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Vendors and service providers this week will celebrate VoIP (voice over Internet Protocol) breaking into the mainstream of telecommunications with a slew of new and upgraded products at one of the young industry's biggest trade shows.

With the number of users exploding and big names such as SBC Communications and AT&T stepping in where only small, specialized providers used to tread, VoIP is going big time. Both carriers and the companies that supply their equipment and software are scrambling to differentiate themselves before market consolidation starts up in earnest, industry analysts say. The evidence will be there at Spring VON (Voice on the Net), in San Jose, California, where many exhibitors will be unveiling new, more fully featured or highly integrated offerings.

Competitors large and small see huge potential in VoIP, which breaks phone calls into data packets and sends them over a LAN or a wide-area data network. The technology can be used to consolidate voice and data on an enterprise's own network or to offer a service to companies and consumers, generally at far less cost than traditional phone service and sometimes with more features.

Just considering consumer services, by the end of 2004 there were more than 1 million VoIP subscribers in the U.S. alone, according to IDC analyst William Stofega. By the end of this year, IDC estimates that number will roughly triple, and by the end of 2006 Stofega expects to see 6 million to 7 million subscribers, he says. On the business side, at least 20 percent of businesses in the U.S. use VoIP in some form according to market research company In-Stat.

New Product Plans

After the strong year of growth in VoIP, vendors and carriers at the show will take the wraps off their next-generation offerings.

Motorola will announce a series of gateways for consumer VoIP services that build on its previous platforms with the addition of routing and other capabilities. The gateways, which initially will be distributed by DSL providers or VoIP carriers and at retail starting in the second quarter, can eliminate the need for separate router and gateway boxes. Most basic is the VT2000 gateway, which has two voice ports and one data port and basic routing functions. The VT 2400 also has two voice ports but includes four data ports and an integrated firewall, as well as more advanced routing functions such as parental controls for filtering Web sites.

The top of the new line, the VT2500, includes all the features of the VT2400 plus Wi-Fi wireless LAN capability. That means it can support wireless VoIP phones that use Wi-Fi, says Jeff Walker, senior director of marketing at Motorola. With a later software upgrade, the gateway should support the use of combination cell/Wi-Fi phones, allowing users to shift from traditional cellular connectivity outdoors to Wi-Fi VoIP when they enter the home, Walker says.

Texas Instruments (TI), coming out of a year in which it sold hardware for 100 million ports of VoIP equipment, is set to announce integration of performance management algorithms into the firmware of its VoIP chip sets. The algorithms, developed by Telchemy, are for monitoring and analyzing VoIP quality of service, says Fred Zimmerman, executive director of product management for customer premise equipment at TI.

The company also is set to announce the addition of an echo canceller and support for multiple conferencing bridges to its TNETV3010 carrier VoIP gateway. The new capabilities are available now.

Freescale Semiconductor also is rolling out improved chips for VoIP equipment. It will unveil the MSC7119 and MSC7118 programmable DSPs (digital signal processors), which represent a performance boost for the company's MSC711x line, the company says. They are available in production today.

Service Shakeout?

Service providers will also be out in force at the show, with appearances by big names that either have jumped into VoIP or may be ready to, such as Comcast, AT&T, SBC, Time Warner, and America Online.

AccessLine Communications, a business VoIP pioneer less well known outside the packet voice world, is set to announce SmartVoice, a service that combines local, long-distance, international, and direct office-to-office calling. For international branch offices, the company so far has primarily offered direct office-to-office calls on a customer's own data network, says Chief Marketing Officer Kent Hellebust.

AccessLine, in Bellevue, Washington, claims more than 100,000 business customers. It will deliver the service in North America, starting in April, both under its own brand and wholesale through other service providers. SmartVoice will be priced at about $45 for each line, each of which can typically be shared by four or five users.

The entry of major telecom carriers and cable operators is changing the VoIP industry rapidly, analysts say. They come in with cash flow, large customer bases, and technology, posing a threat to smaller service providers such as AccessLine, but some specialized operators will survive the likely shakeout as many startups go by the wayside, says IDC's Stofega.

Those vendors will have a lot of company at Spring VON, which one year ago hosted about 140 exhibitors and 3100 attendees at the Santa Clara, California's convention center. This year it moves to the larger San Jose McEnery Convention Center, with 240 exhibitors and at least 6000 in attendance, according to Jeff Pulver, president and chief executive officer of show organizer Pulver.com.

In tune with VoIP's move into the mainstream, this year's show is likely to be different as well as bigger.

"Sadly, you'll see less of the propellerheads and more of the people you'd expect to see at a regular telecom show," Stofega says.

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