NEW YORK -- VOIP's taking the marquee position among new telecom services taking shape, according panelists and speakers at Light Reading’s Next Generation Services (NGS) 2004Service providers, analysts, and equipment providers gathered here Monday to talk about which new services promised to deliver the telecom industry's recovery. And while broadband services, video, and triple-play all came to mind, the discussions kept circling back to VOIP.

Some speakers said service providers could ignore VOIP at their own peril.

”Voice is a uniquely powerful communication medium,” said keynote speaker Andrew Odlyzko, director of the University of Minnesota’s Digital Technology Center. “There is much more that can be done with voice. Skype is doing it. Toll-quality voice is pretty lousy. With IP, you can play with voice."In fact, if anything, Odlyzko says that in examining new opportunities, service providers should be careful not to ignore voice. He believes service providers may be wasting too much time trying to build complex networks that serve up the new “killer apps," when in fact it's voice -- the application they've been serving for years -- that generates the most excitement.

“ATM, RSVP, multicasting, streaming real-time media, 3G: these are all technical successes, but failure in the marketplace.”

In the panel sessions, however, evidence of reality came to light. Conference participants said that equipment providers and service providers alike can easily get bogged down in complexity in designing their VOIP networks and developing common architectures that work together.

“Quite a lot of equipment doesn’t interoperate,” said NGS conference Chairman and Light Reading Founding Editor Peter Heywood. “If you’re trying to build a multi-vendor softwitch network, you’re asking for trouble.” Surveys of service providers by Heavy Reading indicate that the technology is not yet viewed as mature, says Heywood.

Equipment vendors, of course, say they’re just trying to get the highest quality product to market in the most efficient amount of time. “VOIP techology is proven and it’s out there and deployed today,” says Rob Scheible, senior marketing manager for carrier VOIP for Nortel Networks Ltd. (NYSE/Toronto: NT). “The smaller companies will move first, they can take a higher risk. Across the board you will see high deployment."

So what exactly goes into a VOIP network? As defined by panelists, the foundation of a VOIP network is built using three new categories of equipment: softwitches, media gateways, and session border controllers (see Session Controllers Storm Chicago, The Softswitch Name Game, and Tried & True? Not for VOIP).

The glue that's going to hold VOIP networks together is likely the SIP protocol, say some analysts. “SIP is becoming more pervasive, it is the foundation of any of these new services,” says Kevin Mitchell, analyst at Infonetics Research Inc..

Mitchell says the drivers of VOIP technology are the fact that it’s cheaper to deploy, including both initial capital spending and longer-term costs of ownership. He also says service providers are plunging ahead because they need the new revenue streams.

{Image 1}But hold on before you starting counting down to that IPO: even if VOIP's popularity is undeniable, the business case remains murky at best.

"The utility value to consumers is very high, but the prospects of making money in the long run is very difficult," pointed out attendee Ravi Bhagavan, managing partner with the Merton Group and former vice president of business develpment of VOIP provider Zephyr Communications.

— R. Scott Raynovich, US Editor, Light Reading