What's Next For Skype?

It’s been an eventful last two months for Skype. Shortly after Microsoft made the biggest deal in its history with the acquisition of Skype for $8.5 billion, the latter suffered a massive outage. To make matters worse, Efim Bushmanov - a Russian freelance researcher claimed that he has successfully been able to reverse engineer the official Skype desktop implementation in an attempt to make the service open source.

The Big Daddy of Internet Telephony subsequently announced breakthrough partnerships with Facebook, Comcast and Telus. Microsoft patented ‘‘Legal Intercept‘ thereby alleviating privacy concerns that the company could secretly intercept, monitor and record Skype calls is stoking privacy concerns.

So, what’s next for Skype?

CEO Tony Bates is bullish that the Microsoft deal will be completed by October this year. He believes that one billion Skype ‘end points’ is no longer a distant dream and hinted that Skype is open to the idea of using in-call advertisements, as the company attempts to boost its revenue.

The Microsoft-Skype deal has received the required regulatory clearance in the United States but it still awaits a green signal from European regulatory authorities. Bates said that Skype would retain its original brand and it would constitute its own division at Microsoft. He believes Microsoft will help bring in ’strong commitment’ to the brand.

Bates isn’t averse to the idea of in-call advertising in Skype. He claims that since the average length of a video call has gone up, there’s room to introduce new opportunities through advertising. And it isn’t just playing advertisements, it could even be sharing ads across participants in a Skype call. In March, Skype started rolling out unobtrusive ads from major sponsors. It was then claimed that these ads ‘won’t interrupt your Skype experience.’ With Microsoft at the helm now, you never know what’s coming next.

Skype already has a strong foothold in the smartphone user segment. The company is now trying to bring goodies of the Internet world to the TV segment. Skype is pre-installed on 50 million TVs and companies like Comcast will begin offering Skype video calling to customers next year. Of course, monetization still remains a major challenge. There’s no denying that Skype needs to find ways to better monetize free calling and video chats – whether in-call advertising is the way to do it, I’m not so sure.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby: RSS,Twitter, Facebook, or YouTube.

http://www.whichvoip.co.za/index.php?option=com_blog&view=comments&pid=159&Itemid=6

Stating the obvious

Telkom finally concedes it's too big to react quickly to market changes but this reality check comes too late to make a difference.

 

By Nicola Mawson, ITWeb senior journalist.

Telkom has finally woken up and smelled the roses, admitting to a conundrum that analysts have been pointing out for years.

The telecoms company, which for decades had a monopoly over SA's communications and still dominates the fixed-line market, has admitted it's too big and cumbersome to react to the changing landscape quickly enough.

Recently appointed CEO Nombulelo “Pinky” Moholi this week admitted the telco has “neither the agility to seize market opportunities nor the ability to absorb competitive pressures ad infinitum”. A “step change” in the way it invests and operates is vital, she declared.

Consequences

Now that local loop unbundling is finally on the cards for November, the company is umming and ahhing over what implications letting go of the last mile will have on its operations.

Duh! For years, analysts have been pointing out that the huge “carrier” isn't nimble enough to turn around when the tide changes. Telkom has missed the boat several times by not reacting quickly enough to changes in the competitive landscape.

Moholi's comments, that Telkom needs to become more agile to cope in an ever-changing world, are a breath of fresh air. The telco must focus on areas that will aid revenue growth, and invest strategically instead of chucking money at ventures that burn cash, such as Multi-Links.

Telkom admits it needs to increase volumes to bolster revenue, and it will have to become more competitive to do so. Voice revenue, its traditional mainstay, is on the decline, a trend that's unlikely to reverse anytime soon.

Moholi wants the Independent Communications Authority of SA to back off, and stop regulating retail prices, as well as wholesale prices. If Telkom gets its way, it will be able to be much more competitive, supposedly benefiting end-users.

Too late
However, Telkom should have started worrying about competition almost two decades ago, instead of panicking about it now when the sector has moved on to a point where people are questioning the company's relevance.

