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Feature Article
April 2004

Passing The Buck To IP Billing


Companies that make the move to IP telephony can find tremendous efficiencies and are able to exploit new telephony services. As part of the process, mature, sophisticated, and accurate Private Branch Exchange (PBX) call tracking and accounting systems must also be transitioned. Over the years, add-on technologies have been developed for PBXs that do a good job of collecting and reporting both intra-company and carrier call data. Consequently, related business decisions must be made when moving to IP telephony.

There are essentially three approaches to managing corporate telephony systems: do nothing � stay with the existing PBX and call management systems; execute a hard cutover to VoIP; or, the most practical approach, adopt a hybrid strategy where the PBX systems are gradually replaced by IP telephony systems on a department, building, or campus basis. The last approach is the most logical from a business standpoint but it also presents the greatest challenges from a call management standpoint.


PBX manufacturers have long provided for the collection of call record information and voice IP system providers have implemented similar services in their equipment. Both PBXs and IP telephony servers collect call records for line-level billing so that the data can be used to generate detailed call costing and allocation reports. There are, however, some differences in the level of detail provided, and the telephony management services included, in VoIP systems. In some cases, third-party providers bridge the gap with specialized products.

The PBX does not typically have any resident call record memory so the data is usually sent via a serial data port in a proprietary format to be stored in an external memory device, a so-called serial buffer box. The buffer box makes the data available to a call management system. The VoIP switch accomplishes the same data collection function internally. It saves call records to an internal database where it is available for access by the call management system in a standards-based format, such as Structured Query Language (SQL).

If an organization jumps directly from PBX to VoIP, the call reporting, accounting and management system transition can be relatively simple. The new communications management system is specified with the new VoIP system and, when the changeover is made, the management system takes over. The server collects call record data and the communications management system queries the database using one of a number of standard protocols, such as File Transfer Protocol (FTP) or Extensible Markup Language (XML).

In a hybrid environment, however, two or more call collection systems must coexist � the traditional environment and the IP system. If the installed PBX systems have proprietary, totally integrated or inflexible call management systems, administrators face the challenge of cobbling together data collected in disparate formats so it can be rolled up and analyzed for reporting to enterprise General Ledger (GL) systems and other enterprise systems.

The most logical and efficient approach is to implement a single, independent call management system that takes the call record data regardless of the source � a system that can tap both the PBX buffer boxes and access the server databases to present a single, consolidated view of calling activity. This provides a single location where the organization�s call records can be collected and reconciled with public switched telephone network (PSTN) charges.

In this way, the location, department, cost center, and other corporate units for telephony costs can be efficiently and accurately allocated and reported across the organization. Another advantage is that, as the transition progresses, the call management system is already in place as PBXs are eliminated and new IP systems come on line. Departments or other units� call reporting continues to be collected in the same way, even though the data source transitions from the PBX to the IP telephony system.


When making the transition to VoIP, internal call reporting and allocation must also be considered. It is true that leased lines between corporate facilities can be eliminated but that does not mean that intra-company telephony costs drop to zero. There are wide-area network (WAN) utilization costs for Internet access, T1-carrier and asynchronous transfer mode (ATM) transmission technologies that must be allocated either on an overhead or on a usage basis.

If usage is selected, a rate table, similar to the rate tables commonly used with PBX systems, can be established for intra-company calls. It can be as simple as a flat rate per call/minute or be more sophisticated in that it applies variable rates based on call parameters, such as whether the call is made to another campus or to a foreign office. At the extreme, rate tables can be constructed to factor in bandwidth usage in order to charge a higher rate for calls placed during peak periods.


Transitioning to a VoIP system also presents network managers with an opportunity to reconsider and enhance their approach to call reporting and call management. Traditionally, call management has been accomplished through a software package that collects the data from the PBX. The system is resident onsite and comes under the auspices of the telephony system managers. Telephony help desk operations, moves, adds and changes (MACs), infrastructure design and maintenance, and system planning are collectively managed as a distinct telephony function.

Since the resources are onsite, the function requires computing power, space, and support resources for maintenance, upgrades, security, and other services. For many companies with trained staff this is an effective approach. For these companies, moving to an in-house communications management system that is capable of supporting both PBXs and IP telephony systems is the logical step.

For an increasing number of companies, however, a hosted approach is an excellent option. With tight capital budgets and long approval cycles, the customer may decide that purchasing additional hardware, managing software upgrades, and investing in staff training to support the call management system does not make sense. In this case, an outside company can host the software on its systems. With an Internet connection, the customer can check for voice and data reports, track service orders and trouble tickets and view updated directory information � the customer can manage the telephony system with reduced complexity and expense.

The third approach is to fully outsource the management of the communications systems. As companies continue to focus on investing in their core competencies, many have realized that the daily management of their communication environment may be outside of their strategic business direction. A completely managed service approach enables a company to spend more time on business issues as the service provider�s expert staff takes over every task associated with managing the communications systems. All of the management functions are supported by the services provider, as well as the help desk, provisioning, and planning functions. Under this approach, as new VoIP systems are added and PBXs retired, the service provider handles the transitions. So, the call management changes are transparent to both users and in-house technical staff.


There has been a lot written about analyzing current telephony systems in order to plan for an orderly transition to VoIP. Every technology decision fosters multiple business decisions. With the transition to IP telephony there are thousands of decisions to be made from infrastructure to training.

One technology/business decision point that has been difficult to quantify is determining what effect the addition of voice will have on the data communication network. Sure, there are consultants who will analyze and project results, but now a set of technologies is emerging that offers a linear comparison between traditional voice traffic and VoIP data loads.

These new technologies use existing call management systems to create detailed traffic reports of your telephony usage to plot call volume/time not only on an aggregate basis but also on a point-to-point basis so that you can determine what the traffic is at different points on the network. The technology then translates the call volume into data network traffic levels.

When overlaid on existing data network traffic patterns, administrators can not only predict but actually see the network load that voice traffic will put on the system. This gives them the information they need to upgrade the IP network accordingly.

This approach has the potential to save companies that are planning a transition tremendous consulting time and money. It gives managers a higher level of confidence in the quality of their network usage projections and avoids under provisioning, which will lead to performance problems, and over-provisioning, which can be costly.


The challenge for IP telephony managers is to institute good communications management practices and technologies from the outset. There are computer-based systems, hosted solutions and outsourced services that can help companies monitor and manage the billing functions of their IP telephony systems. These systems deliver the same or better level of insight and control as traditional switched gear systems.

Effective communications management will better handle multi-device environments where employees seamlessly move between mobile and office communications. It will support ubiquitous communications through a single phone number. It also will position companies to take advantage of the inevitable evolution towards multi-function devices that blur the lines between telephony and data communications. c

Alan E. Gold is senior vice president of corporate strategy for Avotus Corporation. He has over 20 years of experience in product management and strategic direction, including corporate partnerships and venture capital. He has authored numerous software and data collection articles and presented to industry forums.

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