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IMPACT OF TELEPHONY ON AMERICAN BUSINESS.

Analyzes the technological development of IP Telephony. Defines the technology as the merging of the telephone and the Internet enabling users to use their Internet broadband connections for a variety of communiction tasks. Discusses studies on the topic. How the technology works. The basis of the technology. Why companies use it.

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Potential Impacts of IP Telephony
on American Business
Introduction
The technological development chosen for this analytical essay is IP Telephony. This is generally accepted to mean the merging of the telephone and the Internet, so that commercial users can use their Internet broadband connections to communicate using a number of media simultaneously and also using the Internet for voice and fax phone calls. This is an interesting technology since many businesses can profit while many other business will undoubtedly lose money.
Schlegelmilch and Sinkovics (1998), report on a number of studies concerning the IP technology, including a 1997 study that suggests rapid adoption of the technology could end up costing phone c

. (1998, June), Viewpoint:marketing in the information age - can we plan for an unpredictable future? * Phone-to-phone PC operation can occur with two gateways. Most people agree that voice will be a big part of Web-based transactions. Based on this simple estimate, another three or four calls couldeasily fit into the space used by a single call under the conventionalsystem. As Lynch (2 ) again points out, the projected increase in thetechnology use will be driven by e-commerce. The sending computer chops data into these small packets, with anaddress on each one telling the network where to send them. Why Companies Use this Technology Lynch (2 ) explains in detail the reasons why companies are turningto this VoIP transmission. .that could get their customers good quality, has held them back, Because if you are a Lands' End and you spend millions of dollars to make sure the page pops are fast and the user experience is good on the visible part of the Web, you don't want to push people into a low-quality phone conversation and diminish the whole experience (Lynch, 2 , p. It also freesup the two computers communicating with each other so that they can acceptinformation from other computers as well. While one party talks, the otherperson is listening, which, mathematically means that only half the circuitis being maximized. Forexample: * Phone-to-PC or PC-to-phone operation can take place with onegateway. So in a 1 -minute conversation, the totaltransmission is 96 KB, which is roughly equal to 9.4 megabytes (MB). New telephone companies can use therelatively inexpensive gateways to quickly implement alternatives totraditional carrier networks (Freiden, Goldsmith, Takacs, & Hofacker, 1998, p. It is claimed that Internet telephonywill create the foundation for a new class of applications, many of whichwill become as common as a desktop phone (Freiden, Goldsmith, Takacs, &Hofacker, 1998, p. Still, until recently, the lack of networks. Gromov also addresses the concept of networks and gateways, twoconcepts that are key to the continued escalation of IP Telephony. The software needed to make Internet voice calls nowcomes bundled with the latest Web browsers, and also can be freelydownloaded. The e-commerce movement also portends an explosion in Web-based voice applications. With the VoIP technology, companies can route their phone calls, faxand voice mail either through the Internet for cost savings, or over thepublic network for higher quality. International Marketing Review, 162-17 . . Poor call quality has been one of the biggest obstacles (Lynch, 2 , p. Voice telephone conversations over the traditional PSTN aretransmitted at a fixed rate of about 64 kilobits per second (Kbps), or1, 24 bits per second (bps), in each direction, for a total transmissionrate of 128 Kbps. At the basis of this technology is a series of protocols called VoiceOver Internet Protocol (VoIP), which provide packet-switching methods toprovide several advantages over circuit switching. It will be phoned in. Recent industry consensus on Internet Telephony standards facilitatesInternet calling among users of software from a number of suppliers. 124). Inaddition, several manufacturers have introduced gateway servers thatgreatly expand the potential market by relaying Internet calls to and fromordinary telephones and fax machines (Levitt, 1997, p. 21 -22 .Gromov, G.R. Tele.com, 14 Schlegelmilch, B.D. This is an interestingtechnology since many businesses can profit while many other business willundoubtedly lose money. The most obvious constraint is that, in spite of the noted research byGromov (1998) there is no primary landmark event we can point to andidentify as the "occurrence" that gave birth to the phenomenon now known asthe Internet. And this example doesn't even factor in the use of datacompression, which further reduces the size of each call. For example, packetswitching allows several telephone calls to occupy the amount of spaceoccupied by only one in a circuit-switched network. However, much of this is wasted. Internet telephony has disappointed its masters before, though. Using VoIP protocols to convert toVoIP, that same call may have occupied only 3.5 minutes of transmissiontime at a cost of 64 Kbps, leaving another 64 Kbps free for that 3.5minutes, plus an additional 128 Kbps for the remaining 6.5 minutes. 