Changing something as large as a nationwide telephone network must cost a bundle. Isn't making all that possible a huge cost to MCI?
It's a lot less than expected. We've already had a huge investment in our Internet backbone, and we have a huge capacity. The question for us is about interfacing the traditional equipment with the Internet gear. You need SIP (Session Initiation Protocol) to set up and tear down calls, for instance. But we don't have to go and build a gigantic new Internet backbone to support this.
You view VoIP as just one of several next-generation services. What are some of the other services?
There are several already showing up. You can show up at a hotel and register your normal telephone number -- as long as you can plug in your PC to an Internet service. What that means is your visibility in the communications world is now portable. Wherever you are, your communications are (there also). You can control where things go. If someone's trying to send a fax, you can vector that to your email as an attachment or vector it to a different fax machine. There's an incredible amount of interaction over what had been completely separate services.
What's the most important of these next-generation services?
I think it's using the Internet as a control system. If you're like me, you have consumer equipment with remotes around the house. I can't figure out which one's which. And once I get the right one, the batteries are dead. Why not Internet-enable everything? Then it's possible to just have a single radio-based device, maybe 802.11-enabled, that lets you interact with all those appliances. You don't even have to be home. Obviously there are some security issues involved. You need strong authentication to make sure some 15-year-old next door won't reprogram your house. People will soon say there was a time when you couldn't communicate with your household appliances.
There seems to be a mixed opinion about whether businesses are using VoIP. Some say they are, some say it's a myth. What's your take?
It's in the early stages. You've seen a huge investment in infrastructure leading up to Y2K. But the big leap is when you can have inventory control system placing orders automatically. By creating a heavy-duty industrial strength IP environment, it will enable huge enterprise applications. See those things coming from Microsoft, with its .Net platform, or IBM's WebSphere? Many of our customers have VoIP, and they are buying Internet service from us. They don't have three dedicated circuits for voice, data and something else; now it's just one. I can't tell percentages, though, because it all looks like Internet packets to us. In talking to the customer base, they tell us they want it.
Why are they doing it?
They have several reasons. Instead of buying local, long-distance and Internet, they get all three through one pipe, so it saves money on the access side. In terms of utility, they can move from Instant Messaging to voice to videoconferencing in a very smooth way.
Perhaps a market just as important to VoIP as businesses is the consumer market. Does MCI have any VoIP consumers yet?
It starts with people who are almost hobbyists and early adopters. That's certainly where VoIP was in 1996. What we're starting to see now is increased interest in providing these bundled services to consumers. It will probably go hand-in-hand with broadband service.
What about carriers, the third part of this market?
Most of the major carriers are showing a lot of interest. But it shouldn't matter to my customers how I do it. I would be happy to route calls over an IP backbone and some over internal narrowband switches. How we do it is not very relevant to consumers.
It must translate somehow to the consumer?
It's relevant in something like our Neighborhood Service. If you buy a bigger pipe, you pay more. So we're pricing per pipe instead of pricing per packet. A voice service that's operated through this kind of network could legitimately be priced on this basis
