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Technology
The New Age of Telecom
An industry rebound is underway thanks to innovative new technologies.
With less than 200 employees, CareCentric Inc., an Atlanta-based software developer, isn't exactly the Holy Grail for the telecommunications industry. There are bigger fish with bigger needs—and bigger telecom budgets. But last year, when CareCentric spent $120,000 for phone service that used to cost $150,000, it discovered an equation that has breathed new life into the telecommunications industry: Spend some money, save more money. What's making that equation possible—and making these good days, after some truly lousy ones, for telecom companies—are new technologies such as Voice over IP (VoIP) and Wi-Fi. These aren't just slick tools that make it easier to communicate; they're tools that boost productivity, efficiency, and the bottom line.
 For the telecommunications sector, these technologies have also sparked a rebound. Since 2000, spending freezes, job cuts, and company losses and closings have taken a toll on the industry. But that's starting to change. Last year, worldwide telecommunications spending jumped 6.8%, to $2.1 trillion, according to the Telecommunications Industry Association (TIA). Wireless traffic is surging; Wi-Fi hotspots—locations where you can log onto the Internet without plugging into anything—are growing by the thousands each month; and VoIP is being embraced in the enterprise. "There has really been a turnaround," says Matthew Flanigan, president of the TIA. "We've been through some rough spots, but people are starting to spend money on telecom equipment again." Probably the biggest factor in that turnaround has been the burgeoning demand for broadband, or high-speed data connections, and all the services it enables. "We're seeing applications that we couldn't even have imagined because of the efficiencies of broadband," says Flanigan.
One of the most promising applications is VoIP, a technology that leverages the same data networks that transmit e-mail and web pages to pass along telephone calls. VoIP isn't simply a new spin on telephony. It's the way telephony would have been designed to begin with, if Alexander Graham Bell had the Internet at his disposal. That's because VoIP is far more efficient than standard telephone systems. Traditional phone calls rely on a technology known as circuit switching, in which the two parties speaking are connected to each other, in both directions, for the duration of the call.
This connection, or circuit, has enough capacity so that both parties can speak continuously. But in most conversations (or at least, the good ones), only one party is speaking at any given moment, so much of the circuit's capacity is wasted. VoIP does away with circuit-switched calls by sending voice traffic the same way data traffic is sent: only as needed, in small chunks. This technique, called packet switching, is remarkably efficient, allowing several calls to fit in the same space that would be required for one traditional phone call.
And that's just the beginning. Because VoIP runs over the same networks that data pass over, all sorts of nifty applications are possible. For instance, you could access your voicemail, e-mail, and faxes from one inbox, or forward a voicemail message as an e-mail for colleagues to read. When clients or customers call, their data could instantly appear on your computer screen. And since your phone number no longer represents a physical location, but simply an IP address, you could move your phone—and number—from location to location, much as you take a laptop or PDA. "For the enterprise, VoIP is no longer a matter of if but when," says David Passmore, research director at Burton Group, an IT research and advisory firm.
To be sure, enterprise VoIP is a whole different species than the jittery, static-prone version that first appeared on the scene a few years back. That early, consumer-targeted version relied on the public Internet, and quality suffered because voice packets were competing for bandwidth with all the e-mail forwards and MP3 tunes passing along the pipes. All too often, Metallica won. Even today, quality over the public Internet can vary greatly from call to call. "The gotcha is that you really have to worry about the readiness and capacity of your underlying data network," says Passmore.
VoIP providers have been able to improve quality—and woo enterprises—by keeping voice traffic off the public Internet. Global Crossing, for example, sends customer VoIP calls over its private IP network. It also gives voice traffic priority over data traffic, which can better tolerate delays and hiccups. "That lets us avoid jitter, latency, and packet loss," says Anthony Christie, chief marketing officer of Global Crossing, which pushes more than 2 billion minutes of VoIP traffic over its network each month.
Enterprises are attracted by the cost savings, as well. CareCentric, for example, expects to save $30,000 in its first year by using Global Crossing's VoIP service. The company avoids long-distance charges for calls between its three CareCentric offices in Atlanta, Pittsburgh, and Pompano Beach, Fla., because they ride over Global Crossing's IP VPN, or private data line. "It has let us eliminate our internal long-distance costs because now those calls go over a non-metered VoIP network," says Gene Weiland, director of MIS at CareCentric.
There are other advantages, too. VoIP, when implemented with IP PBX's, lets you move around with the same number and set rules for where calls go. So if a CareCentric sales representative based in Montana leaves the company, his calls can be instantly rerouted to the new sales representative in Ohio. "We don't lose the lead, and we're much more in control," says Weiland. "These are savings that are not easy to quantify but are definitely there."
