Migrating From Circuit To Packet: The
Business Case For IP Telephony
BY CHARLES HENDERSON
Flashback to February 2000. The Dow Jones and NASDAQ stock indexes were
at all time highs, as were the stock values of every publicly traded telecom
company. Competitive carriers and the looming Internet telephony revolution
were driving long distance rates down to single-digit-per-minute rates. The
dot com euphoria spread to the staid world of corporate telecom in the form
of a magical new technology that would make the PBX obsolete. Voice over IP
would create returns on investment so compelling that every corporation
would begin replacing their traditional telephony systems. Indeed,
standards-based technologies promised to make the need for corporate
telephony systems disappear, along with much of their cost.
Telecom manufacturers were pouring millions of dollars into creating
Voice over IP (VoIP) systems to stave off the implosion of their installed
bases with their lucrative service contracts. They were also pouring money
into marketing campaigns designed to convince corporate telecom buyers that
their products werenï¿½t PBXï¿½s after all but Internet-ready converged
Oh, how the telecom world has changed in three short years. The dot comï¿½s
are gone; except for the few who had old world (read profit-making) business
models. The Dow and NASDAQ are beginning to show life after flatlining for
almost two years. Corporate earnings in the telecom sector are beginning to
crawl off the bottom. But, the phones on most peopleï¿½s desks are the same as
they were three years ago; so is the technology in the basement that runs
them. PBX is no longer an anathema and even the IP-only technology vendors
are promoting a migratory approach to convergence.
The state of the industry in 2003 is one of stark reality. There is no
magic. And real, achievable return on investment analysis is driving
technology acquisitions. For telecom departments this means that the
existing infrastructure that is delivering high-quality, highly reliable,
very secure communications at predictable costs will continue to serve the
needs of most corporate users for its normal lifetime. As new sites are
added to the network and as systems are replaced or upgraded, IP-based
technologies will be one of the tools considered for the job. And over time,
as data networks migrate to full real-time quality of service capabilities
the trend will be to implement IP.
The challenge for the telecom manager contemplating the future is when,
where, why, and how are IP technologies part of the solution. The answer is,
as always, in the why.
VOICE AND DATA NETWORKS ARE BOTH UNIQUE
For a long time the conventional wisdom, from the data networking point
of view was that data was hard and voice was easy. Of course, the voice
networking point of view was exactly the opposite and both are right. And
both are wrong.
The reality is, that despite the methodology for transmitting the
payload, the knowledge required to deliver high-quality voice networks is
distinct from that required to deliver high-quality data networks. While the
mission of the transmission network is similar, the mission of the
end-points and the operational environments are unique. Thus the skills
required to deliver the functionality required by the end-user does not
converge just because the packets are intermingled.
VOICE AND DATA NETWORKS MUST BOTH EVOLVE
Many of us in the telephony world assumed that corporate data networks
were well defined, well managed and properly implemented. What we found was
a highly dynamic environment with widely differing options for achieving
similar ends. It is an environment so dynamic that one implementation was
not complete before its architectural replacement was arriving on the
loading dock. And the environment is so dynamic that applications,
protocols, and even user behavior seemingly changed by the second.
Early assumptions that only the voice components had to change to achieve
convergence were naive. The presence of voice in the network places
architectural and administrative requirements on it that cannot be
compromised or the characteristics of the voice application will not meet
Understanding the why really boils down to understanding the
characteristics that telephone systems have traditionally delivered and what
new expectations users have that are changing those characteristics.
Telephony users have a common set of expectations of telephone systems based
on many years of experience: voice quality, reliability, feature set,
lifeline services, user integration, and security.
These characteristics were adequately addressed with the existing PBX
technology for many years and were quite stable. But new characteristics
have begun to be demanded by consumers including: transport integration,
standards adherence, open systems, and integrated applications. These
emerging demands from consumers can create a new compelling reason to move
to VoIP as long as the real benefits exceed the cost enough to justify the
Five Key Evaluation Criteria
In developing a business case for any large telephony acquisition the
first and most important step is to develop a set of criteria that the
project must meet in order to proceed. Meeting these criteria will generate
cost in the project but also, aside from operational cost savings, they will
generate all of the benefits to justify the project. In addition to the
financial criteria established by every organization, here are five key
areas where requirements must be understood and met by the project in order
to be acceptable for implementation.
Your constituents are your customers, and often your customerï¿½s customer.
