IP Telephony: A Laymans Guide

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It's the latest, greatest hope for cable, and it's at least
two years away: IP telephony, or "VoIP" (voice over Internet protocol).

In press releases from both telco and traditional supplier
segments this week, the IP-telephony hype machine will work overtime. Vendors will discuss
coming products, form alliances and scrap furiously over what most agreed is a huge market
opportunity -- someday.

All of this raises the question: What exactly is IP
telephony?

Calling VoIP on the Web
General VoIP information:


http://www.phonezone.com/tutorial/index.htm#internet_telephony


VoIP over HFC:
http://www.ipxstream.com/frame/technology.html


Comprehensive glossary of telecommunications terms, courtesy of the U.S. government:
http://glossary.its.bldrdoc.gov/fs-1037/

In short, IP telephony is a software-driven way to make and
receive calls via the Internet, instead of via the traditional, circuit-switched telco
network.

As a potentially lucrative revenue category, telephony is
no newcomer to cable. The segment billowed up in the mid-1990s, then mostly resettled into
obscurity, in step with the mutual retreat of cable from wireline telephony and of telcos
from video.

Now, telephony is back, but different. Mostly, it's back
because the economics and omnipresence of the Internet brought IP with it. IP is a means
of delivering information in packets of data from one point to another on a network. Cable
operators that are familiar with or planning to install high-speed cable modems are
already entrenched in the world of IP -- whether they know it or not.

WHAT IS IP?

In an IP scheme, data are broken up into packets, or
"datagrams," which are sent across a network to a destination, identified by an
address. When the packets reach the destination -- often having taken many different
routes to get there -- they are reassembled. There is no dedicated "circuit"
between the source and destination of packets.

In contrast, traditional "circuit-switched"
telephony -- the current method of making and receiving phone calls around the world --
establishes a dedicated connection between two points on the telco network. That
connection is maintained until it is released, or broken, by the called or calling
station.

With packets replacing dedicated streams, cable-network
bandwidth can be more efficiently utilized, cable operators believe, because circuits need
not be reserved for blocks of customers.

In addition, once an IP-terminal device -- such as a cable
modem, or an MTA (multimedia-terminal adapter), in PacketCable parlance -- is established
at a cable subscriber's home or business, that subscriber can receive voice, Internet data
and, eventually, video over the same hybrid fiber-coaxial network using IP.

As Cable Television Laboratories Inc. develops VoIP
standards for HFC networks through its PacketCable initiative, equipment costs are
expected to drop, and "interoperability" should let cable operators use network
elements from various manufacturers.

HOW DOES IT WORK?

On the surface, placing or receiving an IP-telephone call
will appear to be no different than making a call today: A person picks up the handset,
hears a dialtone, dials a number, hears the ring back and either talks to the person at
the other end or leaves a message.

IP technologies are already being used in some
long-distance calls. In those arrangements, independent long-distance carriers take phone
traffic coming in from the telco network, convert it into packets, then send it out over
their own, "managed" networks.

What PacketCable aims to do is to extend that capability
into the local arena, via the cable modem and high-speed-data networks that are already
being laid in. Nationwide backbone connectivity will come either from high-speed data
services @Home Network or Road Runner, or from other long-haul carriers, like Qwest
Communications International Inc. or Level 3 Communications Inc.

Sending IP calls over cable networks will require a
software-intensive series of databases and adapters for homes, according to the
PacketCable plan.

THE EQUIPMENT

In homes, subscribers will be outfitted with an MTA, which
links standard phone sets to cable modems. The adapters will have two jacks: one for an
RJ-11 connector, to plug in the phone; and one for a coaxial F-connector, for connecting
to the cable modem or the digital set-top with built-in cable modem.

Whole-house adapters are also in the works. In that
scenario, a house-mounted box connects all inside phone wires at that central point. All
coding to transform circuit-switched calls into IP calls happens inside that white plastic
box.

As a point of reference, the two end points of all IP
traffic between the home and the headend are the cable modem and the
cable-modem-termination system (CMTS), which sits in the headend.

What's at the headend side of the equation? A series of
servers. One, a data "gateway," is envisioned to eventually replace the
expensive Class 5 switches that are now required for HFC telephony. With gateways, cable
operators argued, VoIP will be an affordable way for them to generate revenues for
telephone services.

At the headend, the gateway server converts IP packets to
circuit-switched analog data streams to be sent out over the public switched telephone
network. The size and capacity (and, therefore, the price) of gateways is dependent upon
how many subscribers are served by a headend and the expected penetration rate of VoIP
services. Traffic tables do exist, vendors submitted, that help operators to decide how
many circuits are necessary to serve a given subscriber base.

Another service in the necessary mix: call-management
servers, or "gatekeepers," which handle signaling; security and access; network
directories and addressing; event tracking; and load-balancing functions.

The gatekeeper, said Rick Walsworth, director and general
manager of Com21 Inc., serves as the "circuit manager" that negotiates for
bandwidth so that voice calls can be made and that identifies the end points of a call.

WILL IT WORK?

There are still several important technical issues to be
addressed before cable subscribers can pull the plug on their local telephone companies.

The No. 1 one issue that must be in place before
implementing VoIP is making sure that the HFC network is sturdy, two-way and symmetrical,
said Rob Milne, vice president of engineering for Vienna Systems Inc.'s client division.

"Packet loss has to be very low," Milne said. A
network signal-to-noise ratio of 15 decibels is preferred.

"Just because you have a two-way network that can do
Internet traffic, it doesn't mean that it can do voice," Milne said.

Packet loss with voice data results in latency, which can
make for broken voice transmissions. A delay of less than 250 milliseconds is what's
considered "toll-quality" voice transmission.

Powering is another issue. MSOs envision IP telephony as
"lifeline," meaning that the service stays up even when the power is down. Plus,
while today's cable-phone equipment -- the circuit-switched flavor -- was designed with
ever-decreasing power draws, the situation is not the same with cable modems and digital
set-tops.

Those devices, noted Jim Lakin, vice president of marketing
for Arris Interactive, were simply not designed to be frugal with power. That's because
operators never envisioned a need for the set-top box or cable modem to stay on when the
power was off, because they assumed that the TV and/or personal computer would also be
inoperable in lost-power situations.

The additional powering needs of cable modems and set-tops,
in turn, boost the amount of power needed on the cable plant. And lifting an HFC network
from 60 to 90 volts is an expensive proposition, MSOs said, although most are already in
the throes of doing so.

Operators are already examining battery-power options for
subscribers' homes as they enter into market trials of VoIP.

And clearly, VoIP is not ready to displace the local phone
company for lifeline telephony with extra features that are now standard fare for many
telephone customers, such as CLASS (custom local-area signaling service) features like
emergency 911, operator services, call waiting, conferencing and caller ID.

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