and access for people with a disability. However,
according to a recent Network Insight analysis, there may not be overwhelming
legal change required to accommodate VoIP services.(4) Thus
VoIP may be applications-driven rather than cost-driven.
The challenges facing VoIP also include matters of
interconnection, identity, interception, customer credit and privacy.
Interoperability based on a common standard seems to be eluding manufacturers
so far.
Wi-Fi and wireless broadband
Promising wireless technologies that offer broadband
(high bandwidth capacity) services over local regions may well assist
VoIP. Wireless Internet provides access to the Internet without a telephone
line or cable, using radio frequency bands. This requires the presence
of local wireless ‘hotspots’ or subscription to a wireless Internet service
provider.
Hotspots use Wi-Fi technology, enabling Internet access,
within a 100 metre or so range. A computer wireless card costs around
$200 to buy. There will also be an account for the wireless access with
a service provider, unless free services like www.public.net.au
or www.wafreenet.org are utilised.
Wireless broadband Internet Service Providers (ISPs)
such as Unwired or iBurst operate their own ISP networks using proprietary
technologies. Such companies provide a special modem and antenna to connect
personal computers from anywhere within their network coverage areas.
Installation and service prices vary with plan choice. Note that regional
and remote areas are not well served.
Broadband uptake
The Economist has warned of impending brand
wars as VoIP gains increasing market share from traditional phone networks.
VoIP is independent of distance and time costs, and breaks the nexus between
broadband access and telephony service. However, incumbent PSTN operators
will not stand by, especially as many provide broadband access.(5)
Some developing nations have acted to ban VoIP in their
countries in favour of the existing PSTNs, given the ‘digital divide’
facing many such nations. This action may overlook the multimedia capabilities
on offer, possible cost and price savings, and opportunities. The established
carriers can use the same VoIP technology if they so choose and offer
a range of services at various price and quality levels.
Analyst Paul Budde claims that VoIP here seriously
threatens telecommunications carriers or pay TV providers, unless they
act to impede broadband deployment, since VoIP competitors can provide
voice as well as data over a single broadband connection. By international
standards, Australia’s broadband rollout has been tardy, costly and somewhat
compromised by pay television policy.
As at June 2004, there were just over a million broadband
(>200 kbps) services connected across Australia, according to the ACCC.
This represented growth of 26 per cent over the previous quarter. Digital
subscriber line broadband was the service with the highest growth rate.(6)
The nation ranked 22nd in the broadband users listing produced by the
OECD. Just over half of Australian households have Internet access, with
less in regional and remote areas, according to the ABS. Close to two-thirds
of households have access to a computer, but there are variances due to
age and location across the nation.(7)
Australian broadband development has been a national
issue, with extensive reviews of broadband policy undertaken over the
past few years, including the Broadband Advisory Group process, the Regional Telecommunications
Inquiry, the Framework for the Future, the House of Representatives'
Inquiry into Wireless Broadband Technologies, and the Higher Education Bandwidth Advisory Committee study.
Two recent Senate inquiries have focussed on broadband
issues. The inquiry into the
Australian telecommunications network supported the upgrading of infrastructure
to improve broadband connectivity, along with more pro-active regulation.
The inquiry into competition
in broadband services urged structural change to the telecommunications
industry to remove Telstra’s media interests, while setting a ten-year
national target for service provision. Again, analyst Paul Budde notes
that one year’s Telstra profit alone—about $5 billion—could provide broadband
service to nearly all of regional Australia.(8)
The Government's response to the independent Regional
Telecommunications Inquiry included funding of $142.8 million over
four years for a number of programs to address the bandwidth needs of
regional, rural and remote areas. The Australian Government has also worked
cooperatively with all state and territory governments to develop the
Australian National
Broadband Strategy. Time will tell as to how this sits with growth
in VoIP markets.
- Google appears set to launch a similar service linking its search
engine to providing lines for voice queries.
- Packages are offered by electronic stores, Broadband Phone, Freshtel,
Eftel, Engin, Swiftel and other providers.
- David Neiger, ‘Accessing voice via Internet’, Engineers Australia,
November 2004, p. 46.
- Mark Armstrong, ‘Notes on VoIP Regulatory Options’, Network Insight,
Sydney, November 2004.
- ‘The phone call is dead; long live the phone call’, The Economist,
2 December 2004.
- ACCC, Media Release MR189/04, 31 August 2004.
- ABS Media Release 148/2004, 22 September 2004.
- Paul Budde, ‘Editorial’, Paul Budde’s Information Superhighways,
Vol. 11, No. 8, September 2004, p. 167.
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