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This article by Barbara Fox was published in U.S. 1 Newspaper on July 15, 1998. All rights reserved.
IP Telephony Looms
It's pretty amazing when you think about it. Last year, just like they had done 20 years ago, Tom and Mary Evslin started a business together. Their first firm was a mom & pop enterprise that prospered and grew into a medium-sized business. This one, ITXC Corp., promises to explode with growth until it is a gargantuan operation.
ITXC stands for Internet Telephony eXchange Carrier. It started in July in the Evslins' Library Place home, moved to 7,000 square feet at the Commerce Center in North Brunswick, began actual operation in April, and will move its 40-plus current employees to 15,000 square feet at 600 College Road next month (http://www.itxc.com).
It is indeed growing fast, and no wonder. With seed funding from AT&T and $10 million in first-round financing, it aims to do nothing less than set the standards for a new industry. It aims to encircle the globe and build a global telephone network, one city at a time. Such an awesome task is both an engineering challenge and a marketing challenge.
Tom, the CEO, has engineering credentials in spades; he's the one who kick-started AT&T's entry to the Internet, AT&T WorldNet, and he has lined up an impressive array of executives to accomplish the technical goals. But as vice president for marketing and communications, Mary is the front-end person responsible for spurring the growth and for making a complex story simple. ITXC is breaking new ground, and even technical writers need her help to understand the enigmas of this just-developing sector of Internet technology.
Mary Evslin is expert at explaining enigmas, and she will be one of two featured speakers on the "Look Ma, No Hands! Use the Internet without a Computer" panel at the U.S. 1 Computer Showcase on Thursday, July 23, at 5:15 p.m. She joins Michael Wynblatt of Siemens Corporate Research (see accompanying story) to discuss pioneering Internet applications for people who don't have, or who aren't using, computers.
Fortune picked ITXC as its "Cool Company" last September. CTI Magazine gave ITXC the Editor's Choice award last month. Also last month, Telecom Business Magazine listed ITXC as one of the "Top Telecom Companies of the Year." The Red Herring magazine named ITXC Corp. as the private company most likely to benefit from Internet telephony in 1998.
"Internet telephony is the first use of the Internet for people who don't have computers," says Evslin. "Inexpensive calling is the initial benefit and is helping us build an industry. The Internet helps conquer the cost of distance for the human voice just as it does for E-mail and Web browsing."
Internet Service Providers (ISPs) that use ITXC's WWeXchange voice service will be able to support IP (Internet protocol) voice calls from their users' PCs or telephones. The service will provide a complete data and voice communication alternative to AT&T's current network of circuit-switched lines.
This single, seamless IP network with more advanced security will also support different qualities of service level guarantees. Instead of taking one call and then another call on multiple lines, a business on this network could receive its communications through one always-open line. This "persistent connection" would allow firms to use their bandwidth dynamically and take advantage of all sorts of yet-to-be-invented applications.
Established last year with seed funding from AT&T and VocalTec, ITXC is the first to provide strictly wholesale services to the new Internet telephony industry. These infrastructure services include billing, routing, switching, high-quality transport, gateway management/network monitoring, and settlement of IP phone calls for Internet service providers (ISPs) and telephone companies. By connecting the networks of ISPs worldwide, ITXC's WWeXchange Service provides IP connectivity to any location in the United States and many places overseas. It also offers combined IP-PSTN (public switched telephone network) service to every phone in the world.
Speed will increase and costs will drop when new fast packet-switched networks replace old circuit-switched networks. By working with multiple ISP voice services, says industry analyst Jeff Pulver (http://www.pulver.com), ITXC will get out to more customers faster than could a single ISP.
In late spring ITXC harvested an additional $10 million in venture capital financing from six companies to fund the buildout of its domestic IP telephony facilities, further development of its international network, and marketing activities worldwide. The companies are Chase Capital Partners (http://www.chase.com), DS Polaris Ltd., Flatiron Partners (http://www.flatironpartners.com), Intel, Spectrum Equity Investors (http://www.spectrumequity.com) and Vocaltec Communications (http://www.vocaltec.com). The Evslins predict that ITXC will successfully combine telephony and Internet networks in five years. ITXC's WWeXchange service now uses the Internet to provide call termination in many international locations including Moscow, Shanghai, and Sao Paolo. Some calls are routed over the Internet for termination to any phone in the United States and, by combining services with traditional public networks, they can go to any phone anywhere in the world.
