Talk Is Cheap

Once a novelty used by individuals for circumventing pricey long-distance carriers, Voice-over-IP (VoIP) has finally found its niche as an inexpensive and flexible telephony solution for the enterprise.

VoIP breaks down voice signals into digital packets, allowing it to be transmitted via IP, avoid the public switched telephone network (PTSN), and use advanced call features such as call conferencing, call forwarding, unified messaging, and voicemail. Corporations can take advantage of the technology by purchasing a gateway that routes voice packets to other parts of the network or sends them over the PTSN. Some gateways work using existing PBX equipment, while others work on their own or with a Win NT backbone.

The technology is sound on paper, but many corporations have been slow to install VoIP solutions. All that is expected to change in coming years as the price of gateways and other costs come down and as quality of service improves. An industry survey conducted by Frost and Sullivan of San Jose concluded that VoIP sales are expected to climb to $349 billion by 2006.

The Good
VoIP’s growing popularity is no surprise. The advantages of VoIP over traditional PBX are numerous. For one, the lifetime cost of a VoIP solution is a fraction of what you would pay for a traditional phone system. By bypassing the PTSN for long-distance calls and fax, the per-minute rate for both services can drop to as low as two or three cents per minute. VoIP can also utilize existing network and PBX equipment, thereby cutting down on installation and day-to-day operational costs. And while the initial investment may be pricey, users can see savings almost immediately, particularly if they are building their VoIP network from the ground up or are an international firm, according to Doug Fink, director of voice solutions for Calence, a Tempe, Arizona-based network solutions provider that both installs and uses VoIP solutions. “A typical installation with under 200 phones runs about $50,000 for hardware and $30,000 for implementation services, and maintenance runs just a couple of thousand versus $50,000 for a PBX,” Fink says.

Streamlined management is also a realistic expectation with VoIP. Network managers, already familiar with IP, SNMP management, and the network backbone, can be trained to work with VoIP. Directory and security services can be shared and standard protocols (HTML, Java, XML, H.323, MGCP, and SIP) are used.

VoIPs flexibility should not be ignored. The enterprise has many architectural choices, including upgrades from traditional PBXs, brand-new IP gateways, and outsourced VoIP services, especially popular among smaller companies that want the same call features without the initial investment or day-to-day management. There is also geographical flexibility — since all your phones can be connected via IP, you can give even remote locations the same advanced call features as your main office.

The final boon is the potential for new applications, something it does not share with traditional phone service. It is expected that VoIP will grow from a phone and fax solution to a multimedia service, creating voice-enabled Web sites and single-area storage and retrieval for voicemail and e-mail.

The Bad
In spite of the potential, there are reasons businesses have been slow to adopt VoIP, first and foremost being quality of service. VoIP often uses the public network (much of it using IPv4, as opposed to the preferred IPv6), making it difficult to guarantee service and sound quality. These issues can be addressed by building private networks, using an Internet telephony service provider (ITSP), or blending of IP with other protocols, such as ATM or frame relay. Of course, these are expensive solutions that tend to make the cost-savings of VoIP less dramatic.

The lower cost of VoIP can also be hard to realize in the short-term when you figure in the price of handsets, which are still pricier than traditional models and are not often interoperable with servers and handsets from other vendors. Efforts are underway within the industry to ensure future interoperability, but using the handsets has also been problematic, as users are often required to dial 25 numbers or more to place a call or use call features.

To avoid problems, analyze your long-distance call loads for several months before committing to a VoIP installation; use a vendor that can fully address sound quality and bandwidth usage issues; and be sure your PBX, VoIP gateway, and handsets are all interoperable at every site.

The Future
VoIP holds great potential for businesses both large and small. Early issues with sound quality, upgrades from PBX systems, and interoperability are being addressed and growth is expected to continue. Doug Fink believes that now that call centers have adopted the technology, quality of service has become more critical, and even traditional carriers like AT&T, WorldCom, and Sprint are building up their IP networks, it’s not a matter of if your company will adopt VoIP, but when. “Not every company may want to use IP today, but between the cost and new applications, everyone will find the need in the future,” says Fink.

As the technology matures, expect to find a demand for its flexibility, long-term lower cost, and ease of management, and expect to see useful, exciting applications arise out of the meeting of voice and data.


Adding a gateway to your network?

800-553-NETS or 800-553-6387
888-4LUCENT or 888-458-2368
Nortel Networks
800-SIEMENS or 800-743-6367

Building a VoIP phone system from scratch?

510-252-9712 x300 or 888-ALTIGEN ext. 300

Looking for a hybrid gateway/call processing gateway?

800-252-2835 or 800-777-6804

Seeking other VoIP solutions?

866-GOAVAYA or 866-462-8292
[email protected]
Vertical Networks
800-826-6769 x133
800-WORLDCOM or 800-967-5326

Eileen Bien Calabro is currently a freelance writer and editor based out of Brooklyn, NY.

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