Voice Communications Using Digital Networks


July 21, 1997






TABLE OF CONTENTS




EXECUTIVE SUMMARY 1
INTRODUCTION 3
A BRIEF HISTORY OF VOIP 6
VOICE COMPRESSION TECHNOLOGY 10
VOICE DATA TRANSMISSION 17
CURRENTLY AVAILABLE SOFTWARE 21
THE VALUE OF VOIP 42
THE FUTURE OF VOIP 45
SUMMARY 50
APPENDIX A 53
APPENDIX B 55
BIBLIOGRAPHY 56
TABLE OF FIGURES 59












Executive Summary
The decade of the nineteen nineties is often labeled the information age. Few would argue against
the statement timely information availability and exchange is vital to success in every endeavor. There is a
technology that is maturing today that makes the gathering and sharing of information less costly, faster,
and easier. It is called Internet Telephony.
Internet telephony was originally conceived as a method for the military to communicate tactical
information using speech from a battlefield to commanders across the globe via a digital network.
Applications that are based on concepts developed for the military now provides the individual or small
business with unprecedented communications capabilities. Internet Telephony now provides everyone
possessing some basic equipment and an Internet connection, instant access to people and data anywhere in
the world. Almost as importantly, it does this at a fraction of the price of using the traditional telephone
system. Once the equipment and Internet connection are in place, long distance calls may be made at
essentially no cost.
As appealing as free long distance calling is, this is a small portion of what Internet telephony can
accomplish. The most popular software packages also offer all of the services provided by business
telephone systems. However, they also add capabilities for collaborative computing, digital data transfer,
and video that even the most sophisticated telephone system cannot provide.
There are currently over 35 companies that produce Internet Telephony software for the consumer.
The software prices range from no cost packages provided in pre-release form, to full-featured programs
sold at retail for about $50. There are also packages targeted at the business community. These packages
use proprietary hardware to process audio and video. The price for these is in the $3000 range. In general
though, they provide little improvement over the applications described above.
Three major obstacles must be addressed before Internet Telephony will begin to challenge the
Public Switched Telephone Network for market share. First, the software has to become more user friendly.
Making a call must become as easy as it is using when using a telephone. Second, the Internet must mature
to the point of being as reliable as the telephone network. Third, the adoption and implementation of
standards must be completed. This needs to happen so that every software package will be able to
communicate with all of the others. Currently this is not the case.
Projections by International Data Corporation indicate that there is now three million Internet
Telephony users worldwide. By turn of the century projections indicate that this number will have
increased to sixteen million. The majority of this increase will be comprised of business users. These
figures show that Internet Telephony is one of the fastest growing technology sectors associated with the
Internet.
Putting the infrastructure into place to provide voice communications over a digital network is
much less expensive than that used for telephone systems. Using purely digital networks to carry voice
information is about 75% less expensive than using the analog/digital hybrid system that comprises the
Public Switched Telephone Network. Because of these economies, it will be possible to bring voice
communications to large numbers of people, in many areas of the world, where it has not been previously
feasible. This is likely to be the most important contribution that Internet Telephony will make in the next
century.

Introduction

In the past three years, your author has spent countless hours using, and assisting various software
producing corporations to develop and market applications that allow a user to transmit voice over digital
networks. In this time, awareness has grown of the great possibilities presented by this technology. The
main motivation for producing this document is to make more people aware of the possibilities that are
presented for the consumer or small businessperson when digital technology is used to either replace or
supplement voice communications using the standard circuit switched telephone network.
In the following document, we will explore a technology that is developing into one of the fastest
growing fields in communications. This relatively new technology uses a digital network to transmit voice
and video data. The name that has been given to this technology