Telcos plan to run VoIP out of town

The traditional phone companies are trying to stifle innovation in next-generation IP services, according to equipment makers.

Old-school telecoms operators are suspected of scheming behind the scenes in an attempt to hamper the new wave of companies offering IP-based telephony services.

Bert Whyte, chief executive of net.com - a maker of broadband telecoms equipment - claimed on Thursday that incumbents are lobbying regulators and governments in an attempt to stop Voice-over-Internet Protocol (VoIP) providers damaging their existing profitable voice services.

"Every carrier is concerned about this trend towards VoIP. There's nothing they can do about this emerging explosion, unless they work with governments to regulate this business," Whyte told a group of journalists at NetEvents in Barcelona on Thursday.

"There's a lot of work being done to stifle innovation."

Ofcom, the UK's communications regulator, is currently deciding how VoIP should be regulated in Britain. Industry bodies representing the VoIP industry, such as the Internet service providers association (ISPA), have publicly urged Ofcom not to regulate VoIP too tightly. ISPA believes that holding internet telephony to the same standards as traditional telephone services would harm its development.

Ofcom's decision is eagerly awaited by the industry. Voice services make up a massive chunk of the revenue stream of a major telco such as BT. They are also very profitable, so the impact of VoIP could be a huge threat to these services, according to Whyte.

"It's like saying to Coke that they can't sell Coca-Cola any more," said Whyte.

There is a long and undistinguished history of powerful incumbents across business attempting to block disruptive technologies that threaten them.

In the case of VoIP, though, there may be too much momentum driving IP networks for the established telecoms giants to slow it.

Neil Anderson, senior director of services at telecom's testing firm Spirent, acknowledged that established telcos have big concerns about losing revenue to IP services, but he doesn't think this will matter too much.

"Enterprises will push IP services," said Anderson. "Enterprises who go to build new offices, or those whose existing PBX kit is old and tired, will be compelled to go to an internet telephony solution. Service providers will be forced to offer it," Anderson added.

In the UK, BT appears to be committed to IP. Through its 21st Century Network project it will fully upgrade its network to IP within the next few years.

NetEvents also heard that few companies are actually moving to VoIP today.

Ian Keene, Gartner's vice-president and chief analyst, said: "Most of the businesses Gartner talks to aren't there yet." He added that IT managers are finding it "pretty darn difficult" to establish the business benefits.

Graeme Wearden writes for ZDNet UK