Before the Dawn of IP Telephony - Part 23Shock of low-price broadband (June 2001)
These contents translated a serialization article carried by ITPro IP telephony ONLINE published by Nikkei Business Publications, Inc. Jump to the original (Japanese).
Shinji Usuba
General Manager
eSound Venture Unit
Oki Electric Industry Co., Ltd
Developments for fiscal 2001 had started. Many development plans were launched starting with VoIP gateways, but we were forced to review them due to an incident. It was in June 2001 when it occurred.
It was on June 19, 2001. I was shocked by an article that had made it to the front page of The Nikkei Newspaper. It was the rise of a groundbreaking communication service that provides ADSL lines to the consumer market at a fixed rate of 3,000 yen a month. It was as if I was hit on the back of the head. Personally, I welcomed such communication service for a low, fixed price. It was a sign that meant widespread adoption of broadband services in the consumer market. And before we knew it, the talk had spread all over the company.
Development of VoIP gateway using broadband
We could not allow this opportunity to pass. We had been focusing on new businesses using broadband and were waiting for the opportune moment. And overnight, the opportunity suddenly appeared triggered by the drop in ADSL prices. The shift to broadband would accelerate. It would be a major business chance if we could develop a product fully utilizing the technologies cultivated by OKI.
The concept of IP telephony services using broadband lines by telecommunication carriers had existed for years. However, no one guessed that such services would start so soon. Up until then, we figured that voice would be integrated into IP networks after the spread of broadband. But the scenario of broadband and IP telephony disseminating at the same time was becoming more and more a reality. As opposed to our assumptions, there was now a possibility that IP telephony would be provided as a tool for spreading broadband—a "killer application." We couldn't let this business chance pass by.
While such thoughts spun around my head, I was approached by the person in charge of operations with an idea to develop a broadband product equipped with VoIP features that can be used as an indoor broadband device within the year.
Photo 1 : VoIP-TA, a product shipped at the same time as IP stage in 2000
Like described in episode 6 of this series, we have two types of technologies and products in the field of VoIP. One is an approach using VoIP in "intra-office communication," and the other in "inter-office communication." The former refers to VoIP gateway products such as the BV series that were developed with technical weight on guaranteeing stable voice quality in a narrow and unstable bandwidth. The latter refers to IP-PBX systems such as OKI's IPstage aimed at reducing device cost.
In the latter approach, "VoIP-TA" was the closest in terms of conditions demanded in broadband products with a single-channel VoIP adapter already commercialized (photo 1).
Difficulties in terms of cost
During the summer of 2001, our team started the development of a 4-channel corporate gateway as the fourth generation gateway counting from BS1100, the original VoIP gateway. It was the corporate gateway to be released as the successor of BV1250. Then I was approached with the idea of developing a broadband product. It wouldn't be easy, but it was a great opportunity. I quickly gathered the key persons of the team and examined the possibility of realizing this product. The fundamental technologies were already there. Although it was a challenge that involved great suffering, we felt that it was worth a try.
Two walls to overcome
The first was "price." In order to develop and deploy a gateway using broadband of telecommunication carriers, they must be provided at an extremely low price. There was a limit to how much design costs could be cutback. On the other hand, we felt that broadband lines were spreading faster than we anticipated and that we could sell enough in terms of quantity through proposal activities of Sales. If a good amount could be sold, the manufacturing cost could be decreased by mass production as well as discounts on larger volume for parts. The gap between current unit cost and ideal unit cost quickly shrunk, enabling us to see beyond the wall concerning price.
The second was "delivery." Short-term development always caused problems, whether it was design quality or manufacturing. From a developer's point of view, it was desirable to keep the initial lot to a minimum and enter mass production once the quality becomes stable.
Although our team members were highly skilled in the development of VoIP devices, meeting the deadline was difficult when considering the plan including manufacturing. As indicated previously, development of a corporate gateway already in the planning stage cannot simply be aborted. Completing the development of both products seemed almost impossible without a miracle.
The reason why I decided to accept the development challenge, which we knew would cause hardships, was that not one member of the team rejected the idea. Each member felt a special significance in the development of a broadband gateway. I believe members had a burning ambition as engineers to see the development through and to see for themselves the dawn of IP telephony that was beginning to appear on the horizon.
Broadband development project starts
In tandem, a number of related projects were launched other than the model I was in charge of. These include a broadband center device and other indoor devices. When I was certain the phenomenon of voice communication integrating with broadband was not limited to within offices but the consumer market as well, I came to hold a new point of view.
... To be continued
