June 2001
 

In response to Jim Machi�s LAN Telephony: Not Just The IP-PBX (April 2001)

Dear Mr. Machi:
The hybrid value proposition is flawed. Merely adding an IP gateway to a legacy PBX does not reduce the installation, support, or maintenance expense of the typical legacy PBX since the vendor van is still there and the meter is running. The TDM bus is a dinosaur at the heart of the legacy PBX network, and until you remove it, the TCO remains inordinately high because maintenance is still site-based.

IP means much more than the features or incremental bells and whistles, it means more than toll bypass. As always, it is about massive TCO reductions driven by new multi-site management capabilities. The cost of IP enabling a legacy PBX can easily cost as much as a complete IP voice solution. Over time that IP voice solution will rack up massive TCO savings.

The legacy PBX business model, with or without gateways, etc., is still based on the Trojan Horse strategy: Sell the system cheap, and then own the customer from the inside. Until the issue of complexity is addressed to the degree that enterprises can self manage their voice networks, they will pay dearly for their dependence on vendor support. The �Hybrid Horse� is that same Trojan Horse: The highly trained service troops are still inside the walls and ready to take control.

- Greg Ness
Shoreline Communications

Jim Machi Responds:

Greg,
Thanks for your response. In terms of whether or not you think the hybrid (IP Telephony and traditional telephony) PBX is flawed architecturally, the potential customers that I�ve talked to like the concept since they don�t have to jump 100 percent into the IP Telephony pool. As you point out, a pure IP PBX has definite advantages.

I wanted to point out the advantages of a hybrid PBX for some potential deployment scenarios. Architecturally, I also don�t think a hybrid PBX is simply adding an IP gateway to a legacy PBX. To me, a hybrid PBX needs to be architecturally designed as such, or, as you point out, there would be problems. An hybrid PBX would also allow for IP phones.

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In response to Laura Guevin�s Points of Presence column from April 20, 2001:

Hi Laura,
I appreciate your coverage on the Indian Telecommunication Policy and am impressed with your awareness and knowledge in reporting the state of affairs as well as the snail�s pace at which progress is being made in liberalizing India�s restrictive policies.

What India continues to experience are the vestiges of the British colonization, wherein the current bureaucrats have taken on the feudal role that the British played more than half a century ago. As a result, we have a situation that perpetuates the interests of the bureaucrats and the associated government organizations at the expense of progress and the consumer. This situation accounts for the government legitimizing the monopolies they run and the illegal status of VoIP. This perpetuation protects the monopoly�s revenue stream, does not increase their losses, and protects their jobs. It is essentially no different from the British policy of forbidding locals to make salt, the policy that Ghandi protested in the Salt March of 1930. (Editor�s Note: The British government had made it illegal for Indians to make their own salt. Many believed that this law symbolized a British-forced dependence of Indians on the British for the basics of life, just as they depend on salt. After 240 miles and 24 days of marching, the original 78 marchers had increased to thousands. For weeks after, thousands were arrested, beaten, and killed, but no one fought back.) As a result, in today�s context, these companies, like VSNL, who constitute modern day, legitimized mafias that are able to impose policies that protect themselves, allow the government to lumber along at their slow pace and, in essence, hold the consumer hostage.

These restrictive policies also promote corruption, which makes bribery a way of business in India. Feudalism in India is still alive and well, and continues to hamper progress.

Thank you again for the excellent reporting.

� Raj Shastri

Hi Laura,
I�m a telecom analyst at a sell-side research firm in New York, and I enjoy reading your articles. What impact do you expect India�s decision to have on Internet telephony carriers and equipment manufacturers in the US (NTOP, ITXC, Inter-Tel.net/Cirilium, IBAS, DDDC, GRIC, IDTC, CLRN)? Do you think that the Internet is reliable and robust enough to make a full changeover to VoIP? I�d appreciate your insight on the matter.

Thanks,
- Michael Coady

Laura Responds:

Hi Michael,
I think equipment manufacturers have already realized the benefits Internet telephony has to offer in countries like India. I know Cisco has made a large announcement earlier this year about investing $150 million in India�s Internet infrastructure, and will open a research and development center there for testing VoIP, among other things. Other manufacturers like Arelnet have also announced partnership plays in India. And Clarent announced a partnership today (4/20) with D-Link to focus on VoIP in India. So I think the announcement has already made a huge impact on the equipment side.

As for carriers like ITXC, GRIC, and iBasis, India offers an opportunity for them to legally broaden their coverage and establish points of presence there. I think managed IP networks like those of iBasis, which offers service level agreements to customers and partners, will be the winners in that space and will have the reliability and scalability to endure.

I hope that this opinion helps you gain some insight into the changing VoIP climate in India. Thank you for your feedback.

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