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August 31, 2005

Microsoft edges nearer to full VoIP

Microsoft has acquired VoIP software developer Teleo, taking another step in the direction of offering full VoIP. Initially Microsoft will look to include VoIP in MSN Messenger, but as Rik Turner explains, the real interest lies in whether the firm will develop an 'any-to-any' VoIP service based around the SIP standard.

By CBR Staff Writer

The privately held ISV from San Francisco, California, was founded in 2003 and had just completed a beta test for its eponymous service, which enables calls to other PCs with the same client software, but also to regular PSTN phones, fixed or mobile.

What most excited Microsoft about it and led to its acquiring it for inclusion within its MSN Messenger offering, were the integrations it has with Outlook and Internet Explorer, according to Will Collins, global Messenger product manager at the Redmond, Washington-based software giant.

They enable click-to-call from your Outlook contacts, while within IE you can do an MSN search, find the website for a store, then click on its phone number and call using Teleo, he said.

Now that’s all compelling stuff and showed obvious synergies with what Microsoft was already doing in VoIP. On the business user side, for instance, it plans click-to-call from Outlook within Live Communications Server, its real-time collaboration suite. Equally, MSN itself has been offering PC-to-PC calling over VoIP for some time, so adding all the other Microsoft-related calling is clearly a plus.

However, it is the PC-to-PSTN, aka ‘PSTN breakout’ in VoIP parlance, that has got pulses racing in the industry. Mr Collins admitted that calling to regular phones would be something we’d like to do in the future, adding that it would require partners, such as network operators, for the last mile. We’re not going to be a telephone company, he was quick to add.

MSN will clearly have to partner with telcos in order for them to terminate calls from its Teleo users as and when it moves to offer PSTN breakout, just as Skype does today. The trick will then be to get as much of the call as possible carried across an IP network so that it is literally only the last mile that will go over a circuit-switched one, in order to keep down cost. That will then enable it to offer the equivalent to a SkypeOut service, which Skype users sign up to (and pay for) in order to get breakout services.

Beyond that, of course, there will need to be an MSN equivalent of SkypeIn, whereby the Teleo user would be able to acquire a number associated to his or her URI (the Uniform Resource Identifier, the URL of the VoIP world) for calls from PSTN phones.

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This will mean getting phone numbers from national regulators, but shouldn’t prove an insurmountable obstacle. If Skype and Vonage can do it, Microsoft should certainly be up to the task.

The offering will be part of MSN and, as such, will be a consumer-oriented service rather than one for enterprises, where Microsoft pitches LCS, of course. Still, as Mr Collins acknowledged, the Teleo acquisition also brings Microsoft expertise to build our VoIP team, and the integrations with Outlook and IE will surely have knock-on effects in the speed with which the company is able to integrate VoIP into its other multifarious apps.

For now, however, the task in hand is integrating the Teleo client into the MSN Messenger software, used by some 170 million people around the world. Mr Collins declined to go into huge amounts of detail, but he did say the company planned to have some form of VoIP enhancements to MSN Messenger by the end of this calendar year.

What will be interesting, beyond offering Teleo-enabled MSN Messenger clients to talk to each other or to regular PSTN phones, will be to see whether Microsoft will one day enable them to talk to other VoIP clients.

The company is a leading proponent of SIP, the standard for VoIP telephony which holds the promise, at least, of any-to-any calls, providing both clients are SIP-compliant. If the evidence of its instant messaging offering is anything to go by, however, it may prefer to keep all those MSN Messenger users within a walled garden, talking to each other and PSTN phones, but not to other VoIP clients.

In that case, calls to Vonage numbers, to cite another SIP-compliant company, would have to be routed over the regular PSTN network, thereby somewhat negating the cost-saving aspect of VoIP, albeit still enabling calling from your PC. Calls to Skype numbers will in any case have to go over the regular phone network as that vendor uses a proprietary protocol rather than SIP.

Should Microsoft opt to extend its walled garden approach from IM to VoIP, it will be market pressure alone that will nudge it toward interoperability.

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