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| Thought Paper |
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VoIP Jumpstart |
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| Abstract |
Communication and infrastructure providers are entering the voice-telecom market with Voice-over-
IP (VOIP), and discovering that it is a challenging market to enter. PC-to-PC voice service is not
complicated; one IP address connects directly to another, and the PCs handle the digitization of
voice and the protocol. Even the addition of a central directory - such as those with services like
Skype does not tremendously increase the complexity.
With VOIP, the local loop is paid for by broadband Internet service, so it is effectively factored out of
the equation. The subscriber buys their own power to run the CPE and keeps the battery charged,
so the carriers do not have to buy it. The digitization of voice and processing of touch-tones is
handled at the customer premise, which is paid for by the subscriber (either through rental or
purchase). This distribution of responsibility is a major cost savings in VOIP.
The other cost savings make better use of network resources. Circuit-switched networks require
channels dedicated to each call. For example, since a channelized T-1 has 24 channels, it can carry
24 active phone calls. These channels are used even if no one is talking.
On the other hand, VOIP calls only use network capacity when there is something to transmit. This
means that circuits can possibly carry more calls (depending on the type of call). You must ensure
that there is adequate bandwidth so that there is no quality degradation, so some extra, unused
bandwidth will always be around. In spite of that, bandwidth use can be more efficient.
Understanding the cost model of VOIP goes a long way to understanding the business. The other
part is understanding the traditional telecom business, which many of the new VOIP entrants are
struggling with.
This paper discusses the various tasks in hand while launching voice telecom services.
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