IP goes home

commentary The increasing popularity of IP telephony is a big worry for local telcos, but not all the pieces are in place for Australia to take full advantage.
As IP telephony gains momentum in the enterprise space, it's also gaining some mindshare with consumers. This won't be a pleasing move for telcos intent on squeezing the most return from their existing assets. A recent A Current Affair segment reported "a system known as VoIP, or Voice over Internet Protocol, allows consumers to make telephone calls over the Internet instead of the regular phone line... and the best bit is, it's free!".

As broadband subscriber numbers continue to increase (and growth will accelerate as prices start to fall to the same levels as dial-up) there will be more pressure for a "business-grade" consumer IP voice offering. A limitation in Australia is that we have relatively low "standard" broadband speeds. Most consumer packages are based on 256Kbps downstream speeds, versus 512kbps in the UK and typically up to 768Kbps in the US (with correspondingly faster upstream speeds). Quality of service is the most important consideration in using a broadband service for telephony, but having a faster connection helps, especially when using the service for (IP) voice and data traffic.

Another consideration is the reach of broadband. While calls originating as IP can be ported into the PSTN network by a telco, it becomes a more expensive traditional call. It also means reliance on a telco-provided VoIP service, rather than enabling direct IP voice calls to other broadband users. Australia has about 74 pecent coverage, which is slightly below the OECD average, and below countries such as UK (95 percent), France (79 percent) and New Zealand 85 percent. Interestingly, the US is at 75 percent, but with a higher level of competition, so those with access to broadband pay less and get more features.

The other relevant factor is take-up. In Australia residential broadband penetration is about the one million mark (or 12 percent penetration). This compares to 39 million in the US, or a higher take-up rate of 21 percent. Bill Gates predicts "broadband will be as commonplace as cable TV in the US within the next 10 years". The rate of growth in Australia is also rapidly increasing, and as broadband continues to displace dial-up Internet access (and consumers understand the capabilities of IP telephony) there will be a greater demand for using broadband to provide cheaper on-Net IP voice calls.

The biggest barrier to availability of IP calls is the telcos. Carriers are not falling over themselves to offer cheaper IP voice calls, which would cannibalise their existing PSTN business. For businesses, there is sufficient competition that suggests the next 12to 24 months will see an increasing range of IP telephony call packages and rates. For consumers, it may be a long wait until there are enough early adopters making voice calls over IP to force Telstra and carriers into offering IP telephony as a mainstream service. And it's not currently possible to unbundle local call access (eg, purchase DSL access without paying the monthly phone line charge), so even if you used broadband for all of your voice calls, you can't move to a completely IP world.

While you're waiting for significantly cheaper phone calls from your broadband consider some of the possibilities available in other parts of the world (unless you're in a rural area, in which case you'll be waiting another five years just to get reasonably fast Internet access). In France, about AU$50 per month gets you broadband, IP calls (local and national rates 2c per minute) and pay TV with Iliad (previously known as OneTel). In the US, about AU$55 provides a voice over IP service with unlimited local and long distance calls, very cheap international calls, voicemail, and caller ID with AT&T.

As a geographically dispersed country, providing cheaper and more flexible communications to remote workers and small businesses has an impact on our productivity and competitiveness. It's not just about free calls, but if the increasing awareness of cheap IP phone calls drives innovation in this space, it can only be a positive development.

Oliver Descoeudres is marketing manager at network IP/Internet network infrastructure builder and solutions provider NetStar Australia. He can be contacted at marketing@netstarnetworks.com or on 02 9805 9759.

This article was first published in Technology & Business magazine.
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