Competition in the telecoms space arrived in 1994 when mobile operators were given the go-ahead to provide services. Telkom should have made a move then, but it didn't have to: it had a 50% stake in Vodacom, essentially a licence to print money.

In 2009, Telkom sold Vodacom, raking in a massive R40 billion profit. It took the company over a year to come up with the idea of competing with its former subsidiary by launching its own mobile arm, 8ta.

No-one expects 8ta to be a raging success and shake up the cellular market, and Telkom isn't surprised at the market's expectations. Judging by its previous well thought out, but badly executed growth strategies – Multi-Links, Telkom Media – the company has a lot of work to do to get 8ta right.

The cellular company will also need a lot of investment – R6 billion over five years – and is going up against competitors that have the market sewn up, and pockets deep enough to crush any newbies.
8ta isn't expected to be cash-generative until 2015, and until then the market can only hope it proves to be as successful as Telkom promises.

Missed opportunities

The combination of the cellphone company and Telkom's fixed-line operations should be a recipe for success in the converged space.

However, Telkom's competitors already have a head start in the converged space. Altech, Reunert and other competing telcos are battling it out to own market share in a world that is moving rapidly to IP-based communications where voice, data and video will meet on a converged platform.

Telkom still has to spend money on its networks to get rid of ancient switches and replace them with next-generation IP technology.

In fact, Telkom should have started rethinking its strategy three years ago when Altech took the late communications minister Ivy Matsepe-Casaburri to court to force the department to allow value-added network service providers to self-provision.

Altech's win paved the way for more than 400 value-added network services (VANS) to self-provide through electronic network services licences, instead of on-selling Telkom's services. Matsepe-Casaburri had doggedly opposed this concept since September 2004.

It didn't act then to mitigate any competitive effects. Instead, it sat back while companies started self-provisioning.

Collectively, companies such as Altech and Reunert are becoming serious forces to contend with. Neotel, which launched four years ago, has yet to turn into a believable second national operator. Despite the fact that it has yet to turn a profit, or garner the threatened 15% of market share, Neotel is eating into Telkom's profit.

This week, Telkom noted both Neotel and VANS “gained further traction,” hacking away at its share of the interconnection revenue pie.

On the contrary
Now that local loop unbundling (LLU) is finally on the cards for November, the company is umming and ahhing over what implications letting go of the last mile will have on its operations. Moholi called LLU a “major” risk.

Telkom should have started being concerned about LLU when it was first mooted five years ago. In fact, the clever thing to have done would have been to get the regulator to approve a plan that would have created a separate infrastructure company to host the last mile.

Problem solved. Telkom could have earned money, indirectly, by renting out the copper, and used that income to upgrade its infrastructure. Then it wouldn't be sitting with the worry of copper theft and outdated switches.

Instead, Telkom's full of arguments: there is no need to free the fixed last mile, the process isn't clear, November just isn't doable...

Consequently, the matter is likely to drag on for many more years while it and the regulator face off over a plethora of issues. And in the meantime? Smaller telcos that need access to the copper infrastructure to compete against Telkom have to find alternative solutions, or spend a fortune putting their own fibre into the ground.

Telkom can't have its cake and eat it. It can't suggest that the regulator back off and allow it to become more competitive while at the same time stand in the way of allowing more competition through LLU, a process that is years overdue.

Yes, Telkom is important to SA's economy, as Moholi took pains to point out this week, but if it doesn't get its strategy right now, it won't be relevant in five years' time. Too much is changing too fast.

- IT-Web

http://www.itweb.co.za/index.php?option=com_content&view=article&id=44573:stating-the-obvious&catid=267

Hacking threat costs VOIP users

The growing move to IP-based telephony is costing SA's economy millions, as hackers are exploiting networks that aren't properly secured, a threat that will increase as more people move to voice over Internet Protocol (VOIP).

