VOIP: A New Day Is Dawning

By Caron Carlson  |  Posted 2004-12-06

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.

Moving into VOIP


Unlike the anticipated wave of VOIP deployments, where cost reduction is seen as a key factor, early VOIP adopters were driven more often by a combination of circumstances, including owning phone systems near the end of their life cycles; embarking on so-called greenfield deployments, which require building infrastructure from scratch; and engaging in business processes closely tied to integrated voice and data, such as call centers.

In 1999, these circumstances came together for CDW Corp. The technology consulting company (by definition, an early adopter) was expanding from its headquarters in Vernon Hills, Ill., and setting up additional call centers in the Chicago area. The company was not prepared to dump its existing infrastructure so it deployed a hybrid system from Avaya, said K.C. Tomsheck, director of IT operations for CDW.

Today, the company, with about 37,000 employees, runs all interoffice calls over VOIP, and some of its small sales offices and home offices use Avaya IP softphones. Yet CDW has retained its old handsets in the main offices.

"We just couldnt see spending the money to replace all those phones," Tomsheck said.

No less important than leveraging the embedded investment were the risk of the system going down and concerns about security. Both issues caused CDW to put the brakes on an immediate, complete transformation to VOIP, Tomsheck said.

"You hope you have your network secured, but if any kind of virus or worm breaks in, if its creating more traffic than everything else needs, then calls are not going to get through. Its just a risk we havent been able to absorb so far," he said.

In North America, Avaya closely battles Nortel, Mitel Networks Corp. and Cisco Systems Inc. in shipping IP PBXes, according to Infonetics Research Inc., in Woburn, Mass. Revenue from pure IP systems rose 11 percent from the first to second quarter this year, primarily on account of Cisco, according to Infonetics research.

For the village of Lombard, Ill., which completed a deployment of IP telephony equipment from Cisco this summer, security was a major concern. Working with Greenwich Technology Partners Inc., the village of 42,000 residents installed Cisco switches, dual Call Managers, Unity voice mail and approximately 240 IP telephones. The network connects the Village Hall and the police, fire, public works and water works departments.

To defend against Internet-based attacks, Lombard installed Ciscos PIX firewalls and Security Agent intrusion prevention technology. Like Avaya, Cisco is adding encryption to more of its products, including Call Manager, which works with a limited number of Cisco phones.

"IP phones are secure as long as you do your due diligence to make them that way," said Jerry Kaczorowski, business development manager at New York-based GTP, adding that staying up-to-date with patches is critical. "Patch management is a big thing. Most of the exploits go after buffer overflows," Kaczorowski said.

In Lombard, deploying a pure IP system from scratch made sense. The villages equipment was about 10 years old and becoming increasingly difficult to manage, with PBX systems from three different vendors installed throughout the municipal complex. The aging phone system did not support automated voice mail, caller ID or Enhanced 911, which have come to be considered critical in large organizations.

"We wanted to get down to one system," said Lombards IT manager, Larry McGhinnis. "Nobody knew where any of the [voice] cabling was or where any of these connections were going."

The main benefits of the new system are efficiency, manageability and new functions, but there are expected cost savings as well from centralizing moves, from adds and changes and from eliminating lines that were not being used, McGhinnis said. Employees have a variety of new features at their fingertips, including auto-attendant, and they can view directories on the IP phones and check voice mail over the Internet.

While moving confidently into VOIP, both CDW and the village of Lombard faced the age-old challenge of ensuring that calls moving over the data network offer the reliability and QOS that employees were accustomed to. For CDW, the greatest challenge was determining the necessary amount of bandwidth and figuring out how to balance voice and data traffic, Tomsheck said, recalling "a little bit of experimenting and tweaking it as you go."

But convergence, for all its promise, is not easy to accomplish, said Forresters Pierce. Suppliers need to provide better tools for network monitoring and management, and traffic balancing remains a major challenge to VOIP, she said.

"I think everybody is still trying to feel their way. It gets complicated very quickly," Pierce said.

Over the next year, companies such as Avaya will work to break down some of those complexities. Avaya plans to offer enhanced remote monitoring diagnostics for VOIP traffic and proactive monitoring services, Blanco said.

With companies relying on the packet network for phone calls, monitoring becomes increasingly critical, as well as increasingly complex.

"Now we have to watch switches, we have to watch routers, interconnects with the carriers," Blanco said, adding that Avaya also needs to provide the tools to let enterprises do such monitoring themselves.

The best news for IP equipment makers is that one key motivator for migrating to IP—aging gear—will hit most large enterprises over the next couple of years as the major network upgrades made prior to the year 2000 begin to near the end of their life cycles.

However, as the market for VOIP gear grows, so does the pool of suppliers eager to fill the need. Makers of IP telephony systems face increased competition from technology companies, such as Microsoft Corp., that historically served a separate niche.

Check out eWEEK.coms for the latest news, views and analysis on voice over IP and telephony.

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