VoIP's broadband bottleneck

Broadband Net-phoning services pushing aggressive expansion plans are discovering a harsh reality: Some residential Internet service providers in the United States currently can't guarantee the bandwidth required to handle calls effectively.

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What's new:
Broadband Net-phoning services are hitting a stumbling block as they try to expand in the United States: The third-party broadband networks they rely on can't guarantee the bandwidth needed for glitch-free calls.

Bottom line:
Though the high cost of traditional phone service in Europe and Asia may make VoIP a no-brainer for residential customers there--quality problems or no--that's not the case stateside. The price difference in the United States isn't enough to justify dropped calls. Thus VoIP may be forced to compete with more-established cellular services as a backup for landline setups.

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AT&T Vice President Kathy Martine said she learned that lesson the hard way during recent trials of the company's CallVantage Net-phoning plan, which it hopes to introduce in 100 markets this year. Some customers' broadband connections just weren't good enough to provide "AT&T-like" quality, she said. So the company was forced to help the broadband providers fix their connections.

Now AT&T Labs is "doing a lot of statistical modeling and analysis on that so we can, in fact, prove where the problems are in the future," Martine said recently. "But the reality is, it's only as good as the broadband connection to your home."

Analysts forecast that VoIP (voice over Internet Protocol) calls will eventually outstrip conventional calls, thanks to cost savings of up to 30 percent. Consumer demand has been encouraging, providers say, and VoIP plans have now been announced by all of the major carriers in the United States, as well as by their cable rivals.

Still, industry insiders worry that ongoing quality problems could hold back growth.

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VoIP backers such as Cisco Systems insist that the industry has solved problems that once plagued the technology. But those claims tacitly assume the presence of high-quality broadband networks, something industry insiders admit they don't always encounter when deploying service in residential markets.

"We need to bring carrier-grade features to the customer," said Bernd Kuhlin, Siemens' president of enterprise networking.

Broadband's sporadic quality isn't the only problem. Another major one involves reaching 911 emergency services. For now, most VoIP services can't, although a coterie of emergency officials and VoIP leaders say they are close to a solution. VoIP service providers also don't allow connections between one another's customers. They remain "islands," while the complex business arrangements to "peer" (as it's called) are still being hashed out, according to Kuhlin.

But executives said the quality of broadband is perhaps the biggest problem because it leaves VoIP providers at the mercy of other companies they can't necessarily control. While AT&T is big enough to devote staff hours to working with broadband providers, most other Net-phoning companies don't have such resources.

A bad Internet connection can all but ruin a VoIP call, which travels as millions of bits of data over the Internet or an intranet. That leaves the call susceptible to delays brought about by crowded conditions or severed lines.

For Internet users downloading a Web page, such millisecond delays mean nothing more the page taking a little longer to load. But the effect is much more noticeable on a VoIP call, where words are dropped or calls end suddenly.

For its VoIP service, AT&T recommends a minimum of 90 kilobits per second for both upload and download speeds. Cable broadband services typically offer a maximum download speed of about 1.5 megabits per second (mbps) for standard service, and a maximum upload speed of 256kbps. Even services that offer data rates considerably higher than 90kbps can run into trouble, however, since actual connection speeds are affected by a number of factors and rarely run at the maximum threshold.

Bobby Amirshahi, a spokesman for cable broadband provider Cox Communications, agreed that VoIP can be a crapshoot depending on what broadband provider you have. "People should keep in mind that VoIP from companies not offering their own broadband is only a 'best effort service,'" he said.

Cox offers a VoIP service over its own broadband network. According to Amirshahi, the company goes to great pains to ensure its own VoIP customers' traffic stays on its own network, where problems can be acted on very quickly.

United States spoiled by Ma Bell
VoIP's quality problems aren't a big deal in Europe or Asia, where the cost of traditional phone lines is so high that dialers are expected to eagerly embrace VoIP in the home and put up with the lost calls and dropped words.

But Americans are a different story. They've become used to the century-old telephone networks, which operate so well that even during power outages there may still be a dial tone.

Before VoIP can be considered a replacement for that system, some argue, it needs to be just as effective and reliable.

According to some veteran VoIP companies, consumers can be expected to balk at firing the local phone company for the time being, although they may try out broadband phone service for a second line in their homes.

"AT&T is going to find out how hard it is to sell VoIP as a primary line in the United States," said Sarah Hofstetter, senior vice president at Net2Phone, a cable phone service provider that has been successful selling VoIP services in Europe and Asia.

That's the same conclusion that's being drawn by incumbent VoIP service providers such as Vonage, 8x8 and Voicepulse, which have had more success selling their services as a second, rather than the primary, phone inside the home. A Vonage representative said the company believes only about half of its 130,000 customers use the service as their primary phone.

Long-distance phone giant AT&T isn't expecting its service to do any better with primary phone buyers, according to AT&T's Martine.

If VoIP is relegated to the second phone market, it could face daunting competition from cell phone service providers, which consumers increasingly see as a viable alternative to local phone service in the home--a trend that has been linked to a recent decline in phone line shipments.

Whether there's enough business to sustain two industries battling to be a second choice remains to be seen. But VoIP enters the mass market at a disadvantage because half the country already has a cell phone.