Within the next two to three years, all communication in SA is expected to be IP-based, and companies are increasingly moving to VOIP. However, hackers are taking advantage of the step-change, and a local company recently found itself with a R100 000 bill resulting from fraudulent calls made over a weekend.

Hacking into a VOIP system is as simple as exploiting the Internet, say market commentators. Yet, while companies secure data to limit the threat of having it stolen, people don't pay as much attention to their IP-based telephony, an oversight that could cost firms millions, potentially forcing them to shut shop.

Du Pont SA CEO Graeme Victor says hackers from outside SA are increasingly hacking into VOIP systems, and companies that don't secure their lines are facing huge bills. He explains that a small Johannesburg-based company recently ended up with a R100 000 invoice, and the hackers only stopped because the company had reached its credit limit.

Victor explains hackers exploit open ports, which are accessed through the Internet. The issue is becoming a big concern in the industry, he says. “More and more people are talking about it.”

Companies that don't put in security measures will bear the brunt, because the client carries the cost of the call, says Victor. “Once they find an open IP range, they make calls to their heart's desire.”

With the growing move to IP-based telephony, Victor expects the number of companies vulnerable to hacks to increase. He has heard of some companies forking out millions in phone bills because of hacking. “The numbers can be horrific.”

Massive concern
VOIP hacking is a “massive” issue and is as much of a problem as Internet attacks, says Vox Orion MD Jacques du Toit. He adds hackers break into systems on a daily basis, and companies that don't secure their networks will end up footing the bill for breaches.

Du Toit says competition is increasing in the VOIP space, and the “new kids on the block” will be more vulnerable to security breaches than those that have already put measures into place to limit losses.

Companies could easily lose thousands of rands because international calls vary between R1.50 and R12 a minute, says Du Toit. He says hackers could sit on the line for hours running up bills.

Du Toit explains the session initiation protocol (SIP), used to carry voice over the Internet, is open to abuse. He says hackers look up SIPs and exploit them if they aren't properly secured.

Vox Orion has been aware of VOIP hacking since the technology's early days, and has put systems into place that monitor unusual trends, cutting off traffic that is unusual and saving clients cash, says Du Toit. “You can never 100% prevent it if it's a breach on the customer's side, but you can limit damage.”
Du Toit anticipates companies will start requesting that providers put measures in place to limit potential breaches, which will push costs up.

Counting the cost
Andy Openshaw, sales, marketing and business development director at ECN Telecommunications, says hacking is “on the up and up”, and VOIP companies try and stay a step ahead of the hackers, but this is becoming more technically advanced and more difficult to prevent.

Openshaw says network operators will have to invest in security, which will push up costs, but the additional expense will be worth it in the long run, rather than facing the risk of a company that can't pay its bill. “It does come with a price tag.”

ECN and its customer base are regularly subjected to hacking attempts, says Openshaw. The company has developed a number of systems and solutions to protect itself and its customers from attacks, he says.

Hackers can cost companies millions, and could easily run up a bill of R600 000 over a weekend, says Openshaw. “As the hackers advance, the complexity of the measures needed to ensure you remain safe from hacking increases,” which adds costs to network operators, he says.

Openshaw says hacking is an increasing threat. “The hacking of a network becomes a challenge to the hacker, as well as a financial windfall when successful,” he adds.

Tallying the cost is very difficult, but runs into millions of rands, says Openshaw. The time spent developing systems to prevent hacks on an IP network is also a significant cost, he adds.

Openshaw explains hackers run through millions of potential IP addresses in the hope of finding an unsecured link. Open addresses allows them access to a network, opening up access to a termination party, through which they are then able to send expensive destination traffic at no cost to themselves.

Playing safe
WWW Strategy MD Steven Ambrose says people tend to use simple passwords and user names that can easily be compromised. He says hacking into a VOIP system is easier than getting into a physical landline. “They don't have to send people up poles with clips.”

Ambrose says, while the hackers could betraced through their IP addresses, this isn't easy as they could just disconnect, or could route the hack through a proxy. “It's a ludicrously simple way of making phone calls.”

