Is WiFi Telephony A Killer App For IP Centrex?

VoIP technology has reinvigorated the Centrex market. While some still view Centrex as “old-world telephony,” the reality is that IP-based Centrex services are raising the bar on features, scalability, availability, and overall value compared with enterprise-based systems. Bringing together IP Centrex and WiFi technologies can offer even more to business customers. WiFi telephony delivered over IP Centrex provides the advantages of enterprise wireless — improving employee mobility, productivity, and responsiveness — along with the operational and functional advantages of a hosted telephony service.

Hosted business telephone services, commonly referred to by the original Bell System brand name “Centrex,” have been around since the inception of the PBX. Centrex services are based on using a network-based telephone switch to deliver business telephone features just as though there is a PBX installed at the customer site. Using Centrex eliminates the capital investment in a local PBX, and it significantly reduces the local resources required to deal with corporate telecom support by essentially outsourcing telecom to a service provider. Centrex customers simply pay a monthly per-user fee that varies depending on the types of services they require.

Centrex is used by less than 20 percent of business telephones in the U.S. today, but that still translates to more than 15 million lines. The Centrex market is strongest with very large enterprises, such as large corporate facilities and university campuses. Centrex service is also attractive with many small businesses that don’t want to deal with administering their own PBX or key system.

It’s Not Your Father’s Centrex Anymore
IP telephony has changed the Centrex landscape in three significant ways. First, the features and capabilities available through an IP-based hosted service go well beyond the traditional circuit-switch Centrex offerings. Utilizing protocols such as Session Initiation Protocol (SIP), a service provider can offer more than just business telephone service, adding messaging, multimedia, and presence-based features. Second, IP Centrex services are delivered over standard broadband connections. An enterprise can truly converge its voice and data services in terms of physical network connections and service providers. This is a big advantage over circuit-switched Centrex, which requires individual wire pairs or T1 channels for every telephone set at the customer site. A broadband connection provides much more scalability and flexibility for adding users and capacity. Finally, IP Centrex services are much easier to deploy, opening up marketing opportunities for new entrants along with traditional telephone service providers. Whereas a traditional Centrex service could only be delivered from the local telco’s switching office, IP-based services can be delivered from anywhere over an IP network. And the cost of equipment to support IP Centrex services is significantly lower than that of the large-scale central office switches used for traditional Centrex.

The advantages of IP-based business telephone services over traditional Centrex are already pretty clear, even without a wireless component. But adding WiFi wireless networking to the mix can really enhance the value proposition, both in terms of productivity and cost of ownership. And merging IP Centrex with enterprise WiFi is easier than you may think.

WiFi And IP Centrex: Two Peas In A Pod
IP Centrex and WiFi fit hand-in-glove because both are based on IP network technology. The same wired and wireless network infrastructure can be leveraged for both voice and data applications. While circuit-switched wireless telephone technologies for enterprises have been around for more than a decade, they haven’t done a good job of supporting anything other than voice applications. The beauty of WiFi telephony is that it is just another application running on a corporate wireless LAN (with all the requisite network performance and QoS mechanisms, of course).

The end-user devices used with IP Centrex services are typical-looking business telephone sets, making the fact that it is a hosted IP service totally transparent to the end users. But instead of a pair of wires going from the phone to the Centrex service provider, an IP Centrex phone connects to the local Ethernet LAN and uses a VoIP protocol such as SIP to set up calls and access features through the host switch. In the same way, a wireless IP telephone communicates over a WiFi network and uses the same VoIP protocol as a wired phone.

Tying IP Centrex and WiFi telephony makes a lot of sense from a technical perspective. But there are also several compelling business reasons for bundling them together. There are some markets where a wireless telephone solution is easily justified based on employees’ need to be mobile and accessible in the workplace. Hospitals, factories, and large retail stores are already well-known applications for WiFi telephony. Integrating a wireless component with hosted IP telephony gives IP Centrex service providers a much stronger offering in these markets, and improves their competitive positioning against PBX-based solutions.

Cutting Costs By Cutting Wires
What about hard-dollar justification for going wireless? Remember, there are two principal advantages to wireless. The first is mobility, and mobility is what drives improvements in productivity and responsiveness. The second advantage, which is often overlooked, is that wireless eliminates wires. For many enterprises, the cost of wiring — both material and labor — is built into the IT budget and is seen as just another cost of doing business. But for small businesses, particularly those targeted by hosted IP telephony service providers, dealing with voice and data wiring is something they would rather avoid.

Running data and telephone lines can cost more than $100 per connection, particularly in regions with high labor rates and in older buildings. WiFi telephony eliminates wiring to employees’ desktops by supporting both their voice and data needs with a single wireless infrastructure. There are still some cables required to connect the WiFi access points to the network, but with the installed cost of access points below $1,000, the wireless network pays for itself with every 10 cable runs eliminated per WiFi access point. Having a wireless office saves money in the long run because employees can come and go without having to move or add more cables, and the IP Centrex provider isn’t constrained by cabling at the customer site.

IP Centrex service providers can also look for other opportunities to leverage the WiFi network at the customer site. For example, some small businesses might want to take advantage of the wireless network to offer public Internet access as a WiFi hotspot. A service provider can target these kinds of customers by bundling hotspot Internet access, private wireless LAN access, and IP telephony services all in one easy to deploy package.

So is WiFi telephony a killer application for IP Centrex? It certainly can be in markets where there is a compelling need for mobility — markets where the enterprise PBX vendors are already targeting their WiFi telephony solutions. But IP Centrex providers have the unique advantage of integrating WiFi to make their offerings even more scalable and easier to deploy without sacrificing features or capabilities. IT

Ben Guderian is director of market strategy at SpectraLink Corp. For more information, please visit the company online at www.spectralink.com.