Yet replacing an entire phone system is no small undertaking, particularly for large enterprises with phone systems that work just fine. So providers are tailoring solutions that let businesses ease into VoIP at their own pace. Global Crossing's VoIP On-net Transport service enables enterprises to connect branch offices via a private network, cutting out traditional interoffice long-distance charges. Its VoIP Outbound Service, available this summer, raises the ante by routing outgoing VoIP calls to out-of-office, or off-net, locations. In the fall, the company's VoIP On-net Plus will enable enterprises to send not just IP, but also traditional TDM voice calls between offices without long-distance charges. "It acknowledges the fact that there will be hybrid environments out there for years to come and allows companies to begin implementing VoIP in an optimal way today," says Christie.
Those hybrid environments may not remain for long, however. Advanced phone features—possible only on VoIP—promise to boost productivity dramatically. Already, so-called presence features are making their way onto VoIP systems. Users can make sure they don't miss important calls by specifying which calls trigger which actions. A call from the boss, for example, may ring your office, cell, and home numbers simultaneously, to make sure you don't miss it. Or the same call can be routed to e-mail, if it has already been a bad day.
Getting Unwired
 The other technology getting a lot of buzz is Wi-Fi, which lets users transmit and receive data (typically Internet traffic) using electromagnetic waves—or, in layman's terms, without wires. Wi-Fi doesn't sound like a whole lot on paper; it has a range of just a couple hundred feet, requires dedicated base stations, and unlike Superman, doesn't work well through walls. But Wi-Fi has some big advantages going for it, too. Because it is standards based (built around the 802.11 family of standards), equipment made by different vendors will recognize and work with one another, meaning that the same laptop you use to connect at home will connect in an office. And Wi-Fi's limited range is sufficient for many homes and gathering spots such as cafés and bookstores.
But probably the biggest advantage Wi-Fi has going for it is that it is being built into more and more laptops and PDAs. "Today 80% of laptops are shipping with Wi-Fi embedded in them," says Gemma Paulo, a senior analyst at market research firm In-Stat/MDR. "Even the budget laptops you get at Best Buy have it, and that's driving the market." In particular, it's driving the growth of Wi-Fi hotspot locations where—usually for a fee—anyone with a Wi-Fi-enabled laptop can connect to the Internet. Hotspots can be found at cafés, convention centers, even McDonald's. Boeing has introduced an in-flight Wi-Fi service, for airborne web surfing. Last year, there were 38,000 hotspots worldwide, according to ABI Research, which expects that number to grow to 200,000 by 2006.
T-Mobile HotSpot, the nation's largest hotspot provider, with 5,200 locations worldwide in April, expects to have 10,000 hotspots running by the end of the year, according to Mark Bolger, director of brand marketing for T-Mobile HotSpot. While Starbucks, Borders, and Kinko's remain its prime HotSpot partners, T-Mobile HotSpot recently "unwired" San Francisco International Airport—not a few airline lounges, either, but the entire airport. That means that passengers sitting at any gate, or even waiting in the baggage-claim area, can now access the Internet while waiting to board their flights (at T-Mobile HotSpot's daily rate of $9.99, or monthly fee of $29.99 with an annual commitment). "Airports are the crown jewel location," says Keith Waryas, research manager for wireless business network services at IDC. "You have a huge density of users who have a wireless device and need service."
So, too, do university campuses, and T-Mobile HotSpot is becoming active there as well, recently launching wireless Internet service at American University in Washington, D.C. "We took the ten busiest buildings and turned them into HotSpots for students, faculty, and visitors," says Bolger. "When they leave campus, they can use the same account to log on at Borders, Kinko's, or Starbucks."
Hotspots have also become increasingly important for business users—so much so that they're factoring in Wi-Fi availability when planning trips. "No one wants to plug into Ethernet anymore," says Philip Solis, a senior analyst at ABI Research. "That's especially true with PDA users, who can't plug in but have integrated Wi-Fi. When they choose which hotel to stay at, they look for Wi-Fi."
Indeed, for many establishments, launching Wi-Fi is part competitive advantage, part competitive necessity. "Our guests and major customer accounts want it," says Lou Paladeau, vice president for technology business development at Marriott International, which began outfitting its hotels with Wi-Fi last year and now has 1,300 properties untethered. At all of these locations, Wi-Fi is available in public areas, including meeting rooms, lounges, lobbies, and restaurants. "These are the places where wireless makes the most sense," says Paladeau. "People are attending sessions, and they're moving about, but they want to stay connected and productive. Wi-Fi helps us meet our customers' needs." Marriott continues to install Wi-Fi in hotels worldwide, offering another valuable service to help keep travelers productive while on the road. "Wi-Fi is a point of entry now," says Paladeau. "If a hotel doesn't have it, it's going to feel a pinch trying to book rooms."
VoIP and Wi-Fi have both helped the telecom industry—and a lot of other businesses—get back on their feet, but bigger growth, and bigger benefits, are yet to come. Indeed, one of the most anticipated technologies leverages both VoIP and Wi-Fi. Called Voice over Wi-Fi, it will let you make phone calls from a hotspot, saving you untold cellular charges—but probably not winning you new friends at Starbucks.
www.t-mobile.com/hotspot
www.globalcrossing.com
www.wirelessmarriott.com
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