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lost or delayed and the assembly of packets in the correct order at the destination end TCP is so widespread that the term TCP/IP is almost as common as IP and is sometimes used synonymously with IP Although the mechanisms used by TCP are appropriate and successful for data transfer (such as file transfers and e-mail), they are not appropriate for the delivery of voice traffic Most data traffic is asynchronous and extremely error sensitive For example, it hardly matters if an e-mail message takes 10 seconds or 30 seconds to reach its destination, but it is critical that every bit is received correctly On the other hand, voice traffic is synchronous in nature and a little more tolerant of errors In speech, when someone speaks, the listener should hear it practically immediately, although it is not as critical that every millisecond of speech is heard Given that IP provides no guarantees regarding the efficient transport of data packets, one wonders why IP would even be considered as a means for transporting voice, particularly with the stringent delay requirements that voice imposes One also wonders how VoIP can be made to match the quality, reliability, and scalability of traditional networks After all, if VoIP is to be a successful competitor to traditional telephony technology, then it must meet all the requirements met by traditional telephony, it must offer new and attractive capabilities beyond traditional telephony, and it must do so at a lower cost
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Why VoIP
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It is probably best to break this question into two parts The first is, why worry about carrying voice at all when a large and lucrative market for data services exists The second question is, assuming that a carrier intends to compete in the voice market, why should IP be considered the transport mechanism
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Why Carry Voice
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IP and the Internet have led to many new and exciting services Whereas in the past it might have taken weeks to access certain types of information, it is now possible to find out practically anything in an instant It is now possible to communicate at the touch of a button and to share information between colleagues, friends, and family Many companies use IP technology
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to share information between their business systems and those of their suppliers and customers in order to reduce ordering times and streamline production All of this means that people are using IP technology in new and exciting ways The technology has led to new revenue opportunities and to the creation of companies and enterprises to capitalize on those opportunities However, the revenues generated as a result of those opportunities are miniscule compared to the revenues generated by telephone companies who carry voice Voice is still the killer application To illustrate this point, let us look at some real examples In 2001, Amazoncom had net sales of over $3 billion but still failed to make a profit3 Yahoo!, one of the pillars of the Internet, generated net revenues of over $700 million and lost money4 By comparison, BellSouth generated net income of over $25 billion from revenues of over $24 billion, with about half the revenues coming from local wireline voice services5 Meanwhile, Verizon generated an adjusted net income of over $8 billion from revenues of over $67 billion, again with a large portion of the revenue from regular telephony6 Voice is big business
Why Use IP for Voice
Traditional telephony carriers use circuit switching for carrying voice traffic Given that these carriers generate large revenues and profits, why should anyone consider using a packet technology such as IP to transport voice instead of using circuit switching Circuit switching was designed for voice from the outset and does what it is supposed to do very well So why try to fix something that is clearly not broken The fact that circuit switching was designed for voice is both its strength and its weakness There is no doubt that circuit switching carries voice very well, although it could be argued that it is an expensive solution Circuit switching is not particularly suitable for much else, however These days, people want to talk as much as ever, but they also want to communicate in myriad other ways e-mail, instant messaging, video, and so on Circuit switching really does not qualify as a suitable technology for this new world
3 4 5 6
Amazoncom Annual Report, 2001 Yahoo!, Inc Annual Report, 2001 Bellsouth Annual Report, 2001 Verizon Annual Report, 2001
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