THE PULVER REPORT: February 1, 1999

In this Issue:

Heard on the Net:

- NT as a Carrier Grade Platform? - Maybe - Maybe Not. In January, 1999 in marketing presentations from both Lucent and Ericsson the one thing which was pointed out independently from both vendors in the positioning of their gateways was that they were selling Unix based solutions rather than NT based Solutions. VON Industry Conventional Wisdom regarding NT as a \"Carrier Grade\" may be finally shifting away from NT and onto Unix and other real-time operating systems. 1999 will be an interesting year to watch to the marketing messages from Sun, HP and Microsoft. ( http://www.sun.com ) ( http://www.hp.com ) ( http://www.microsoft.com )

- Telia and Telenor will drive European the European IP Telephony Industry. This historic combination of two PTTs creates a major worldwide competitor which can and will compete against all of the other major carriers of the world. When Telia and Telenor merge in addition to their global strength in the traditional PSTN marketplace and their non-overlapping expansion into Eastern Europe, South America, Africa and Asia - look for the combined company to be a major driver of the European IP Telephony Industry. Both Telenor and Telia have been leading early adopters of IP Telephony Technologies and based on their collective experiences learned from launching: Telenor Nextel, Telia Light and the new Telia Global Clearinghouse they will be in a great position to apply IP technologies in the launching of new businesses and services. ( http://www.telia.com ) ( http://www.telenor.com )

- Netspeak and Vocaltec - Under New Management. During the past few months both Netspeak and VocalTec have undergone and are continuing to undergo senior level executive management changes. Netspeak has hired a handful of former AT&T executives and Vocaltec has been hiring former ECI Telecom Executives. ( http://www.netspeak.com ) ( http://www.vocaltec.com )

- Lucent Acquires Cascade (and Ascend and Kenan Systems) Lucent Technologies recently went on a 20 Billion Dollar plus spending spree, made a new Lucent Billionaire - Dr. Kenen Sahin from Kenan Systems and picked up Ascend Communications. Seems to me that if Lucent had the opportunity they may have directly picked up Cascade. Look for new IP Voice over ATM offerings in the near future from Lucent. ( http://www.lucent.com ) ( http://www.ascend.com ) ( http://www.kenan.com )

- Clarent on the Rise. At a recent Clarent Corp. user conference in Hawaii which both Reed Hunt and AT&T Jens CEO Darryl Green keynoted - Clarent reported that their revenues were up 600% in 1998 and that as of January, 1999 - their customers were responsible for more than 30 Million minutes a month of International IP Telephony Minutes. ( http://www.clarent.com )

- Carl Ford joins pulver.com. Carl Ford has left Bellcore and has joined pulver.com with the responsibility for \"Community Development\". Carl is now reachable as carl\@pulver.com. I'm looking forward to Carl's continuing contributions to our various worldwide events as well as for Carl to help drive the development and creation for new events and related content at pulver.com.

For up to date VON Industry Headline News - please visit http://pulver.com/news or subscribe to the weekly IP Telephony News Digest - iptelephony-news-digest ( email majordomo\@pulver.com, leave the subject blank and in the body write subscribe iptelephony-news-digest ).

The Telephony End Game - Wireless to the Home?
Depending upon who you speak to these days it's almost a done deal that home telephony in the United States is about to change.


Between advances in Cable Telephony and the increasing attractive wireless rates it is possible that the number of physical PSTN home phone numbers will start to decrease to a point where the loss of revenue will be measurable. While today this trend may not be on the radar screens of all of the Incumbent Local Exchange Carriers (ILECs) - it will be interesting to watch both the tactical and strategic moves the ILECs make in order to preserve their market share from the technology savvy CLECs and Wireless providers who will be doing everything possible to take advantage of this fundamental technology shift. To the extent that some of the ILECs already have a dominant market position in US Wireless, one can not argue that all ILECs haven't seen this trend coming years ago. But to the extent that the minutes revenue generated
by the ILECs with wireless divisions represents cheaper minutes, the PSTN revenue will not be replaced and the ILECs will have to look elsewhere for displacement revenue opportunities.


The market first to be affected by this technology shift is the lucrative \"2nd phone line to the home\" marketplace. I can envision a time over the next two to five years when many people will reduce the number of physical \"2nd\" PSTN lines in their homes and replace them with dependence on a variety of \"Last Mile\" plays including Wireless phones offering \"buckets\" of cheap minutes. One would hope that people would not be considering removing all their home PSTN lines and would plan to
keep at least one of their home PSTN lines, if for nothing else, at least as the destination number for their fax machines as well as the number to use for those multi-hour dialup sessions with their office or ISP as well as for access to Emergency 911 / Life Line services. Continued access to Life Line services is going to be key in the commercial rollout of these technologies.