ITXC shares traffic with Delta Three's IP telephony network, the largest in the world, and with VIP Calling Network, which has a strong presence in Asia. It has a routing, authorization, and settlement hub in Manhattan, and at that location it uses i-Pass settlement software for back-end billing.
In what is being called "the critical next step in the maturity of IP telephony" ITXC has partnered with two leading vendors of Internet telephony products, VocalTec Communications and Lucent Technologies, to provide multivendor interoperability on WWeXchange. Its first partnership was with VocalTec's Ensemble Architecture, but last month it announced it will also operate Lucent's PacketStar IST-SP, known for its reliable and interchangeable voice and real-time fax.
"Having Lucent gateways ship ITXC-Ready means the operator of the gateway will be able to complete calls anywhere in the world through WWeXchange as soon as that operator installs a single Lucent Gateway," says Evslin. "This is particularly important for traditional telephone companies who perform their initial trials of IP telephony with their own gateways installed in just a few locations, but who still must be able to offer call completion to anywhere."
Mary Evslin escorts a reporter through the maze of offices spanning two buildings at the Commerce Center, off of Route 1 South in North Brunswick. The first clue that this is an international telephone company is that, over each main doorway are four clocks set to New York, Germany, Israel, and Hong Kong time.
Both Internet Service Providers and entrepreneurs who sell prepaid phone cards are potential ITXC clients. They need only to buy a gateway and meet ITXC's quality standards. A complicated chain of events gets triggered by a request for an Internet gateway:
"A team of product planners designs the service offerings and works with the entire office to create the processes that allow them to actually happen," says Evslin. "For example, who takes the call, who test, what are the requirements, what is the process, what software needs to be developed, etc."
These programmers and network designers meet twice a week in a small room, next to Tom Evslin's office. Called the "war room," it has no furniture, just sheets of paper taped to the walls, and it's where they confront their deadlines and summon the firepower to meet them.
Then comes the "purchasers" office, for those who purchase "least cost PSTN routing" and develop elaborate rate tables for IP and PSTN routes. It's the telephony version of arbitrage. "IP calls are our corporate goal," says Evslin. "We currently do more PSTN, but that is going down as we sign up more and more IP termination.
She identifies new gateways and routes with such marketing and PR activities as national and international trade shows and some sparsely distributed display ads. Then there are the media interviews. "I usually spend 45 minutes with them to get them up to speed, then they get Tom for 20 minutes, to ask him specific questions. It works very well," says the woman who -- at her busiest -- seems to have all the time in the world.
Even correspondents from trade journals -- the networking magazines, computer magazines, and Internet magazines -- need considerable handholding in order to "get" the conundrums and implications of this just-developing sector of Internet technology.
Her time-taking has long-term benefits. "Later they come back to me and quote us in individual pieces. We teach them and fill them in. We are the center of the new technology; we see the needs and the challenges from both sides."
Later this year she will give a series of 10 worldwide seminars for potential gateway providers. It's a bold and gutsy move, to go to farflung countries to bring the story, educate the vendors, and sell the slots.
The next set of cubicles is for the telemarketers who qualify the leads. "Marketers make calls to find potential carriers in such exotic places as Kuwait and Bangladesh," she says. "We are looking for locations where the cost of phone service is high and the quality is low. These locations must be international companies that have either customers they already sell calls to (like a telephone company, call-back company, or wireless company) or a company that is used to maintaining servers for 24 hours a day, seven days a week (like a large ISP). They need acceptable credit, they need to be close to the backbone of the Internet, and be able -- financially, technically, and legally -- to get a least a T1 line (24 phone lines).
The sales department negotiates the termination prices that ITXC will pay the providers. If they are also going to originate calls, the salespeople sell them various routes.
If all goes well, the providers sign a contract, and the deployment team takes over. "Deployment works with them, challenged by the language barriers and time differences to get tested and up and going. That sometimes means changing the ISP, getting new telephone carriers, or upgrading their equipment."