In the next two to three years, all communications will be IP-based, and as VOIP grows in use, hacking will increase, says Ambrose. “It's one threat that will be more and more pervasive as we go forward.”
VOIP hacking will become a big issue and could potentially sink companies if hackers ring up huge phone bills, says Ambrose.

By Nicola Mawson, ITWeb senior journalist.

http://www.itweb.co.za/index.php?option=com_content&view=article&id=43442:hacking-threat-costs-voip-users&catid=260

Can Skype Help Microsoft beat Google?

You’ve probably heard by now that Microsoft is buying Skype (pending regulatory approval). This is Microsoft’s biggest acquisition to date at $8.5 billion, and Skype’s second acquisition (it’s already been bought and sold by eBay). Since Skype’s release from eBay, it has been quite busy adding features and functionalities, and even making some acquisitions of its own, such as that of live streaming video service Qik.

Was this acquisition a good idea?

Skype has a reported 663 million registered users and 145 million average connected users. The company recently announced a record of 30 million users online at the same time.

The deal has enormous implications, not only for Microsoft’s own offerings, but for the industry at large. There are also plenty of concerns. Let’s get to those first.

Concerns

Clearly, Skype has a big user base, and users have the right to be worried about what is going to become of their beloved service in the hands of a giant like Microsoft. Especially considering Microsoft’s track record of acquisitions (laid out its graphic nature here).

Marshall Kirkpatrick at ReadWriteWeb brings up some reasonable fears, such as product neglect and malware issues. “Will Skype in 14 years look like Hotmail does today?” he asks. “Malware is already an issue for Skype and of course it’s a well known part of the Microsoft landscape,” he also notes.

How will it affect use across various platforms? Microsoft says it will continue to invest in and support Skype clients on non-Microsoft platforms. Still, this is a little vague, and considering how much head butting goes on between Microsoft and Google, it wouldn’t be an enormous shock to see some issues raised in this area in the future.

On reassuring the continued support of other platforms, Steve Ballmer said at the press conference, “I said it and I mean it. We will continue to support non-Microsoft platforms.”

“We’re one of the companies that has a track record of doing this,” he added. Still, does that mean all platforms?

The fact that this is such a huge acquisition for Microsoft, however, should be an indication that the company will take it very seriously, as it has so much invested in Skype’s future success.

Mobile

Skype, which has more users than Twitter, should help Microsoft on numerous strategic levels. Mobile would be a major one. Skype will support Windows Phone, of course, and while it remains to be seen what kinds of integrations we can expect, there’s little doubt that it will be an integral part of the Microsoft mobile strategy as it tries to gain ground against Google’s Android and Apple’s iOS.

Also consider that Microsoft has recently made deals with Nokia and RIM that will see Microsoft services heavily integrated on these companies’ mobile devices. It stands to reason that Skype will play a major role here as well.

It doesn’t seem out of the realm of possibility that Microsoft would at some point create a Skype-branded phone.

The Living Room

The living room is one area where Microsoft already has a tremendous edge over competitors like Google and Apple. While the jury’s still out on the future success of Google TV and Apple TV, it’s been pretty well established that Microsoft’s Xbox line is a smashing success. Kinect is doing pretty well too. Guess what will be integrated with both of these.

In its announcement, Microsoft points out its “long-standing focus and investment in real-time communications across its various platforms” including Xbox Live. It also says Skype will support Xbox and Kinect, and will connect Skype users with Xbox Live (in addition to Lync, Outlook and other communities).

PayPal is also coming to Xbox Live. That can’t hurt either.

The Enterprise

Let’s not forget about the implications for businesses. Microsoft says the acquisition will increase accessibility of real-time video and voice communications for enterprise users and generate “new business and revenue opportunities”.

Plenty of businesses are already using Skype. How many are using Microsoft products? This could be a huge blow to Google, who is aggressively going after the enterprise market with Google Apps, and soon with Chrome OS. Skype may give businesses another reason to stick with MS. Of course it remains to be seen what kinds of integrations we’ll see.

