In Moscow, Moving Voice Over the Public Internet

Today's surge in interest in Voice over Internet Protocol (VoIP) solutions hangs on a pair of strict provisos: that quality of service is king and that quality of service is something the public Internet cannot yet deliver.

The reasoning is that unless VoIP delivers a telephone experience that is at least as high in quality as the established voice network, the customers who have money to spend will not be tempted by cost savings. Once these customers are lured into the IP environment, analysts say, the floodgates can open for new integrated services, all IP-based.

In the same developed countries that are proving such a hotbed for corporate services, there is still a market for students, migrant workers and others who cannot afford to worry about quality of service. For them, cost is king. Meanwhile, in less developed countries, there is a market for cheap but acceptable-quality voice connectivity.

In fact, VoIP on the public Internet makes a tasty morsel for budding entrepreneurs in countries like Russia and the Confederation of Independent States. It offers an opportunity to roll out a service to customers faster and at lower cost than a larger telecommunications company can manage, and to plant the seeds of a promising business without much up-front investment.

One of the pioneers in this field is a U.S. venture-capital-backed start-up, ITXC, which is signing up partners in markets like Russia, helping them set up a small operation and then encouraging them to explore the potential for themselves.

The service starts when ITXC ships out a VoIP gateway, which plugs into the public network and acts as a bridge to the Internet. ITXC continues to own and manage the gateway, while the local entrepreneur sets about trying to sell the basic telephone connectivity the gateway makes possible, undercutting the incumbent telecommuications company on price.

ITXC's first man in Moscow provides an example of how the rollout works. He provides termination for the Moscow area code and also for a couple of places outside of Moscow. As his business builds, one or more of those outer sites is upgraded to its own gateway when the business plan permits. If all goes well, the process develops a momentum of its own, and one site in a place like Moscow steadily grows into a group of sites, some of them competing, both in and outside the original location.

The whole process may well be contagious. ''The guy in Moscow is making so much money that his neighbors know he is making that much money,'' says ITXC's vice president of marketing, Mary Evslin. ''It is pretty sure that one of his neighbors will go into the business, too, and they will drive prices down.''

Not every location is suitable, however, and careful judgments have to be made. ''In many places in the world, we just have to say, 'I'm sorry, we can't do this just yet,''' says Ms. Evslin. ''We don't sign you up as an affiliate if the quality isn't sellable. We're very careful who we sign up, and they can't be six hops away from the backbone; they have to have people and pagers, they have to have adequate bandwidth and they have to have phone lines on the other side.''

It is a promising, if possibly risky, market. But is it just a short-term niche? Ms. Evslin agrees that the service should later develop toward the kinds of multiservice features that mainstream VoIP deployments emphasize. The International Telecommunication Union is now expanding a host of standards on gateway control to bridge circuit-switched and IP networks and to enable multimedia over packet-switched networks.

Bob Whitehouse