Once through deployment, the billable minutes start to flow in both directions. Then a billing team takes over and first-level customer support stands ready. Also involved is a team in the Network Operations Center that oversees the network 24 hours a day, seven days a week. It's a telephone company in miniature. But it's growing so fast, everyone is going at top speed to keep up. At the far end is a mammoth wall map stuck with push pins to show how many gateway companies survived this process and are operating. On this visit the head of the deployment team is embarrassed to tell a reporter that the map doesn't really reflect the company's gateway wealth. They have been so busy annexing gateways that they just haven't been keeping up with the push pins.
Mary Evslin has two traits that are useful to her right now: She is an expert at connecting people with information and she is not afraid of risk. Both came from when she was a Wisconsin teenager, the oldest of seven children, who worked for her father's answering service; she plugged in callers to their doctors, dentists, and vets. But her father's business went bankrupt (he plunged into debt for a new switchboard that malfunctioned), and she also learned that you can survive when you lose your wealth.
"We grew up in a risk tolerant environment," says Evslin. "We knew there was never any guarantee. We had a big house and lost it. There were times when the phone company would come to take the lines out."
She majored in art history at the University of Wisconsin at Marquette, working in the Osterizer blender factory in the summers so she could spend her junior year in Paris. When she couldn't find an art job she went rustic in Vermont and got a job as a bookkeeper for a gas station. Her next door neighbor happened to be the son of a novelist/playwright and a teacher/author, an American history and literature major from Harvard (Class of 1965) who loved programming.
This fellow Tom Evslin was smart (and perhaps by subliminal implication, reliable -- no bum switchboards for him). She went to work for him, married him, and in the 1970s they started both a family and a software company. Now the youngest of their three children is in college, and ITXC is their third computer business.
The first business, Solutions Inc., developed leading mainframe software to connect banks to automated clearing houses and also pioneered the first background fax software for personal computers. The second business, in the 1980s, involved software for Dow Jones News Retrieval. Tom Evslin then spent the next three years with Microsoft, where he was general manager of a division. Meanwhile Mary took a job setting up the paid technical support system for a Seattle-based firm, AttachMate. Four years ago the Evslins moved east to take up AT&T's challenge to jump-start its Internet enterprise.
Evslin plunged into rehabbing her historic Library Place house, a mansion, actually, and she did full-time volunteer work, including serving on the executive committee of the Friends of the Institute for Advanced Study. "She's incredibly enthusiastic and reliable, very smart and committed to her endeavors. She's really efficient, very broadbased in her interests and abilities," says Rachel Gray, associate director of the Institute.
But last July Tom called Mary to say, "Open a bank account, we're starting a business."
"Tom is so entrepreneurial," says Mary Evslin with an appreciative smile. She quotes her husband as saying that, in his previous aentures, his technology was way too early for the market. Not this time. With Internet telephony, ITXC is desperately trying to keep pace with the market.
Francois de Repentigny, an analyst for Forst & Sullivan quoted in an industry newsletter, predicts that global IP telephony traffic will exceed 5 billion minutes per month by the end of 2001, or about 10 percent of the worldwide telephony traffic: "This represents a tremendous opportunity for a company like ITXC."
Andrew Madden, in the Red Herring's "top 10 trends for 1998" list, said in December that Internet protocol (IP) is the great equalizer that will move from carrying text and graphical data like E-mail and Web pages to handling nearly every form of communication. "The Universal Network, the idea of which has beguiled the high-tech community for years, is now imminent," wrote Madden. "The move toward the Universal Network will cause the greatest upheaval and competition in the area of traditional telephone services."
"Bear in mind," warns Madden, "that the movement toward a unified network will be a gradual one. While the telephone companies will develop IP strategies out of necessity, they will also feel compelled to protect their existing circuit-switched telephone network investments."
Soon ITXC will move to 600 College Road -- just across the road from Siemens -- where it will have space for up to 65 employees. "This business will be a huge success. And if it isn't, it will be a huge failure," Mary Evslin confesses. "But our `baby' is out of the house. And we would have time to get other jobs to accumulate our pensions. We can always sell the house."
-- Barbara Fox
This page is published by PrincetonInfo.com -- the web site for U.S. 1 Newspaper in Princeton, New Jersey.