Four years ago, Gallery IP Telephony was one of a handful of small telecommunications firms hoping to cash in cable’s initial interest in voice-over-Internet protocol telephone services.
The company had developed software for switching voice calls to their destinations on phone networks. Its “soft switch” was tested in-house by several cable companies. Gallery also worked with Cable Television Laboratories Inc. on early PacketCable specification.
That early momentum didn’t pan out into U.S. deployments. The telecommunications bubble burst, venture-capital funding dried up and the cable industry went slow on IP-telephony development.
Thus, Israel-based Gallery IP turned its attention to the international market, where it picked up steam with 20 deployments while waiting for things to heat up in the U.S.
As Cablevision Systems Corp. and Time Warner Cable now have proven VoIP deployments, Gallery IP has returned. But this time, in its talks with U.S. cable companies, soft switches aren’t front and center.
Instead of viewing telephony as its own platform requiring traditional telephony gear such as switches, Gallery IP is pushing a network-based model. That envisions telephony as one application among many, driven from a network of servers, CEO Avihai Degani explained.
Trend lines that indicate telephony can be viewed as an application that rides on the IP platform include Skype Technologies S.A.’s 61 million users and Vonage Holdings Corp.’s 1 million subscribers, the Gallery IP CEO said. Both of those services use cable’s broadband plant, without providing cable any revenue, and put pressure on cable’s VoIP pricing.
“With Skype and Vonage, prices will go down,” Degani said.
Cable’s current VoIP business model – including $40-per-month pricing — includes paying the operators of the public-switched telephone network to handle call transfers. Without peering agreements among cable companies, those costs will continue to be a drain, Degani said.
“Cable needs to deliver telephony at a very low price,” he said, and a network-based approach would allow for that.
Also, more consumers are abandoning wireline phones altogether, relying on cell phones. Cell-phone companies are also looking at dual-mode phones, perhaps hastening the day when consumers use their broadband connections and cell phones for all voice calls, eliminating the need for a VoIP service.
In a sense, IP telephony solves yesterday’s problem, in Degani’s view. “Cable still thinks they need to get subscribers en masse,” he said. “But they don’t have the features they need to compete. They don’t have the sticky stuff.”
Degani sees cellular providers, not circuit-switched landline networks, as cable’s big competitor for phone subscribers. Operators should be looking at features like video and audio conferencing, unified messaging and location/presence-based services, he said.
The CEO’s advice: Buy servers from Sun Microsystems Inc., trunking and Signaling System 7 equipment from Nuera Networks Inc. and software applications that handle conferencing and messaging and other features from GalleryIP. That way, cable can provide a product competitive with cellular providers.
“[Customers] will be able to use a phone while they travel with either the same or different number while having the local/presence-based service support,” Degani said.
To some degree, cable is moving in this direction. PacketCable Multimedia specifications doesn’t require a softswitch. The phrase “subscriber data server” has crept into the PacketCable 2.0 specifications, Degani points out.
“Today’s soft switches are [time-division multiplex] switches wrapped with some IP,” Degani said. “Pure soft switches should enable easy interoperability with other computers.
“This will ease the introduction of advanced applications but will also enable the [Session Initiation Protocol]-based interoperability — on a system level — with servers handling routing, local number portability and number translation. It will also enable the functional and geographic distribution that will enable operational cost reductions as well as in establishing calls.”
“You have to look at it from the computer angle,” he said. “Telephony is just another application.”
So how would a network look? Today, Time Warner Cable has seven or so soft switches spread throughout the country. In Degani’s view, cable would have trunking, SS7 and media servers distributed throughout country, with centralized software management.
“The main goals are to add more functionality in terms of features and services while lowering the cost of the telephony operation and maintenance and the cost of establishing the call,” he said.
“Build the telephony system on sessions as opposed to number of subscribers,” Degani said. “Distribute the telephony components in an efficient way and SIP-based telephony in a transparent mode.
Degani also reiterated his point about the need for cable companies to create VoIP-peering deals with their fellow operators to lower costs and increase efficiency.
“All of this doesn’t mean that MSOs have to replace their soft switches,” Degani said. Gallery IP is still marketing soft switches to cable, with the understanding that it may be a cable operator’s second or third vendor.
“The second switch needs to adapt to the existing environment,” he said. “We have the mechanism to integrate the switch into the existing system.”
The overall key: For operators to start looking at telephony as a computer network-based application, instead of a separate, hardware-based telephone service, he said.