Competition and Google

There are plenty of areas where Microsoft and Google compete with one another, and Skype could go a long way in helping Microsoft with maybe all of them. That includes the areas we’ve already discussed – mobile, the living room, and the enterprise. It also includes the communication services Skype provides on its own.

Google has been doing more and more in this area, whether it be in the form of Google Voice or video chat via Google Talk and Gmail (email being another prime example of where Google and Microsoft already compete). How about live streaming video? Skype recently bought Qik for this, and YouTube recently announced its own YouTube Live (both a viewing destination and a platform for streaming live video).

YouTube is also doing plenty of other things to cement its position of being THE online video destination. This week, the company announced new partnerships with movie studios, the doubling of its catalog of movie offerings (including new releases), and increased investments in original content from partners. This comes back to the living room discussion, but I’m guessing we will continue to see overlap in the offerings from these two companies here.

Bing

And then there’s Bing. What in the world could Skype possibly have to do with search? Well, everything we’ve talked about up until now is all about Microsoft expanding its presence and user base. The more people using Microsoft products (now including Skype), the more opportunities Microsoft has to push Bing on people. The more businesses using Microsoft products, the more opportunities for Bing integration. The more consumers using Microsoft in the living room (where Microsoft is already heavily pushing Bing via television commercials), the more opportunities for Microsoft to push Bing on users through products.

We’ve had the mobile conversation more than once – both when Microsoft announced its partnership with Nokia, and its partnership with RIM. They both equate to Bing search being the default search on more mobile devices, and getting Bing into more consumers’ hands (literally). These things can only help Bing’s continued growth.

Last week, we asked, “Will Bing catch Google?“. The Skype acquisition can’t hurt. Much of this is simply about opportunity. We don’t know all of the details about Microsoft’s plans for Skype, but there’s no question that there is an incredible amount of possibilities that can help give the company some much-needed boosts.

Kirkpatrick brings up another good point about developer opportunities, making the case that “social graph and address books, presence, file sharing, Instant Messaging, [and] mobile” elements of Skype are all things developers salivate over, and that with Microsoft behind it, developers could get a great deal more access to build more useful applications and integrations on top of Skype.

The social element was played up in the press conference about the acquisition.

The Facebook Factor

As long as we’re talking about how much of a strategic buy this could turn out to be for Microsoft, in its ongoing competition with Google, let’s not leave out the implications for Facebook – another company that not only has a partnership with Microsoft, but increasingly competes with Google in numerous areas.

Om Malik brings up some good points about how the acquisition relates to Google’s competition with Facebook, which he says could be the biggest winner of the deal.

“The Palo Alto-based social networking giant had little or no chance of buying Skype. Had it been public, it would have been a different story. With Microsoft, it gets the best of both worlds — it gets access to Skype assets (Microsoft is an investor in Facebook) and it gets to keep Skype away from Google,” he says. “Facebook needs Skype badly. Among other things, it needs to use Skype’s peer-to-peer network to offer video and voice services to the users of Facebook Chat. If the company had to use conventional methods and offer voice and video service to its 600 million plus customers, the cost and overhead of operating the infrastructure would be prohibitive.”

“Facebook can also help Skype get more customers for its SkypeOut service, and it can have folks use Facebook Credits to pay for Skype minutes,” he adds. “Skype and Facebook are working on a joint announcement and you can expect it shortly.”

Also, while Google continues to struggle in social, Skype makes Microsoft more social by default, with or without Facebook (MUCH more so with any Facebook integration).

The New York Times says Microsoft analysts see the acquisition as a move to block Google from “gaining greater ground in Internet communications”. Google was said to have been in talks with Skype about a potential partnership. It may or may not be the entire basis for the acquisition, but it’s not hard to see this logic.

To put it simply, it’s all about products that people use, and Microsoft just added another major one to its list.