Not trying to be morbid about this - but just wait until the first time somebody can't get through to the police or hospital because of a technical glitch on their Last Mile technology and Law Suits get filed. I would not want to be the person responsible for installing a replacement technology which didn't provide 100% reliable backup access for Life Line services...


In order for the Telephony End Game to play out, I don't believe it will be a matter of just available technology but rather a combination of marketing and consumer economics. On the technology side one thing that will have to be completely worked out are all of the practical issues associated with Local Number Portability.
But taking this to the next level, and assuming the Life Line issues can be and will be solved, if wireless delivery to the home is a viable option, how long will it take until businesses - maybe small office / home office based businesses at first and medium sized business next - start relying on wireless telephony services as their primary service. If /when this happens, it might start to bring about a revolution in the pricing of Business Phone lines vs. Home phone numbers. What this also means is that there maybe a great new opportunity for NextGen convergence tools. Something that I'd expect to see for the US Small Office/ Home Office market is an IP Based PBX (or traditional PBX) which in addition of supporting either digital or analog circuits will have support for multiple wireless phone numbers. This way small business owners could hypothetically order 8 wireless phone numbers from for example: AT&T Wireless or Bell Atlantic, could purchase a plan at .10 cents a minute (or less) and be in a position to take advantage of these minutes by having a Least Cost Routing table built into their office PBX which optimizes the costs for all calls being placed (PSTN,
Wireless, xDSL, Cable ) and places calls out over the network based on costs.


An added benefit is that the same phone number that I use for my direct inbound dialing in my office can be the name number that is mapped to my cell phone when I travel. The next step, assuming that my US cell phone carrier has relationships with GSM carriers means that we may be getting a step closer to having that universal phone number.

In addition to having PBXs which support the wireless phone network, there will be an opportunity for a new breed of IP Telephony gateways - those which interconnect between the IP and Cellular networks. The biggest issue to be solved in this space is the technology of Tandem Codecing - and I'm extremely confident that this may already be a non-issue for some vendors. The nice part of going from the IP Network directly to the Wireless is that service providers once again have a chance to by-pass paying access charges some calls theoretically never have to touch the PSTN but rather just the IP and Wireless networks. The scope of opportunities for Wireless/IP plays are without boundaries and I can envision business opportunities for the entire spectrum of the 900/1800/1900 Mhz wireless world.

In the near future look for leading edge service providers to start offering telephony services which bridge together the IP and Wireless world.

AT&T Jens - #1 NextGen Telco in International IP Telephony Minutes

While many other NextGen Telcos have gone out of their way to be noticed, one of the \"Sleeping Giants\" in the industry recently woke up. I was fortunate enough to be in the right place at the right time when Darryl Green, President and CEO of AT&T Jens from Japan, spoke at a recent Clarent customer event which took place in Hawaii in January, 1999. While listening to Darryl speak, I quickly realized that it was AT&T Jens which is the leading NextGen Telco as rated by their number of reported International IP Telephony Minutes. Now if you are wondering why I didn't state the number of Monthly International IP Telephony Minutes AT&T Jens reported, it was because right after the meeting I was asked not to reveal this number and I promised to respect this request. (I would personally encourage AT&T Jens to go \"public\" with this information as being the number one rated pulver.com NextGen Telco is something to be proud of.)


Taking a look at the recent history at AT&T Jens, they were able to bring their \@phone product to market in only 7 months - by taking advantage of market trials and rapid prototyping. Two other things which worked to AT&T's strategic advantage was the deregulation of IP Telephony in Japan in August, 1997 and finding a vendor like Clarent Corp. who was responsive and catered to AT&T's needs during the on-going development and nurturing phases of the \@phone service.


AT&T \@phone is now sold in four different market segments: Residential, Military, Business and Temporary Foreign Residents - providing deep product reach within Japan. A large portion of the income for \@phone comes from Prepaid calling cards.


On August 25th, 1997 everything came together for AT&T Jens the MPT of Japan liberalized the regulation of International IP Telephony and on August 26th the AT&T Jens \@phone tariff was accepted. Operation of \@phone started on September 1, 1997 with 4 gateways and 96 ports and AT&T Jens has never looked back since.

Telenor's Interfon PC Service


December 9th '98 Telenor commercially launched their Interfon PC service for phone-PC, PC-phone, and PC-PC calls over their national H.323 network. This network was first put in operation in February '98 with a commercial pilot at the University of Oslo, and later used for an H.323 interoperability demonstration at VON Europe '98. As part of the service offering, Telenor has also included click-to-call directly from entries in the complete Norwegian white- and yellow page on-line phone directories.


