VoIP Equipment Now Trumps Traditional Lines

In-Stat's research cites comfort level with VoIP and converging voice and data departments for the move from traditional telephone networks to digital.

By Jim Wagner | Posted Aug 23, 2005
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IP-based telephone line shipments are expected to surpass those of traditional lines this year, signaling the continued growth of voice traffic on data networks.

According to a report by market research firm In-Stat, network administrators are increasingly moving their telephone networks, the PBX , onto the data network as their traditional phone networks reach the end of their equipment lifecycle.

In-Stat expects to see a rapid decline in the traditional PBX as companies replace them with IP-based and less-expensive hybrid PBX equipment, which is server-based but uses traditional phones.

By 2009, analysts at the firm predict IP-based PBX shipments will make up 91 percent of the total PBX market, at a compound annual growth rate of 6.6 percent. Shipments for the next-generation PBX, in that time, will jump from 9.5 million to 28.1 million lines.

The reason for the switch to IP-based telephony networks, said Keith Nissen, a senior analyst at In-Stat, is that companies are comfortable with VoIP and are now looking at ways to integrate their data and voice networks.

Also, most IT departments today are a combination of the data staff and voice staff of yesterday. With that integration comes a common budget, too, so it makes more sense for them to put both voice and data on the same network, he said.

"When that happens, you no longer have the separate buying decisions going on between voice and data," Nissen said.

The move to IP-based telephony networks today is mainly occurring at the large enterprise level, Nissen said. While medium- to large-sized enterprises have the resources to switch, most small business don't have that option and are moving to hybrid systems, which puts the phone network on a server but lets users continue using their TDM-based telephones. It's a cost-cutting measure, he said, that lets companies forgo the typical $150-$350 cost for an IP phone.

In addition to the cost of swapping out the old system with the new, the networks themselves need to be tweaked to handle voice packets, he said. Voice packets are much more sensitive to delays, he said, so sending them through routers and firewalls is going to cause some issues.

As such, he doesn't expect IP-based PBX changeovers outside the large enterprise markets until 2007.

That's going to make it challenging for PBX vendors in the future who want to offer software and multi-media services like video conferencing to go along with IP-based voice telephony services.

"At some point in time these PBX vendors are going to want to begin selling, and the businesses are going to want to begin deploying, these integrated voice, data and video applications," Nissen said. "But the barrier to that will be [businesses] will have to install IP end-points, which will drive up the price."

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