Google is just kicking off its Google I/O developer event. It will be interesting to see what all news comes out of this, and how it might pertain to this discussion. Also keep in mind the ongling regulatory scrutiny over competition that Google continues to attract.

WebProNews: http://www.webpronews.com/can-skype-help-microsoft-beat-google-2011-05#more

Telecoms prices to fall?

South African consumers and businesses could see their telephone bills drop by up to 30% over the next two years, but only if all the benefits of lower interconnect rates are passed on to the end-user.

The high cost of communication has often been cited as a key inhibitor to business growth and expansion of the economy. Government has repeatedly said communication costs must come down to enable growth, but so far South Africans have yet to see big gains.

According to least-cost routing company Vox Orion, telephone bills will drop by 30% over the next two years due to lower interconnect rates as fixed-to-mobile calls become cheaper. “Lower interconnect rates mean everyone is paying less for their phone calls,” says MD Jacques du Toit.

However, it is unlikely all the savings will be passed on to end-users as voice revenue is under pressure, and operators are anticipated to hold onto as much margin gain as possible, notes analyst Steven Ambrose, MD of WWW Strategy.

Cheaper calls?

Last March, cellphone operators voluntarily cut the peak interconnect rate from R1.25 to 89c per minute. In October, the Independent Communications Authority of SA regulated interconnect rates.

Peak mobile termination rates dropped to 73c, while off-peak dropped to 63c this March. Another two cuts will come into effect before rates settle at 40c for peak and off-peak in March 2013.
Fixed-line rates will also drop, and will settle at 12c for peak and off-peak for local calls, while the rate for national calls will settle at 19c in March 2013.

Du Toit explains end-users will benefit if the entire interconnect rate is passed on by large and mid-tier operators. He says the total benefit since the initial cut last March will amount to as much as 42% reduction in phone bills. However, not all the players are passing on the total reduction. According to media reports, SA's largest fixed-line operator, Telkom, will only pass on between 50% and 70% of the latest reduction. ITWeb was unable to confirm this figure, as Telkom is in a closed period.
The fixed-line operator passed on 100% of the March 2010 cut, which resulted in a net interconnect loss of R24 million on fixed-to-mobile calls.

Du Toit says consumers and businesses using a Telkom line will see lower call rates as a result of a portion of the lower interconnect fee being passed on.

Cellular operators are also not passing on lower interconnect rates directly. Consumers have yet to see any significant savings as the country's two main mobile players, Vodacom and MTN, have categorically stated they would not pass on the savings to end-users.

The real benefit from lower interconnect rates will be felt by end-users who make use of mid-tier players, argues Du Toit. He says these providers will keep their margins stable, and pass on all of the cuts to their subscribers.

Du Toit expects the drop in voice tariffs as a result of lower interconnect fees to have the same effect as the drops in broadband data prices over the past few years. “Everyone is getting much more value for their money now.

“We've gone from using maybe 2Gb of data a month, to 5Gb to 10Gb to uncapped services, all at the same price. The same will happen with voice; people will either get more minutes for their money, or take advantage of other services.”

Profit game

Ambrose notes that operators can't afford to pass on all the benefits of lower interconnect rates, because voice is a dying business. “The fixed-line business is also in terminal decline.”

He says lower interconnect rates will trim the cost of making calls from a landline to a cellphone. However, he argues the saving won't be as high as 30%, because voice revenues are declining as data starts to take over.

“It is unusual that price reductions will be passed on in a declining market.” Ambrose says the only way end-users will see the full benefit is if volumes pick up, which will maintain revenue.

However, says Ambrose, the use of voice, especially fixed-to-mobile calls, is in decline. Real growth will be seen in the use of data and related products such as voice over IP (VOIP), he adds. “The days of massive price reduction in voice are gone, and they are not coming back.”

Huge Telecoms CEO James Herbst believes aggressive retail price reductions in the corporate enterprise market will only be offered by the fledgling VOIP operators, and aren't sustainable.