By including phone-PC calls in the launch, Telenor is the first operator to implement a national number plan for IP-telephony (the Norwegian 850 series). The IP-telephony number is mobile between Internet connected PCs, and thereby follows the user to the PC at which he wants to receive phone-PC and PC-PC calls. This allows him to receive calls while surfing on dial-up connections by diverting his regular phone (on busy) to his 850 number. He may also make/receive calls to/from his Internet connected portable PC whenever he is traveling outside the coverage of his GSM cellular phone. To enable the service, a PSTN interconnect agreement for IP-telephony has been negotiated, considering PC-phone and phone-PC services as public telephony from a regulatory point of view.


The H.323 network is built around Ericsson's H.323 Gatekeeper and Digi/ITK's NetBlazer 8500 gateway. MS NetMeeting (TM) is used as the H.323 client. The in-house developed H.323 billing and rating system is closely integrated with Telenor's ISP customer care system, making Interfon PC available as a post-paid service to existing Internet subscribers. All calls are billed, and a complete price list for phone-PC, PC-phone, and PC-PC calls is available from the Interfon PC user interface.

Fremont, CA - The Home for Cable Telephony in the United States


A few weeks ago I attended the AT&T Analyst Meeting in New York where Mike Armstrong spoke about the AT&T/TCI merger and he introduced the key AT&T executives responsible for the rollout of AT&T's Cable Telephony project. When AT&T and TCI finally merge it will be very interesting to watch AT&T back in business as a Local Exchange Carrier.


One thing which became immediately clear was that at least from AT&T's perspective, the future for Cable Telephony in the United States is Fremont, California. It turns out that Fremont is the model city for AT&T's Cable Telephony project and it is the experiences and lessons learned from Fremont that will directly influence AT&T's rollout of both HFC and Packet Cable Telephony.


AT&T's current plans for Cable Telephony is a three step plan:
1. Pilot the technology and find out all that they don't know from the
MSOs.
2. Move from Pilot to scores of people to tens of thousands of customers
and monitor their progress as the service turns into a commodity.
3. Scale to the Market over the next five years.


The Fremont pilot is currently underway. ** The Pulver Report is looking for people in Fremont, CA who are early beta testers of AT&T's service and have the time to email us with their early experiences using this technology. Please email fremont\@pulver.com if you can share your experiences with us. **


After the Fremont trials are completed, AT&T has targeted ten cities for deployment. The initial technology which is being rolled out is \"HFC Telephony\" based technologies. Look for Packet Cable based technologies to be introduced in mid-2000 along with a set top box which has IP Telephony based chipset.


During the time that John Zeglis, President of AT&T was on stage talking about the work that AT&T will be going through in order to scale themselves for the widespread deployment of Cable Telephony, I had the mental image of AT&T establishing a \"Commando Team Strikeforce\" which they would use to go from city to city to get in, deploy the technology, train the operations teams and leave for the next city.


>From my perspective the success of Cable Telephony in the United States is not dependent upon the underlying technology - AT&T is determined to make the technologies work...the biggest issue facing AT&T/TCI is their ability to market these technologies and new services to their customers. The one thing that I really don't want to see is for Cable Telephony become the VON Industry's equivalent of Cable's \"Video on Demand\".

Qtalk: A Lightweight IP Telephony Client
During the past few weeks I've been experimenting with a \"next generation\" light-weight Internet Telephony client called Qtalk ( http://www.minidata.co.nz/qtalk/ ) from New Zealand.


The one key feature about this product is that it uses the directory structure from ICQ ( http://www.icq.com )- so you can maintain a personal watchlist, get notified when the person you wish to communicate with is available - and then either: text chat or speak directly with that party. Qtalk is the first \"lightweight\" client that I've found and it works well on a 28.8k connection. To date Qtalk has produced some of the clearest audio that I've heard in a long time. I'm sure that \"actual mileage may vary\" but I've been pretty impressed so far.


For those of you who are interested in ICQ and in \"Presence Notification\" you might also be interested in an ongoing effort within the PIP group of the IETF of using an extension of SIP for presence notification, allowing a seamless transition between presence notification and making Internet phone calls. Details regarding this is available in the Internet draft at http://www.cs.columbia.edu/~hgs/sip/drafts/draft-rosenberg-sip-pip-00.txt

New pulver.com Newsgroups
As the Internet Telephony Industry continues to grow, I felt the timing was right to introduce the following \"experimental\" (and unmoderated) Newsgroups at pulver.com:
news://news.pulver.com/pulver.fwd
news://news.pulver.com/pulver.iphone
news://news.pulver.com/pulver.von
news://news.pulver.com/pulver.von.gateways
news://news.pulver.com/pulver.von.news
news://news.pulver.com/pulver.von.nextgen-telco
news://news.pulver.com/pulver.von.protocols
news://news.pulver.com/pulver.von.regulatory
Please feel free to directly post your company news to:
news://news.pulver.com/pulver.von.news


If you have trouble accessing these newsgroups behind your corporate firewall and would like to arrange to have these lists replicated at your site - please feel free to email: usenet\@pulver.com.

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