As the VoIP market continues its torrid growth rate, we must
realize that traditional PSTN communications is becoming legacy (read:
yesterday�s) telecom while IP telephony becomes today�s telecom standard. At
some point in the early 1980�s, corporations realized that buying a
fixed-function word processor from a company like Wang made no sense. It
wasn�t expandable and couldn�t grow with them and was limited in feature
set. Similarly, two decades later the traditional PBX is following the same
path towards becoming a relic. Purchasing a traditional PBX is like buying a
cassette-playing walkman instead of an MP3 player. An MP3 player allows you
to do so much more like skip quickly between songs, hold thousands of songs,
and the quality of digital is better than that of analog tape.
This analogy continues into the workplace where a career-ending decision
would be to buy legacy telecom instead of IP telephony, which can do so much
more and will allow you to take advantage of your investment through the
addition of new applications. At the recent Internet Telephony� Conference &
EXPO (February 11�13, 2004 Miami), we assembled a leading panel of experts
to discuss The Future of IP Telephony. The session was an amazing success,
as the participants shared their visions for the future of our industry.
Before the event in Miami, however, I asked the participants a series of
�warm-up� questions to get their creative juices flowing. This also allowed
me to meet our production schedule for this issue, which was going to print
the day the show began. What follows is a selection from among the answers
we received before convening in Miami. For a look at the complete responses,
and to get information about our next event in Long Beach (October 12�14)
please visit our Web site at www.itexpo.com.
Pierce Reid, VP Marketing, Qovia
RT: How do IP telephony systems compare to legacy systems on a cost
basis? Does it make financial sense to move from legacy systems to IP
telephony? And what of the �soft� cost savings (productivity, ease of
use)...? What impact does that have on the decision to adopt new technology?
PR: Cost has long been the rallying cry for VoIP. But costs come in
many shapes and sizes. It definitely makes financial sense for a lot of
enterprises to move to VoIP, not only as their legacy phone systems reach
end of life, but to take advantage of the productivity increases that VoIP
delivers. For enterprises (and this includes departments and branch offices)
that are highly dependant on their phone systems and, especially, for
government agencies, VoIP makes sense immediately. For the rest, as
economies of scale bring the costs down, VoIP will make sense. Currently,
there is probably not a single enterprise out there that isn�t at least
considering VoIP as they look to upgrade their legacy phone systems.
The other thing that has to be taken into consideration is the long-term
cost of owning a VoIP system. Like data networks, VoIP phones don�t just run
themselves. They require the same �care and feeding� that complex data
networks have long required � with the added complexity of the critical
nature of voice. If your e-mail if five seconds late, it is irrelevant. If
your voice packet is 1/10 of a second off, it is noticeable to everyone. As
companies move to VoIP and put the responsibilities for managing the phone
systems into the hands of their IT teams, the cost of reliability � and the
greater costs of lack of reliability � are a key consideration.
RT: What are some of the specific steps the industry needs to take in
order to ensure continued growth and user adoption of IP telephony? What are
some potential pitfalls and how should they be avoided?
PR: Maintaining call quality and network reliability are critical.
Internet telephony didn�t take off in 1995 because it was, essentially, an
unreliable toy for Internet hobbyists who were happy to shout at their PC
screens in order to get some free long distance. But that isn�t enterprise
strength! This time around, the core equipment from key vendors like 3Com,
Cisco, Nortel, Avaya, NEC, and others is up to the task. But VoIP networks
don�t just run themselves and the creation and availability of tools to
manage those networks is key.
The industry is also going to have to manage its relationship with the
regulatory community. So far, it has dodged bullets through the successful
resolution of the Vonage v. Minnesota PUC court case and through Michael
Powell�s FCC declaration that they were giving VoIP room to grow. Treating
VoIP like the Internet is a good thing for the industry right now and we
need the room to grow and establish a foothold without a patchwork of
regulation across the U.S. However, regulation will keep coming up. Unlike
the �traditional� Internet which moved into virgin territory, VoIP is moving
into one of the most regulated areas of American Society:
telecommunications. With Federal, State, Municipal and even Local regulatory
boards covering the phone system, the industry should be prepared to work
with the regulatory agencies to ensure its long-term success. One area that
the industry should pursue: Federal preemption to have VoIP regulated only
at the Federal level, so we don�t have to face a patchwork of legislation.
Remember, government can do things for you� or do things to you. The
industry needs to work with government to make sure we everyone wins.
