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October 2008 | Volume 11 / Number 10
Feature Story

Making the Business Case for IP Communications

By: Richard “Zippy” Grigonis

The business world finally gets it. IP communications in all its forms — voice, video, email, instant messaging, etc. — can actually save money, increase productivity and improve customer satisfaction. That’s true whether you’re talking about customer premise equipment (IP PBXs) or hosted solutions. But just about everybody continues to phase in IP gradually, stretching out their investment in legacy TDM technology.

A Yankee Group study demonstrated that VoIP systems were about 22 percent less expensive to run that older circuit-switched systems. Moreover, Cisco (News - Alert) claims that installation costs for new systems have dropped by 40 percent to 60 percent because a company need now rely merely on a single IP infrastructure instead of both packet data and TDM networks.

Furthermore, a study conducted by Sage Research for Cisco showed that when IP is adopted by companies in their contact centers, 74 percent reported generating an additional $5000 or more per month per sales agent, nearly 50 percent reported agents handled an average of 30 or more additional calls per day, 67 percent reported being able to assist an additional ten or more customers per day, and 91 percent reported completion of an additional 10 or more outbound calls per day, per agent.

Sage Research also found an average reduction of 30 percent in in-house conferencing and $1700 monthly on travel avoidance by using rich-media conferencing, with unified communications-enabled employees saving an average of 55 minutes per day.

The march to IP adoption has been witnessed in some unexpected places. For example, take Exalt (News - Alert) Communications, which supplies next-gen wireless backhaul systems for service providers and enterprises worldwide. Exalt’s advanced carrier class, spectrally efficient, and high capacity microwave radio systems are designed to alleviate bottlenecks in last mile, middle mile, and first mile network segments.

Exalt’s CEO, Amir Zoufonoun, says, “We now have over 350 customers, many of whom are enterprise customers in various segments. We see an interesting trend across the board in all segments. Regardless of geography and type of organization — even service providers — there has been a definite trend toward using IP. We’re dealing with mining companies, railroads, power companies, rural power companies, education, healthcare and all sorts of other verticals. Literally everybody, without exception, is on the path of transitioning from TDM to IP. Everybody wants to move to IP and do the transition as fast as they can. At the same time, they say they would like to get the maximum usage out of their legacy equipment and previous investments in the TDM infrastructure. So they would like to run these things in parallel if at all possible. Obviously, the more they have invested in TDM technology, the stronger is the case for keeping the equipment around for as long as possible. This would include large users who own private networks and have a lot of TDM-based equipment.”

“What’s interesting is that when these organizations add IP, they find themselves asking for a great deal more bandwidth,” says Zoufonoun. “They want hundreds of megabits per second at every node, as opposed to a traditional solution such as a couple of T-1s. That’s an interesting combination, and it means that you need sophisticated technologies to be able to handle it, particularly on the transport side. It’s not easy to suddenly upgrade from one or two megabits per second to 200, 300 or more Mbps, which is the ‘sweet spot’ right now when it comes to IP connectivity.”

“So, everybody wants IP and everybody wants more bandwidth along with it,” says Zoufonoun. “That’s a very interesting combination for us at Exalt Communications, because that’s exactly what we saw happening in our ‘crystal ball’ four years ago — that the world was going to experience this transition, and that the need for bandwidth would definitely increase from a nodal perspective. At the time we felt that many incumbent carriers didn’t see that trend developing, and that we would have an ‘edge’. As it turns out, that is definitely the case, both with our existing customer base and prospects who contact us. And of course, over the next five to ten years, we will see a demand for TDM support. That’s why Exalt offers native TDM and native IP in every box that we ship. The customer can decide, under software control, how much bandwidth they would like to allocate to each one of their transport mechanisms. As they retire their TDM equipment, companies can shift the bandwidth over to IP.”

Zoufonoun adds, “The other innovation that helps in this case is that IP has an asymmetrical nature, as opposed to symmetrical TDM-based traffic. With Exalt we have asymmetrical transmission built-in, and the customer can allocate as they wish the ‘lanes of the highway’, if you will, depending on the type of traffic or its direction. If you have a lot of video content, for example, it makes sense that one direction has a lot more bandwidth allocated than the other. That’s certainly the case with government applications, where you encounter Homeland Security-related activities, and crime ‘eye’ applications, where you have very high bandwidth camera clusters, and bandwidth consumption can be anywhere from 200 to 500 Mbps per cluster, which you’d like to direct back to the data center/control center. Hospital systems also use asymmetrical transport, where large X-ray files are sent from radiology labs and by law can’t be compressed. Asymmetrical transport enables the customer to use bandwidth a lot more efficiently. It’s the same with downloads from a website over a carrier or file transfers.”

