WorldCom places bet on IP telephony

Embattled telecommunications provider WorldCom Inc. is preparing to roll out a turnkey service based on IP telephony that will enable companies to replace their traditional public switched telephone networks, Computerworld has learned.

According to internal WorldCom documents obtained by Computerworld, the vendor is training its sales force to sell a managed IP telephony service that will run over WorldCom’s frame-relay, Asynchronous Transfer Mode and IP networks. Customers will be given the choice of slowly migrating to a full voice/data/video IP network, or buying something along the lines of an old-style Ma Bell service in which WorldCom will lease all the needed equipment to the user and route all the call traffic.

WorldCom launched WAN support for voice over IP calls in 2001 and added VOIP to LAN desktops earlier this year. It will now combine those services with the ability to make all telephone calls over its data network. This comprehensive IP telephony service will be pitched as a replacement for companies’ traditional circuit-switched networks.

While WorldCom declined to comment about such a service in advance of an official announcement, a source at the company said it’s already selling the service at the enterprise level and the full offering will be released in September.

The timing is interesting, given that WorldCom is embroiled in a financial disaster following revelations that it artificially inflated revenue statements to woo investors. Analysts question whether the vendor can launch and support such a service as it teeters on the brink of bankruptcy.

“I don’t think many people will buy it” while WorldCom’s financial situation is unsettled, said Zeus Kerravala, an analyst at The Yankee Group.

Analyst Kate Gerwig at Current Analysis Inc. in Sterling, Va., agreed, saying customers won’t trust the WorldCom brand for some time. She suggested it would be better to roll out the service after WorldCom pares its operations and rights its financial ship.

David Willis, an analyst at Meta Group Inc., said WorldCom has invested heavily in Session Initiated Protocol technology, which bridges the gap between circuit-switched and packet-based networks, and it has been building toward a full VOIP offering. “It was supposed to be launched in June, but they got distracted,” he said.

The internal documents convey the company’s conviction that the VOIP market is on the verge of large-scale adoption, stating that “circuit-switched networks are now too expensive to operate” and IP-based phone calls will become the norm in the next five years.

The service is designed to work with all handsets and networking gear. Its ultimate goal is to replace traditional telephony systems, eliminating the difference between local and long-distance calls while making applications such as unified messaging part of an enterprise’s core communications infrastructure.

Kerravala cautioned that many users lack the LANs to support VOIP traffic and that many remain doubtful that IP telephony will achieve the sound quality and secure communications of a traditional telephone network.

“There’s a perception of risk associated with it, and I’m not even talking about the WorldCom risk,” Willis said. “It’s a bit premature to expect customers to flock to this type of offering.”

Reporter Marc L. Songini contributed to this story.