Barry Zipp, Senior Director,
Intelligent Services, MCI
RT: IP telephony�s market share is increasing. What are your
predictions for continued growth of IP telephony in the Enterprise space?
What about in the service provider space?
BZ: The pace at which IP telephony has developed from both a
technological and end user acceptance standpoint has been remarkable. Much
of the growth has been based on cost savings. However, we expect features
and applications enabled through the convergence of voice and data on a
converged IP infrastructure will further accelerate IP technology expansion.
Applications such as messaging, conferencing, and contact center services
will take on an increased significance for VoIP.
IP contact centers in particular represent a significant market opportunity
in the IP telephony space. Features such as blended media (voice, instant
messaging, e-mail, fax, and video), co-browsing, presence management, and
click-to-talk applications will continue to be the most prominent enhanced
applications. Other applications like network-based call waiting and virtual
second line applications will enable even more enhanced remote agent
capabilities.
Service providers today are faced with a set of formidable challenges: how
to grow revenues and attract new customers while working within reduced
capital budgets. Hosted voice (i.e., IP Centrex or hosted PBX services) will
enable service providers to realize both objectives. There is a huge market
opportunity in hosted voice. Studies in the SMB space have shown that most
companies will outsource their services to a carrier if it enables them to
scale affordably and reduces their need to manage CPE.
Because one size does not fit all, carriers will have to be able to support
both premises-based and hosted solutions, thereby enabling customized
solutions for all size customers. Ultimately, providers that educate,
inform, and provide pragmatic solutions will be most likely to gain the
trust and business of enterprise customers.
RT: How do IP telephony systems compare to legacy systems on a cost
basis? Does it make financial sense to move from legacy systems to IP
telephony? And what of the �soft� cost savings (productivity, ease of
use)...? What impact does that have on the decision to adopt new technology?
BZ: The primary driver for IP Telephony has consistently been cost
savings. Enterprises are realizing savings in transport usage, access,
moves/adds/changes, equipment, and cabling. IP telephony also provides
significant soft cost savings. The technology promotes staffing savings by
combining IT and Telecom staffs. It boosts employee productivity with
enhanced applications such as unified communication management,
collaborative tools, and remote employee applications. Equally important,
the technology enables the enterprise to quickly adapt to changing business
conditions by adding/removing users, quickly modifying auto-attendants,
voice mail platforms etc.
Hosted solutions in particular deliver even greater efficiencies by enabling
enterprises to realize the benefits of next generation features and services
without the hassle and expense of managing CPE. They also provide a more
economical means to connect a distributed workforce with remote agent
capabilities.
Both hard and soft cost savings should be included as part of the
enterprise�s TCO analysis when contemplating an IP telephony deployment.
Chuck Rutledge, VP Marketing,
Quintum Technologies
RT: IP telephony�s market share is increasing. What are your
predictions for continued growth of IP telephony in the Enterprise space?
What about in the service provider space?
CR: The growth in both the enterprise and the service provider space
has just begun. The industry to date has been largely driven by arbitrage
opportunities and those early adopters validating the benefits of converging
voice and data on a single network. Now that these benefits have been proven
and are better understood, we should experience mainstream market growth.
The IP PBX has proven to offer substantial benefits to the enterprise
particularly in the SME market. We will now see larger installations of
IP-based telephony systems with broad deployments across branch offices. We
will see companies not only deploying IP telephony as PBX replacements, but
also expanding their existing voice networks based on VoIP while
simultaneously phasing out the legacy PBX equipment.
In the service provider market we are beginning to see the move from VoIP
being used to support low-cost calling-card applications to mainstream
telephony services. As enterprises are deploying more IP telephony systems
the service providers have the opportunity to add even greater value by
positioning themselves to offer IP-based services and provide off-net VoIP
connectivity. Also, telephony markets around the world are deregulating,
opening the markets for competition. The next generation of telecom
competitors will take be taking advantage of VoIP benefits in deploying
their networks.
RT: How do IP telephony systems compare to legacy systems on a cost
basis? Does it make financial sense to move from legacy systems to IP
telephony? And what of the �soft� cost savings (productivity, ease of use)�?
What impact does that have on the decision to adopt new technology?
CR: IP telephony systems not only offer the efficiencies of a single
network for both voice and data, but they actually cost less � and in some
cases, a lot less. Today�s IP PBX systems are becoming more cost effective
as the technology matures. The call processing intelligence is moving toward
software that will be run on a standard server or softswitch, and
interoperable devices (VoIP gateways, IP phones, session border
controllers�) are becoming competitively available from a variety of
vendors. We will begin to see open source software solutions as well,
offering both low cost and opportunities for innovation. Service provides
can deploy a VoIP POP for a fraction of the cost of a Telco central office
as is evidenced from the proliferation of next-generation service providers.
