AOL Closing in on Video VoIP Launch

AOL is jumping into a video VoIP calling service, internetnews.com has learned.

By Erin Joyce | Posted Sep 7, 2005
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UPDATED: After years of endless speculation in the industry about plans for video over its vast Instant Messaging networks, AOL is closing in on its own splashy video Voice over IP calling service, internetnews.com has learned.

According to a source familiar with the offering, AOL is about two weeks away from moving the video calling product into wider public use.

The service, expected to get a major airing at the upcoming VON VoIP Conference in Boston the week of Sept. 19, will be aimed at its Instant Messaging and ICQ base of users, the source added.

Details on pricing were sketchy. But it is expected to be a mix of paid services and free, though free services wouldn't be as extensive. The idea is to get users of its popular IM clients to consider paying up for enhanced calling and messaging services involving video.

If it catches on, the service could give AOL an opportunity to monetize its base of free ICQ and AIM users at a time when its dial-up customers are defecting to broadband providers via DSL or cable modems.

AOL pegs its U.S. base of AIM users at over 41.6 million. According to research firm comScore, in July 2005 it counted about 30 million unique visitors for AIM, and pegged MSN's Messenger base at 25.9 million unique users, up 11 percent from the year before. Yahoo Messenger is in the third place in comScore's numbers with 25.6 million users, up about 16 percent from last year's tally.

An AOL spokeswoman declined comment but said the company's Triton beta offers enhanced Voice over IM and Video over IM components.

AOL's Triton Beta 0.15 includes a feature called "Call Log" that evidently enables you to see your VOIP calling logs. This leads to a series of Web pages in the totaltalk.com domain. One screen asks users to "Sign in here to access your voicemail, call logs, contacts, settings and more. Add this page to your Favorites/Bookmarks so you can come back often."

However, AOL has been offering VoIP in Canada -- through totaltalk.ca -- since June.

Adding video to its current VoIP offerings appears to be the next obvious move for AOL, even though it was unclear how this would expand on AIM's current support for its feature called Live Video IM, which already enables real-time PC-to-PC calls.

According to the source, AOL's video calling product is built on three components. One involves a SIP-based softphone product provided by Pingtel, a maker of IP PBX software. Pingtel calls its softphone "the world's first enterprise-grade open source softphone for computer desktops and laptops."

The second component is to be provided by Global IP Sound, a provider of networking software that eases Internet-based call quality problems, such as jitter, packet loss, clock-drift, acoustic and network echo. The video compression codecs used in the calling feature are expected to be provided by On2 Technologies , a maker of compression software.

Pingtel and On2 declined to comment for the story.

Although Global IP Sound also declined to comment, it is already on record about its relationship with AOL. In a June 30, 2005, filing with the Securities and Exchange Commission, Global IP Sound said it signed an OEM deal with AOL. "The contract includes Global IP Sound's VoiceEngine and VoiceEngine Multimedia solutions."

GIPS already counts VoIP darlings Skype and Google Talk as customers. Skype, which had planned to launch a wider public beta of its own video over VoIP service last week, has now delayed that launch until later this fall, according to a Skype spokeswoman. The service is expected to be free when it does launch.

Although Google has only recently launched its own IM product called Google Talk, the involvement of Global IP Sound in the offering is yet another signal that Google is also positioning its IM platform for a possible video-calling component in the future.

Video calling over Instant Messaging networks has long been a goal of every IM platform provider. The breathtaking speed with which online users have embraced online chat and the peering nature of presence-based chat easily positions an IM platform for a video component.

AOL is also expected to license the video-calling platform to third-party providers interested in adding the video calling component to their platforms.

But whether it could get customers -- consumers or business users for video-conferencing services -- to pay up is the question. "It's definitely an arms race in communications, but I'm not sure there's huge demand for this kind of stuff," said David Card, a media analyst with Jupiter Research (Jupiter Research and internetnews.com are owned by the same parent company).

"AIM is a great platform and one of the places where AOL is the clear leader," he added. "But I don't see a huge demand for video conferencing. The only place you could charge for it would be with professionals."

The service is the latest among a flurry of Voice over IP maneuvers and Video IM buzz getting louder by the day. The most recent move came from Microsoft, which bought VoIP player Teleo, a San Francisco-based provider of PSTN termination and click-to-call functionality, a popular feature with its collaboration offerings.

That's in addition to MSN's full-screen Video over IM capabilitythat it recently improved in version 7.5.

Last June, Yahoo jumped into the fray when it acquired VoIP provider Dialpad Communications. Yahoo is planning to use the voice platform across its portal network, as well as in its instant messaging application. Like Microsoft's purchase of Teleo, Dialpad also features PSTN calling features that let users call over the Internet or place a call to traditional landlines and mobile phones.

Keith Nissen, senior analyst with research firm In-Stat MDR, said thanks to advances with video compression, video is ready for Internet phone calls. Also, chipsets have become so cheap that they can be incorporated into relatively inexpensive mobile phones, for example.

"From that perspective, mobile operators are looking at video streaming as a means to add to their services. There's no reason why ISPs cannot do the same. Skype, Vonage are coming out with their own branded wireless phones. If cellular operators can offer video, why can't they?"

Like Jupiter's Card, Nissen is also skeptical that the offering will catch fire with consumers. It's not like anyone's clamoring for video calling.

"But maybe where you have family members living and working in another country, there would be a market for video and voice integrated services from that perspective," Nissen told internetnews.com.

That said, there's no stopping the arrival of video communications, he added. Take the gaming world. Microsoft's xBox game cube offers VoIP with its online gaming features.

"I always know when my son is gaming late at night when I hear him using the voice features to communicate with his fellow players. VoIP is now part of that experience. IP-TV will be offering new communications services, and integrating voice," Nissen added.

"There's a lot of overlap between video and IM. It makes sense that it would become an add-on capability. Video will be incorporated into a lot and lot of services, everything from entertainment to traditional voice calls to your data communications."

Updates prior version to correct spelling of Teleo

Colin Haley of internetnews.com's Boston bureau and Chris Saunders, managing editor of Jupitermedia's SysOpt.com, contributed to this story. <

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