HD Voice Push Could Face Resistance in Washington

Vonage co-founder Jeff Pulver has heralded HD voice as a technology that could “reboot” telecom and bring billions in revenue back to the industry. Earlier this month, he announced plans to lobby Washington (CD July 15 p6) for widespread rollout of the technology, which doubles a call’s audio resolution for more authentic voice production. The effort, called HD Connect, already has hardware manufacturers’ support, but Pulver told us he has no investments in HD voice manufacturers. That’s not his motivation, he said. “I love the technology.”

Vendors like Global IP Solutions (GIPS) and Polycom are actively engaging in Pulver’s effort, their executives told us. GIPS was one of the founding members that worked with Pulver to develop the HD Connect campaign, said Chief Marketing Officer Joyce Kim. A government push on HD Voice could benefit phone-centric businesses like the call center industry, conferencing and some collaborative application providers, she said. In the long run, all industries could benefit, said Polycom Chief Technology Officer Jeff Rodman.

A government mandate might not be necessary because the market will be the main driver, Kim said. But Rodman said the government should put some pressure on carriers to support HD voice on their networks so it becomes more broadly adopted.

Hardware manufacturers look to benefit most from a government push for HD voice, said voice service provider officials. “Customers’ traditional phones can’t support the frequency range that is available through HD, so all the consumers are going to have to upgrade their phones,” said Kevin McGuire, vice president of the National Telecommunications Cooperative Association.

But not all network operators are convinced government should take a role. “I don’t see any benefits to our customers or to our company” of a government push for widespread HD voice, said Jason Talley, CEO of VoIP carrier Nuvio, which offers HD voice service using devices made by Polycom. “There are other things we need to focus on before we have HD voice be a national priority,” agreed McGuire. “We've got voice out there.”

Broadband should be priority one, said Independent Telephone & Telecommunications Alliance President Curt Stamp: “Shifting resources and attention from that task at this time doesn’t seem to be wise.” Pulver’s suggestion to use universal service money to subsidize the HD voice effort could also lead to resistance. “Given the sensitivity to the size of the fund and increasing contribution rate, it would be a challenging proposition to expand USF to include HD voice,” Stamp said.

“It is probably going to be a hard sell to convince regulators that standard quality voice communication isn’t ‘good enough,'” said former FCC lawyer Jonathan Askin, associate professor at Brooklyn Law School. But HD voice should be looked at “as an important additional component in improving the ways in which we communicate and to make sure that voice doesn’t lag other modes of communication as America invests in improving the qualities and capabilities of our increasing unified communications system,” he said. “People were also skeptical about” stereo sound, HDTV and DVDs, he said. “The problem is we don’t really know the value of any new technology until we actually see its deployment and evolution.”

Pulver could be helped by a new government more in tune to new Internet-based innovations, Talley said. “I think that you will see a push to embrace and deploy new technologies out there,” he said. Government agencies will “certainly push Internet technologies just by way of the mandate they've received from Congress” on broadband stimulus, he said.

Waiting for Demand

The market for HD Voice phones could reach $3 billion annually within five years, with the U.S. market starting to take off this year, said In-Stat analyst Keith Nissen. VoIP providers likely will be early adopters of HD voice while big carriers will be slower to adopt, said IDC analyst William Stofega. GIPS has been working with enterprise customers like Google, IBM and Cisco on bringing the service to Web- based voice offerings like Google Talk, Kim said. The residential consumer market isn’t part of the plan yet, Rodman said.

Big telcos and cable companies are eying HD voice. A Verizon Business director said recently that the company anticipates early adoption to take place in late 2010, with widespread adoption in 2011. Meanwhile, CableLabs finished a specification for HD voice in February allowing cable operators to integrate the technology within the cable VoIP architecture. Cablevision has already started selling HD voice to its business customers in New York.

CableLabs developed the specification with the belief that it could “help differentiate cable voice service over the next several years,” said Eric Rosenfeld, network architecture vice president. However, while there may be long-term interest in HD voice, few U.S. cable companies have publicly expressed plans to adopt the technology, he said. While it’s possible some cable companies will adopt HD voice early to differentiate their service offerings from that of phone companies, some may simply want to keep the technology “in their back pocket in anticipation of [some kind of] future competitive offering,” he said.

Many small carriers are waiting for the big companies to jump. HD voice is sold by few, if any, of NTCA’s small rural carrier members, McGuire said. “Most people are concentrating on rolling out their broadband networks.” However, smaller carriers’ likely would feel pressure to implement HD voice if the big phone companies adopted it, he said. HD voice could gain traction in much the same way as Caller ID, he said. “Early on, it didn’t make a lot of sense to offer it because if it wasn’t enabled in the calling party’s switch, it wouldn’t work for the subscriber. As adoption grew and the switching infrastructure could support it, it became a better and better service, now such that it is the norm in most homes.”

Carrier adoption remains the primary hurdle due to fears that implementing the technology will hurt revenue, Kim said. Moving to HD could be a time-consuming and costly process Stofega said. It also requires more overhead in terms of the bandwidth required to support HD voice, he said. Further, making the traffic run in a multi-carrier environment requires some consensus on codecs used in the network and for endpoints, he said. But without widespread adoption in three to five years, the U.S. will fall behind other countries, Rodman warned.

The service could be a differentiator for carriers, Kim said. Stofega agreed: It’s an advantage for carriers if they go after it, he said. For the carriers, once one gets it, others will follow, Stofega said. The service could also be a replacement for land lines, an opportunity for wireline companies that have struggled with losing access line customers, he said. Service providers might not charge more for HD Voice, seeing it instead as an upgrade, Kim said.

HD voice means higher costs for service providers because it takes up extra bandwidth, Talley said. With HD voice, “you're providing a much larger frequency range” than “traditional packetization of voice,” he said. “The old copper codec … was 64 [kbps]. In an IP situation, you're able to reduce that substantially to 20 or 22 [kbps].” HD voice brings the figure “upwards” of 64 kbps again, he said. “In a day and age where people are talking about having to do traffic management … throwing in a wider bandwidth codec down in the pipe is not necessarily the smartest thing to be doing.”

It’s not a simple matter of passing the extra costs to the customer because awareness and demand are still low, Talley said. Few Nuvio customers know about HD voice, and the ones who do don’t want to pay extra for it, he said. “I have yet to see a customer ask for it and/or not use [our] service because we can or cannot offer it.” The technology seems best suited for a conference-room environment, he said, but “the customers that we have that would be concerned about high-def voice would much rather use videoconferencing.”

Video is nice, but HD voice is a much less expensive way to improve business conferencing, said Doug Mohney, who’s working with Pulver in the effort and was the editor-in-chief of Pulver’s VON Magazine. Installing the latest video telepresence rigs can cost up to $30,000, whereas an HD business phone would run about $300, he said. And an HD desktop phone probably will get more use, he added.

Then again, customers lately have demanded more mobility, not superior audio, said McGuire. Traditional wireline sounds better than wireless, but “everybody’s moving to wireless,” he said. “They're willing to accept lower quality service for convenience.”