Minnows are operating on a business model that isn't sustainable because it's based on the assumption Telkom will only charge capital costs for its network, and not the cost of running the backbone, says Herbst. “Such business models are not sustainable as there is no such thing as a free lunch.

“Short-term price reductions offered by the VOIP operators will be fleeting and ultimately the costs offered by the incumbents will be the fair market price.” He says, as a result, retail rates for national and local termination will remain stagnant for the next two to three years.

- IT-Web

http://www.itweb.co.za/index.php?option=com_content&view=article&id=43176:telecoms-prices-to-fall&catid=118

Taking it to the Cloud: SMB's look to remote VoIP services, but Quality of Service issues remain

For a cost-conscious small business, hosted VoIP telephony makes sense: Rather than pay for both a business line and a high-speed Internet connection, purchase just the latter and then set up a VoIP service for a fraction of the cost. But moving the VoIP connection out of the office won't immediately solve some of the common issues and pitfalls of today's IP-based voice network.


Ease of setup and inexpensive subscription rates are among the key factors driving the growth of VoIP services worldwide. This is most strongly reflected among residential consumers, who make up 69 percent of the worldwide market.

But businesses looking to expand are also looking for an IP-based voice solution that will grow with them yet remain cost-effective. That's driving growth in areas like SIP trunking--to the tune of a 143 percent increase in revenues in 2010, says Infonetics Research--but also creating a niche market of affordable business-grade options for SMBs.

That's where managed IP PBX services come in. Hosted services grew 20 percent last year as more businesses looked for ways to get expanded voice options at a lower cost.

But hidden among all the rosy news on hosted business VoIP are more than a few thorns.
Hosted PBX solves many of the problems involved in managing a VoIP connection locally, taking some of the burden off the IT department. In theory, IT guys no longer have to spend time tracking down problems with voice latency or network shutdowns, and they don't have to be as mindful of any processes eating up bandwidth needed by the local IP-based voice network. This should free up the IT department to concentrate on numerous other issues they face daily in keeping an organization's computer network up and running.

Once the IP-based phone system's management moves off-premise, however, the IT director isn't completely unburdened. Tom Adkins of Tele-Source Ind. Inc. recently pointed out weaknesses that both hosted and on-premise VoIP can experience:

• Security: Maintaining the integrity of the voice system during and after migration to a managed service.
• Equipment: VoIP phones installed on-premise can and do break; power surges can take out the phones, etc.
• Outside network issues: Distortions of signal or dropped signals due to a carrier on the public Internet or along the WAN, or a broadband or SIP trunk signal outage at the carrier CO (central office).
• Colocated networks: With many businesses opting for hosted services for both their IT and voice, often colocated, there's the risk that a change made on the IT side of the network will profoundly affect quality on the voice side of the network.
• Sharing bandwidth: When voice and data share a single feed into a business office, IT has to stay on top of the network setup so that one technology does not hog all the bandwidth.

So, how can an SMB maintain a remotely hosted VoIP service that's truly cost-effective without sacrificing quality? There are a few things to ask a prospective managed services provider before signing a contract:

• Will the company have a designated contact with VoIP expertise to maintain quality of service and help the SMB solve problems that crop up on its side?
• Is an element management service in place that will notify either the SMB's IT department or the host that an equipment problem is occurring on premise?
• What contingency is in place should the VoIP system fail--such as a failover to a designated POTS line on premise?

A final, but important factor is the SMB's own IT staff. Even if it's just one person managing the company's entire local area network, that person needs to also be trained in VoIP management procedures in order to optimize the incoming broadband line--and for many small businesses, it's just a single line--for both data and voice requirements.

Read more: Taking it to the cloud: SMBs look to remote VoIP services, but quality of service issues remain - FierceVoIP http://www.fiercevoip.com/special-reports/taking-it-cloud-smbs-look-remote-voip-services-quality-service-issues-remai#ixzz1IaD9xz2A

- FierceVoIP

A look at the skills telecom, IT departments need when transitioning to SIP trunking

Workers in telecom departments may be understandably apprehensive about switching from TDM to SIP, since it could conceivably put them out of work.

