Businesses are boosting deployments of flexible IP services that can trim their bottom lines while delivering advanced features, including high-quality conferencing and cheap voice and data services that move on the same network.
Major carriers are starting to migrate from old circuit-switched networks to IP systems that can carry voice calls in data packets. Qwest Communications International this month became the first major U.S. carrier to commit to a conversion to packet switching, and BellSouth and Verizon Communications both have rolled out Voice-over-IP (VoIP) services as their strategies takes them in the direction of a converged network.
Overseas carriers are pushing ahead with deployments of new services over IP networks, which translates to more pressure at home. Big carriers building IP networks include Australias Optus, China Telecom, Japans Nippon Telegraph and Telephone and Singapores SingTel.
"It does put demand on our carriers to provide those services in their own territory," said Craig Warren, co-founder of Aravox Technologies. "We dont see a lot of activity on shore yet, but I think the big carriers and the incumbents hear the footsteps behind them."
But businesses wont wait for more incumbent carriers to act; theyre already buying services from smaller networks and system integrators.
VoIP quality has dramatically improved, so consolidating network operations to deliver integrated messaging, voice and videoconferencing and other services to workers desktops -- wherever they may be -- is good business. Windows XP, which Microsoft unveiled last week, includes real-time IP communication features, both for the consumer and the enterprise, that are expected to spur further demand.
"Sept. 11 was in many ways a watershed for communications infrastructure," said Broadwings Chief of Staff Thomas Osha. "The elements that performed beautifully were VPN [virtual private network] and IP-based services. There was congestion across the public network, but IP and VPN held. Customers have taken their old sales bundles and set all that aside and are saying, Now, Im focused on the distributed work environment, security, disaster recovery and backup, all of which have IP-based solutions."
Barclays Global Investors is in the process of building a global IP VPN, placing IP telephones on the desks of 2,000 workers and equipping road warriors with laptops loaded with Avayas Softphone system. Avaya, left with a boring portfolio of private branch exchange (PBX) gear when it spun off from Lucent Technologies a year ago, spit-shined its legacy systems into a line of IP-enabled products that has allowed it to lure healthy enterprise customers looking for telecom savings.
Softphone allows the laptop to function as a telephone with PBX features through the VPN, avoiding costly toll charges or hotel surcharges. A program called "Follow the Sun" will allow Barclays to trim network management costs by handing off maintenance responsibilities from one location to another worldwide every 24 hours.
"Were standardizing on Avayas IP telephony systems to save money and simplify our network administration," said Barclays Corporate Telecommunications Manager Patricia Green.
Masergy Communications, a Dallas IP Multiprotocol Label Switching network, offers businesses the ability to manage mission-critical applications across the network using MPLS to divide pipes into varying levels of service -- best effort for the e-mail, priority for applications like voice and videoconferencing.
"The big thing with IP is the flexibility it gives the customer," said Michael Beaton, senior vice president of global sales at Masergy. "There is cost savings in being able to fully utilize all the bandwidth and prioritize different types of traffic -- voice, video, whatever it is."
Today, enterprises can contract for managed IP services from AT&T, WorldCom or any number of other carriers, similar to Masergy. In most cases, theyll need a telephone company connection to the point of presence and some kind of routing gear on the premises. Many IP applications, such as VPN, work fine over a dial-up link.
These IP features work well over a managed network that handles a comparatively small amount of voice and data traffic. But large carriers, like AT&T, which handles 300 million voice calls daily, can still justify running separate voice and data networks and will wait for the technology to mature. "Its not ready for prime time, from our point-of-view," AT&T spokesman Dave Johnson said. "
Were ready for the evolution, but you have to get it to my reliability and my quality levels." Qwest isnt taking packet switching all the way to the end user yet. But by moving closer to the customer, delivering advanced services becomes more cost effective, which should benefit small businesses and home-office customers. "Theyve changed the business case, in a sense," said Christine Hartman, research director of Probe Researchs voice-over-packet market unit.
VoIP over a managed IP network is working well for some of AT&Ts enterprise customers, said Joe Aibinder, director of AT&Ts VoIP Business services. "But to be perfectly honest, most are more in the tire-kicking phase."
Primus Telecommunications, a global VoIP carrier, sees the potential in converged networks. But John Melick, senior vice president of international business development, is skeptical about near-term customer demand for converged solutions, such as Session Initiation Protocol (SIP) phones in the near future.
"Either the technology is available but too expensive, or the technology is available but not interoperable with other networks," Melick said. "SIP technology is available now, but it is prohibitively expensive to deploy at any kind of scale, especially for small and medium-size businesses."
But that could all change. Windows XP is SIP enabled, which means enterprise users running the new operating system can initiate calls as easily as they send an instant message with a softphone developed by Ubiquity Software.
"E-mail drives my day," said Aravoxs Warren. "The interaction with my PC is woven into my behavior, into my daily routine, my habits. Now, if I can do MSN Messenger, and move my cursor over one icon and click to talk, Im gonna do it." Aravox develops IP infrastructure products that ease voice and video transmissions through the corporate firewall.
Even with Microsofts influence, Warren said its mostly "the bleeding-edge kind of folks, the gizmo guys, who will be interested in SIP calling. But I think its very, very clear thats the direction were going in."
SIP is a signaling protocol that is light on processing demands and heavy on multimedia features, which could include for-fee services such as videoconferencing and online collaboration. "Carriers need to play in the applications space. If they dont, the whole multimedia gig could go the way of the Internet and theyll be left carrying bits and thats a disaster," said Steve Gleave, Ubiquitys chief marketing officer.
Senior Writer Max Smetannikov contributed to this report.