Telecom bites IP telephony bullet

By MICHAEL FOREMAN

Telecom New Zealand is about to dip its toe into the burgeoning voice over internet protocol (VOIP) telephony market.

Telecom's network international division is installing VOIP telephony equipment from US-based Clarent Corporation in Auckland, Los Angeles and in Sydney, next month. The Clarent Signalling System 7 gateways purchased are similar to equipment bought by Australian carrier Telstra last October, and will allow Telecom to offer wholesale VOIP services to other carriers.

Neither side would disclose the value of the contract but according to Telecom international manager of value added services Bob Futcher, "it is a relatively small foray into this field."

Mr Futcher said Telecom was entering the market largely to gain experience of the new technology but the system could be easily and quickly scaled up.

"The [VOIP] market is starting to grow and we have got to get in and learn about alternative delivery methods for our customers," he said.

Mr Futcher said Telecom may provide VOIP services directly to its international business customers in the future.

"That is an evaluation that has yet to take place, but it's a logical step to take," he said.

John Houlker, IT broadband business development manager said any decision to move into the consumer VOIP market in New Zealand would be made by the company's domestic division.

"However, I expect many of our next generation clients will be selling on to consumers. At this stage our experience will be watched quite closely [within Telecom].

VOIP technology translates a voice signal into packets of digital data which are then transmitted using the same methods that would be used to send an e-mail message. The packet-switching equipment used is substantially cheaper to install and manage than conventional circuit switch-based systems.

Joseph Rousseau, general manager of Clarent in Australia and New Zealand said VOIP telephony was growing at the same rate as the internet and approximately 5 per cent of all calls worldwide were now being made using this technology.

Telecom is the first customer in New Zealand for California-based Clarent.The company's customers include large carriers such as AT&T, as well as next generation operators such as ITXC and Rapidlink, and it claims a 30 per cent market share of the IP telephony equipment market. Nasdaq-listed Clarent reported 1999 revenues of $47.8 million, a 227 per cent increase over the previous year.