But any company that adopts SIP and promptly lays off its telecom team while shifting responsibility for voice to its IT team would be making a big mistake, according to Graham Francis, CIO of The SIP School training and certification program. That's because people working in telecom teams have several skills that IT department workers might not possess, such supporting quality of service for real-time applications such as voice calls.

PRIMER: SIP trunking

"All the telecom guys are going to have to understand how voice and data will mix on the same network," says Francis, whose training sessions focus on areas such as SIP messaging, SIP security, troubleshooting and interoperability. "People with TDM backgrounds need knowledge about data switches, firewalls and proxy servers. They need to understand that on a data network, voice just becomes another application."

While there is still definitely a place for telecom specialists in enterprises that use SIP trunks, they'll have to learn additional skills if they want to make a successful transition from TDM to SIP. In particular, they'll have to learn much more about traditional IT tools such as session border controllers and firewalls, since a SIP trunk is a broadband Internet link that utilizes SIP to connect a company's IP-based PBX to an Internet telephone service provider (ITSP). Instead of terminating the trunk directly at the IP-PBX, for security's sake companies tend to terminate the trunks at a SIP-capable session border control system that acts as a firewall.

Jim Maloff, the principal consultant for Maloff NetResults, says the biggest difference that telecom workers have to get used to when switching to SIP is thinking about phone calls in terms of bandwidth rather than available lines. This means that for large conference calls they'll need to figure out exactly how much bandwidth they'll need beforehand so they can provision it off and give it priority over other traffic on the network.

"If I know that I'm going to have 10 concurrent calls then I should know that I'm going to need 1 meg of bandwidth just for my calls," he explains. "You'll need to do packet prioritization and shaping to makes sure that voice packets get higher priority."

Like Francis, Maloff also thinks that telecom workers can bring much-needed skills and perspective to the job of managing SIP-based voice networks that IT workers will need some time to acquire. However, he also thinks telecom workers should realize that preparing themselves to manage SIP will take a lot of time and effort since there are a lot more variables in a SIP system than a traditional TDM system.

"The hardest thing for people who have been in telephony is now there's so much more they need to think about," he says. "In the past if I'm a telecom manager I never had to pay for local outgoing calls. With SIP trunking it's more like a cellphone model where 'local' has no meaning because you're on the Internet."

Brian Graves, a network engineer at the University of Washington who has a background in managing telephony, says he has had to learn much more about implementing quality of service as his department started designing a SIP core that it plans on rolling out over the entire network over the next few years. The difficulty for many people on the telecom side, he says, is understanding that voice calls no longer get automatic preference for bandwidth or even the total amount of bandwidth they'll need to successfully complete calls on an IP network.

"TDM is a circuit-switched technology, so QoS is essentially built right in because you have a dedicated amount of bandwidth on your call," he says. "An IP network is packet-switched so you don't have natively the same bandwidth guarantee. You have to implement QoS to make sure it isn't delayed by other data."

But it isn't just telecom workers who will need to learn more about QoS to successfully manage SIP trunks, as IT workers could learn more about QoS as it applies to voice. Pete Allan, a network engineer at Bandwidth.com who has a background in both IP and traditional telecom networks, says that IT workers will have to change the way they think about handling voice calls on their networks, since traditional methods of handling other applications won't cut it. Instead, he thinks IT departments have to consider voice to be more like a frequent flier reward.

"If you're a frequent flier on a particular airline then you get to go in front of everybody," he says. "If you don't treat it like that then your call quality will be really degraded ... you can't just throw more bandwidth at it."

Maloff also says that IT workers are going to get used to the idea of implementing real-time sessions without any jitter or delays that would typically be acceptable for most IP-based applications.
"IT guys need to stop thinking in terms of storing forward and need to start thinking in terms of real-time sessions," says Maloff. "Voice is an extremely time-sensitive application and as an engineer I have to make sure that I have sufficient capacity."

- Brad Reed, Network World