It is now well understood that IP telephony systems have the advantage of
being managed as part of the data network infrastructure. The need for
telecom specific personnel is substantially reduced or eliminated, providing
a more flexible IT workforce. A VoIP network can centralize much of its
intelligence so the management of the network can also be centralized �
there is no longer a need to have diverse PBXs located around the country
and around the world. A service provider can centralize the network
operations and billing and remotely manage POPs anywhere.
Inevitably, the key driver for IP telephony will be productivity enhancing
applications such as the ability to support remote workers, integration of
voice and data for call center support, on-line feature provisioning, etc.
The choice to deploy an IP telephony system in a greenfield environment is
pretty clear � the advantages of VoIP easily outweigh traditional circuit
switched systems. The more challenging question is what to do when there is
an existing circuit switched system, yet there is a desire to take advantage
of the benefits of IP telephony.
Christopher Labrador,
VP Business Communication Solutions,
Toshiba America Information Systems
RT: IP telephony�s market share is increasing. What are your
predictions for continued growth of IP telephony in the Enterprise space?
What about in the service provider space?
CL: With the economy turning around and enterprises looking to
upgrade their systems, we will see continued growth in IP in the enterprise
space. A primary motivator is the fact that a lot of enterprises were
waiting to upgrade, and now they want the latest technology, which is
clearly IP. As well, IP technologies are maturing, helping to eliminate some
technological shortcomings, and this makes enterprise users more confident
in making the move to IP.
In the service provider space, adoption IP is rapidly increasing. In the
late 1990s/early 2000s, service providers significantly revamped their
physical infrastructure. More of the incumbent service providers are now
moving to IP technology to deliver the seamlessness their users want. We see
service providers making an aggressive move to IP.
Because of these two things, carrier space acceleration and enterprises
upgrading, we expect a move toward an end-to-end IP network. It�s a
wholesale upgrade of the entire communications network.
RT: What are some of the specific steps the industry needs to take in
order to ensure continued growth and user adoption of IP Telephony? What are
some potential pitfalls and how should they be avoided?
CL: To succeed, IP telephony systems must deliver the features and
functionality users expect. Users expect to get what they already have plus
a lot more, but a pitfall of many IP telephone systems today is that they
are delivering subsets of what the users have or expect. IP is, without
question, the future of telephony, but we can�t ignore the richness of the
applications on the voice side. We need to take it along with us as we move
to IP.
You also have to help customers migrate. A strong migration program that
helps customers protect their original investment in telephony is essential
to being successful in upgrading the customer base.
RT: How do IP Telephony systems compare to legacy systems on a cost
basis? Does it make financial sense to move from legacy systems to IP
telephony? And what of the �soft� cost savings (productivity, ease of use)??
What impact does that have on the decision to adopt new technology?
CL: Initial costs for IP telephony systems have been traditionally
higher than legacy systems, but now costs are coming down for IP.
Differentiated IP products are now available at lower costs due to
competitive pressures.
Enterprises can also see that IP systems have a lower total cost of
ownership over the life of the system. Operating costs go down since
administration is easier. For example, moves, adds, and changes costs
virtually disappear since users can simply plug their IP phones into any
Ethernet port and it works right away, requiring only the seconds it takes
for the equipment to register on the network. There�s also the advantage of
toll savings. While the delta between toll bypass savings vs. traditional
long distance tariffs has decreased, there still is a savings.
A big productivity benefit to IP telephony is mobility. Since your phone can
be on your laptop (using a softphone), and you can use an IP phone anywhere
you have a cable or broadband connection, such as at home, your can work
anytime, anywhere. This gives you all your office phone features remotely,
yet you are answering your phone just like you would at work.
IP affords your phone to be more than a phone � it can be dynamic, read the
news, provide alerts, and much more, since it can be tied to applications on
the Internet. XML, HTML, JAVA supported phones let you leverage the Internet
with your telephone without the need for any other processor. Your phone can
literally be a dashboard for your business.
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If you are interested in purchasing
reprints of this article (in either print or HTML format), please visit
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or contact a representative via e-mail at
[email protected] or by phone at
800-290-5460. Contact the editorial director, Greg
Galitzine, with comments or questions about INTERNET TELEPHONY�. E-mail
(addressed to [email protected]) is always welcome. [
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