14). This is generally accepted to mean the merging of the telephoneand the Internet, so that commercial users can use their Internet broadbandconnections to communicate using a number of media simultaneously and alsousing the Internet for voice and fax phone calls. Conclusions Since the concept of Internet Telephony was organically derived fromthe connectivity made available to the world through Internet technology,it is imperative to deal with these two concepts -- the Internet andtelephony simultaneously. 212). In Circuit Switching, when a call is madebetween two parties, the connection is maintained for the entire durationof the call, and this circuit is the basis of the land-wired PublicSwitched Telephone Network (PSTN).You dial the number of the party you wish to talk to.The call is routed through the switch at your local carrier to the partyyou are calling. "When you're moving at Internet speed, you're not going to wait 1 years to form relationships [as a telephony service provider], and besides,there would be too many relationships because this part of telephony is notrestricted to national monopolies, it's got a lot of small players"(Dunlap, 1998, p. Marketing Intelligence& Planning, 16. 14). Instead, data networks use a method of connectinginformation called packet switching. (1998), The roads and crossroads of Internet history.Sacramento, CA: Internet Valley Pubs., Online athttp://www.internetvalley.com/intval.htmlLynch, K. By bypassing the international connect charges -- even paying in-country long distance rates -- the configuration costs significantly lessthan traditional circuit-switching. While gateway operators requiringconnections to local telephone networks might be regulated and taxed, PC-to-PC Internet calls and internal corporate traffic probably are beyond thereach of regulators. "Cut-rate phone calls over the Internet soon will transform the hugetelecom business, especially on expensive international routes," (Lynch,2 , p. Is TheRevolution Upon Us? And "click-to-talk" has been piloted over the past couple years. (1998),Information as a product: not goods, not services. & Sinkovics, B. Since there are 8 kilobits (Kb) in a kilobyte (KB), thistranslates to a transmission of 16 KB each second the circuit is open, and96 KB every minute it's open. Returning to theexample used above, a PSTN 1 -minute phone call used 1 full minutes oftransmission time at a cost of 128 Kbps. Millions and ultimately billions of minutes worth of telephone calls could finally be marching onto the Internet. 212). In fact,Internet connections would be drastically slower if your computer stayedconnected to the Web. Freiden, J., Goldsmith, R., Takacs, S., & Hofacker, C. The study suggests that "the potential for substantial savings,compared to calls on traditional phone networks, is the primary motivationfor using Internet telephony" (Schlegelmilch & Sinkovics, 1998, p. Already, some Internet Telephony providers are offeringdiscounts of from 4 percent to 5 percent off standard internationaltelephone rates. That is not possible today because usersmust sign on with individual telephony service providers in each of theregions they wish to call or the telephony provider must sign numerousrelationships with other providers outside its region. 14). Potential Impacts of IP Telephony on American Business Introduction The technological development chosen for this analytical essay is IPTelephony. The revolution will not be televised. (1998, Nov. On the other hand, data networks don't rely on circuits. . (2 , March 6), Minute Man -- ITXC's Tom Evslin Is MarshalingMillions Of Minutes Of Telephone Traffic Onto The Internet. The reason for this predicted growth is the fact that it is impossibleto separately track voice or fax packets traveling over the multitude ofdata networks that comprise the Internet. If acompany offers international long-distance service using gateways, forexample, an organization or service provider can host one gateway in eachcountry. Packet switching minimizes the time that a connection is maintainedbetween two systems, which reduces the load on the network. Packet switching opens the connectionjust long enough to send a small chunk of data, called a packet, from onesystem to another. Gromov, for instance, traces the technological beginnings oftoday's Internet back to 1858 (Gromov, 1998). 164). When thereceiving computer gets the packets, it reassembles them into the originaldata. 16), Pioneers, Computer Reseller News, 189. References Dunlap, C. The report also notes that since Internet access generally ispurchased at a fixed monthly rate, individuals or companies with the properequipment can place Internet voice or fax calls between computers anywherewithout incurring per minute fees. Schlegelmilch and Sinkovics (1998), report on a number of studiesconcerning the IP technology, including a 1997 study that suggests rapidadoption of the technology could end up costing phone companies some $8billion in lost revenues worldwide over the next four years. . . However, corporations are using these VoIP to route internationalcalls over their data networks, avoiding local access fees, long distancecharges and high international rates. IP, therefore, is a technology that bridges theexisting world of telephony and the New World of the Internet. The great migration of voice traffic to the Internet, a cause celebre of the communications industry for the past few years, has so far failed to materialize. How The Technology Works The fundamental problem with most existing telephone networks is thatthey rely on circuit switching, the concept that has been used by telephonenetworks for over 1 years. Since manycompanies and individuals have established Internet and Intranetconnections, the next step is to use them for telephony. 189).

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