Danish Cable Op to Try New IP Device

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Las Vegas -- A Canadian company believes that it has
fulfilled the cable industry's desire for a premises device that would make voice
over high-speed data a practical option.

The latest wrinkle has prompted a Danish company to commit
to what promises to be the first commercial launch of Internet-protocol telephony by a
cable operator. Telia Network Services of Aarhus, Denmark, is preparing a trial launch of
the device, which converts analog voice signals from a standard telephone to IP data for
transmission through a cable modem.

The company -- which is now serving 500 customers with
voice over high-speed cable-data links -- intends to launch the service in the
150,000-customer franchise area by the end of the year, said Hans Eriksson, vice president
of data-network services for Telia.

Vienna Systems Corp., a leading supplier of IP-telephony
systems based in Kanata, Ontario, unveiled what it calls the "IPShuttle" last
week at the National Show in Atlanta and at the Networld+Interop conference here.

It marked the first time that a supplier has demonstrated
low-priced gear designed specifically for transmitting voice signals to and from analog
telephones over the data channel of the hybrid fiber-coaxial cable network. In Atlanta,
Com21 Inc. and 3Com Corp. demonstrated the technology at their booths, making use of their
modems to deliver voice signals over the coaxial network at the convention center.

"We've had a tremendous number of people from
cable companies in the United States and abroad inquiring about this technology [at the
National Show]," said Rob Milne, vice president of engineering for Vienna.
"Based on our discussions here, we anticipate that a number of trials will be getting
under way in North America in the near future."

Vienna, which is one of a small handful of vendors working
with Cable Television Laboratories Inc.'s Packet Cable task force, has introduced the
technology in a stand-alone device priced at $495 in single-unit quantities. The company
intends to move to a modem-embedded version, which, within a year or so, would add $100 or
less to the cost of a modem, Milne said.

"We're talking with Com21 and 3Com, as well as
with a couple of other modem manufacturers," he said, adding that discussions just
got under way because the product had been under wraps until last week.

The IPShuttle box, measuring about
six-inches-by-nine-inches and a little over one inch thick, is in essence a thin-client
network computer. It makes use of digital-signal-processor technology from Texas
Instruments Inc. and Sun Microsystems Inc.'s Java software to support flexible
provisioning of feature enhancements through the downloading of Java applets in
configurations specific to the service strategies of each operator.

The box supports two lines of service, converting analog
signals from each telephone to IP and mapping the signals onto Ethernet for connection via
a 10baseT port into the cable modem.

Service features, user authentication and call direction
are managed at a headend-based call-processor server before being connected to the
regional-gateway server, which interfaces with the public-switched-telephone network, as
well as with the IP backbone. This allows calls to either be sent to other regions over IP
networks or to be connected locally to users who are not on the cable-data voice network.

In the case of long-distance calls, the IP signals are
passed through a regional gateway at the destination point, where they are converted to
circuit signals or, in the eventual case of interconnected IP-cable networks, passed onto
the local-headend call-processing server for transport to cable-telephony subscribers.

The system currently supports a number of standard calling
features such as caller ID, call waiting, the ability to put a call on hold and the
transfer of a call to another line or to voice mail.

"We're also equipped to support 911
calling," Milne said.

The system could be used to support first-line service,
although it remains to be seen whether the cable industry wants to take on that burden,
Milne added.

"There's a considerable amount of debate over
that question with the Packet Cable group," he said.

Telia, Sweden's dominant phone carrier, moved into
Denmark via its purchase of a cable company there three years ago, and it is expanding
into other countries, too, Eriksson said.

"We consider Scandinavia and the Baltic states as our
home market, and we are looking at other European countries, as well," he added.

The company is positioning itself as a first-line
competitor against TeleDenmark, Denmark's primary telephone company, and it will
initially focus on providing first-rate plain-old telephone service, Eriksson said.

"We expect to add more advanced features as we move
beyond the initial commercial launch," he added.

The IPShuttle DSP supports either Lucent Technologies'
Telemedia codec (encoder/decoder), offering compressed voice transport at 8 kilobits per
second, or full primary-rate (64-kbps) transport, presenting operators with a choice
between conserving bandwidth and offering toll-quality service.

Telia has chosen the full rate, Eriksson said, adding,
"Our tests show that the compressed signal falls somewhat below the [subjective test]
measure for primary rate, although it is close."

By starting out with call quality that's transparent
to standard telephone service, Telia will be in a position to offer varying levels of
quality at lower prices, Eriksson noted.

"For someone who wants to pay less, maybe we give them
less bandwidth and we use compression," he said.

Eriksson said the IPShuttle adds a delay of about 32
milliseconds to the end-to-end connection, which is low enough to allow Telia to target an
overall delay factor of under 100 milliseconds -- well below the 150-millisecond mark set
by the International Telecommunications Union as the measure for toll-quality phone
service.

This delay factor encompasses all of the time that it takes
for a phone signal to be converted from analog, passed through the gateway servers and
converted back to analog in a phone-to-phone IP call.

The Vienna product group represents the first commercial
iteration of the evolving platform under discussion within the Packet Cable group, where
the flexibility to offer various levels of service and enhanced features is key to meeting
a wide variety of strategic goals within the operating community. The product group also
includes a multiline Ethernet-LAN (local-area network) phone that can be used in
connecting office phones to the cable network.

The conformance to the Java-centric NC architecture opens a
means of creating value-added services that are presently not available over the PSTN,
including online directory, video telephony and much else.

"We're working with a select group of vendors and
trying to be low-key about our plans at this point," said a source close to the
Packet Cable initiative, asking not to be named. "We think that things will move
faster this way than if a huge number of players are involved, especially since we're
working within the parameters of IP-telephony standards like H.323 that will ensure that
other suppliers can quickly adapt products to our needs."

This strategy dovetails with the considerable amount of
work already under way in the NC domain, where developers are targeting devices and Java
applet-based features for the IP-telephony market, in general.

For example, U.K.-based Ubiquity Software Ltd. is working
with Vienna to develop Java-based front-end interfaces supporting directory and
conferencing services that can be accessed through screen phones that are tailor-made for
the IP environment, as well as through standard phones and personal computers.

Using the Ubiquity interface, operators in the future could
offer a white-pages-type service at much lower rates than callers currently pay for 411
directory service, noted Kerry Hawkins, vice president of sales at Vienna.

"If the caller has a network computer-enhanced phone
and requests directory assistance, the information can be provided without any involvement
of personnel at the service company, which means that it can be priced much cheaper than
411," Hawkins noted.

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