“So, we see these trends of IP, increased bandwidth and asymmetrical traffic over the next five to ten years,” says Zoufonoun. “We see these trends even in rural areas both in and outside of America.”

Rather than making a case for IP, many major carriers are in fact simply reacting to this one-two punch of growing customer demand for IP communications and additional bandwidth by re-engineering their infrastructures with softswitches, session border controllers, and other devices in an effort to make their networks “VoIP friendly”. For example, Level 3, a leading international provider of fiber-based communications services, enables its customers to drive adoption of VoIP through speed-to-market, strategic partnerships, and network footprint and reach. Level 3’s network is VoIP feature-friendly, enabling customers to innovate and offer different and new applications which drive end-user demand.

Advanced Tools and Building Blocks “Speed the IP Plow”

One way to help feed demand for IP communications is to make it easy to develop enticing IP applications and services. Indeed, there has been increased sales of such innovative tools. Some are low-level programming in nature, others are higher-level “building blocks” used to implement IP strategies of greater scope.

In the latter category, take, for example, Aculab (News - Alert)’s ApplianX product line, based on this U.K. company’s well-known Prosody X-enabling technology. ApplianX encompasses a range of deployment-ready devices purpose-built for use in various areas of the telecom infrastructure, such as enterprises, data centers and service providers. ApplianX products are manufactured in the U.K. and available globally through a network of distribution and value added partners.

Whereas the ApplianX IP Gateway (News - Alert) acts as a SIP-to-TDM gateway, which can easily be configured as a DPNSS Gateway, the ApplianX Gateway for OCS 2007 has been tailored so that end users can take the most advantage of Microsoft Unified Communications (News - Alert) in a mixed IP and TDM environment. Other incarnations of the ApplianX include the ApplianX DPNSS-to-Q.SIG Gateway, the ApplianX SIP Trunking Gateway, the ApplianX 3G Video Gateway and the ApplianX SS7 Signaling Node.

Alan Pound (News - Alert), Managing Director, Aculab, says, “The launch of the ApplianX range of products has been extremely well received. The ApplianX IP Gateway and ApplianX Gateway for Microsoft (News - Alert) Office Communications Server 2007 have both created much interest and demand in their respective target markets. The business case for both IP and our products are quite clear-cut and understood, which explains their success.”

IP and TDM, Now and Forever

Part of the business case for IP is that organizations can often phase-in IP technology gradually. That means that vendors must offer some remarkable flexible products, such as the Iwatsu Enterprise Communications (News - Alert) Server and Enterprise Suite from Iwatsu Voice Networks (IVN), a subsidiary company of Tokyo-based Iwatsu Electric that provides advanced business communications solutions to small and medium-sized business (SMBs).

The Iwatsu (News - Alert) Enterprise Communications Server’s QuadFusion Technology manages to fuse into one platform all four of today’s dominant forms of communication and their protocols: SIP, VoIP, TDM, and H.323. They can be used alone or in combination, thus making the Iwatsu Enterprise an extremely versatile system. It also can act as a true media bridge gateway that converges and transmits both voice and data traffic. Additionally, its modular design enables small companies to expand to 1024 ports. There are various add-on features and applications, and the Iwatsu ECS supports peer-to-peer communications, enabling IP phones to talk to each other directly rather than “trombone” out and back.

As for the Iwatsu Enterprise Suite, it provides inexpensive call processing, unified communications, speech recognition, call reporting, in-building wireless, campus networking and text-to-speech applications favored by Fortune 1000 companies.

In the case of ShoreTel (News - Alert), its ability to deal with legacy equipment was a boon to Design Within Reach, a quality furniture designer. During a phase where the company was growing at 40 percent (20 new stores) a year, and the company’s IT group had to manage the Nortel (News - Alert) voicemail and phone systems at each location. After some study, Design Within Reach adopted a ShoreTel system, which required no outside technical support and less wiring than the Nortel system, and could be managed from a centralized, web-based administration. Because of the ability of the ShoreTel system to interface with legacy phone. The compatibility with the legacy Nortel equipment (voicemail can be passed and calls transferred between the two systems) meant that Design Within Reach could deploy the new ShoreTel system at its own pace.

An Open-and-Shut Case

So, whether it’s the elimination of “phone tag (News - Alert)” or the appearance of new and productive forms of worker collaboration, the business case for IP communications has never been stronger.

Richard “Zippy” Grigonis is Executive Editor of TMC (News - Alert)’s IP Communications Group.


The following companies were mentioned in this article:

Aculab (

Cisco Systems (News - Alert) (

Exalt Communications (

Iwatsu Voice Networks (

Level 3 (

ShoreTel (

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