A new system must not only deliver similar functionality to the existing
system, but also meet additional needs to create quantifiable benefits that
can offset costs. What are the minimum expectations? Are there occasional or
seasonal needs to be met? Is telecommunications a mission critical tool of
the group? How do constituent groups interact? Can this be improved? Do
people need access to service while traveling or working from home?
Reliability and Security
Reliability is now defined as more than just high uptime. Organizations
are requiring non-stop telephone service even in the face of catastrophic
disasters. Disaster planning in most organizations has taken on significant
new meaning in the past year. Packetized voice provides opportunities to
provide enhanced disaster tolerance but it also creates challenges to
maintaining the reliability and resilience as the networks and organizations
evolve. Reliability in the twenty-first century also requires careful
coordination between telecom departments and their carriers. Careful
consideration and planning needs to take place to identify how calls will be
routed in various outage scenarios.
Placing voice on the corporate data network creates openings for
eavesdropping, virus attacks, and denial of service attacks that did not
exist before. One of the strongest arguments for a migratory approach is the
ability to maintain sensitive communications and operations in the
circuit-switched arena while the packet capabilities catch up.
This involves both the PBX and the data network. Is the data network
ready for real-time with Ethernet switches throughout the network and
routers only where absolutely necessary? Do all of the network components
have uninterruptible power at all locations with adequate battery capacity
for the network and all of the phones? Remember, fully 50 percent of a PBXï¿½s
power consumption is frequently directed to the phones. Are there other high
demand applications that may compete for resources with the telephony
Is the solution flexible to meet your needs or do you have to be flexible
to meet the solutionï¿½s needs? Does the solution meet your capacity needs
today and expected growth for the next 5-10 years? Does the solution have a
simple and economic solution for smaller or remote sites? Does the vendor
have a strong track record in your industry?
IP Telephony Adaptability
Does the solution provide an IP telephony solution that is equivalent to
current circuit-switched features and functionality? Is the IP telephony an
economic choice (real ROI)? Will terminal devices be supported for the
expected life of the system? Does the solution provide you with a migration
path that can mix circuit and packet switched voice? How will this IP
telephony solution improve your current service to your constituents?
The State-Of-The-Art In Action
Despite the increased rigor for justification of new telecom projects
organizations are finding unique ways to leverage their investments in IP
networks to improve service, reduce costs, and protect operations.
A large mid-western state university established a goal of unifying all
of its constituents across the metropolitan area where it is located.
Initially, this meant replacing three independently operated PBX systems
with a single distributed system to serve the main campuses and hospital
complex. Due to the high availability and security requirements,
particularly at the hospital complex, the campus chose to use available
fiber and copper to transport the voice but use a secure IP network to
transport all of the control signals. Now that this initial phase is
complete, planning is underway to begin rolling out a variety of VoIP
technologies including IP telephones to integrate 40 additional locations
served by Centrex and key systems, which will use the IP network for both
voice and control functions.
A major utility provider on the eastern seaboard had established multiple
call centers to prevent a hurricane or other natural disaster from disabling
customer service in an emergency. However, coordination between the centers
was difficult. By implementing a single distributed call center to serve all
of the callers and using the IP network to manage the distribution of calls
and network control they were able to increase both disaster tolerance and
An eastern industrial manufacturing company united all of its locations
near its headquarters. By using the existing SONET infrastructure, many
voice-only facilities were removed or converted for shared use and
significantly greater inter-building capacity was realized. This company
plans to begin migrating many of their smaller locations around the world to
use IP for both voice and telephones in order to bring greater integration
and higher levels of service to its employees. The architecture of the SONET
rings provided for new levels of redundancy in the voice network than were
possible with the previous implementation.
In conclusion, IP telephony offers great opportunities for companies
wanting to upgrade and expand their systems. But any plans for change are
being driven by real, achievable return on investment analysis in todayï¿½s
economic climate. To get the best possible system for your organization, you
ï¿½ Clearly understand your constituent needs today and anticipated needs
for next 5ï¿½10 years.
ï¿½ Confirm that your telephony solution can meet your capacity, growth,
and architecture needs.
ï¿½ Use an independent third party to perform a network assessment to
understand performance issues and possible pitfalls.
ï¿½ Demand Achievable ROI.
Charles Henderson is Director of Product Management at
EADS Telecom. Founded in 1979,
EADS Telecom North America has played a pivotal role in every communications
revolutionï¿½from analog to digital, ISDN, ATM, IP and beyondï¿½designing the
systems that helped make these transitions possible. Today, EADS Telecom
North Americaï¿½s Connexity solutions include voice infrastructure, contact
center solutions, secure digital radio communications and secure networks.
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