VOIP: A New Day Is Dawning

From the time the technology was technically possible, VOIP has held second-class status in telecommunications, unable to deliver a call with the reliability, quality and security of plain old telephone service. Equipment vendors have coddled it, carriers have dismissed it, and users have mostly waited to see if it could ever deliver the promising mix of low-cost calling and advanced convergence features.

How things have changed.

Today, voice over IP, a beneficiary of improving technology and changing attitudes, is emerging as one of the top IT concerns for business. Two-thirds of the Global 2000 are expected to implement VOIP by 2006, according to Deloitte Services LP analysts. There are some 400 pure-play VOIP providers in North America, and IP options are now available in every major network equipment vendors product line. Even the stalwarts of POTS—the RBOCs (Regional Bell Operating Companies)—are offering VOIP.

With so many VOIP options available from so many providers, the question for many enterprises, large and small, is shifting from how to do it to finding reasons to do it. And the answers may vary, depending on whom you ask.

For the past few years, VOIP suppliers have championed running voice traffic on a packet-switched network, primarily as a way to lower costs. Most long-distance toll charges can be eliminated with VOIP, and operating expenses can be reduced, mainly because moving, adding or changing phones does not require hours of labor or using the telephone maintenance contract.

The initial capital cost of IP gear is not low, however, nor is the cost of expertise needed to administer the new technology. Even hosted VOIP offerings, requiring little or no capital outlay and providing full management, often do not result in major bottom-line savings.

More recently, VOIP suppliers have extolled the virtues of efficiency, convenience and functionality to promote IP telephony deployment. Converging voice and data traffic is the swiftest path to implementing emerging applications, such as unified messaging, instant messaging, collaboration and presence awareness, across the enterprise, the suppliers said.

"IP is driving opportunities for different business models," said Jorge Blanco, vice president in the Enterprise Communications Group at Avaya Inc. "If the customers are going to make the transition, they want to end up with new applications."

Next year, makers of IP PBXes and other IP communications gear will continue working on improving operational issues, such as reliability, security and QOS (quality of service), while luring customers with the prospect of exciting new applications.

For its part, Avaya will focus on improving "enterprise survivability," Blanco said. The Basking Ridge, N.J., manufacturer plans to integrate SIP (Session Initiation Protocol)—the signaling protocol for Internet-based conferencing, telephony, presence and other applications—into more products and build encryption capabilities deeper within the network.

"The technology, we believe, has now crossed beyond the early adoption," Blanco said. "2005 is a year of lots of maturity." But according to Deloitte Services, in New York, most migrations are being driven by the potential cost reductions associated with VOIP.

That disconnect between business needs and suppliers marketing strategies has slowed some VOIP deployments, according to Lisa Pierce, an analyst with Forrester Research Inc., in Cambridge, Mass.

"Its very disjointed," Pierce said. "Unfortunately, suppliers still think customers should adapt to them. Theyre not looking at the user perspective. Theyre coming at it from the technology perspective."

To help companies ease into VOIP, vendors such as Avaya and Nortel Networks Corp. offer hybrid IP telephony systems that let customers upgrade incrementally to convergence and leverage their investments in existing equipment.

Next page: Moving into VOIP.