VOIP Costs Dip, as Fixed-Mobile Convergence Looms

By Stan Gibson  |  Posted 2006-12-06

VOIP Costs Dip, as Fixed-Mobile Convergence Looms

ATLANTA—As voice over IP completes its first decade, the technology has become firmly established in corporate voice, data and video communications networks.

Now the eyes of the VOIP community are turning to what might be the next big thing on the horizon, FMC (fixed-mobile convergence), or the ability of cell phones and VOIP devices to send and receive voice and video calls—even though significant technology hurdles stand in the way.

"[FMC] is a good cool thing. I hope it happens in our lifetime, but if it does, it means we have a secret sauce for seamless roaming," said Jeff Pulver, chairman of Pulvermedia, which sponsored the VON Enterprise conference here, at which his remarks came.

In a demonstration that such convergence might not be too far off, Pulver initiated at the show a video call from his laptop PC to the cell phone of a worker at the offices of Radvision in Tel Aviv, Israel. The call worked and Pulvers Radvision contact appeared in a video screen, although the video quality was not completely life-like.

The VON conference marked the 10-year anniversary of VOIP technology, during which time VOIP has grown from the status of a fringe method of carrier bypass to broad acceptance by corporations, individuals and telecom carriers—a remarkable transformation that vindicates Pulvers early enthusiasm for the technology.

Pulver worked in the IT department of a Wall Street Firm until 1996, when he left to devote his time to advancing VOIP technologies, including the company that later became VOIP service provider Vonage Holdings.

How will things shape up for VOIP in 2007? Click here to read more.

"TDM switches five to seven years from now will be end-of-lifed. Its not that theyre not any good, but IP has become the way we are," Pulver said.

He warned, however, that all the capabilities that VOIP offers should be exploited. "We need to use VOIP and leverage it, or it will be disrupted," in the same way that VOIP has proved a disrupting force to conventional telephony, Pulver said.

Whether or not FMC happens anytime soon, plenty of companies are taking advantage not only of VOIPs lower costs, but of its ability to integrate better with data applications. The VON conference spotlighted several users who had success stories to tell.

One presenter, Mark Bailey, manager of IS for Thiele Kaolin, a Sandersville, Ga. producer of clay for industrial products and cosmetics, said the most important benefit of a corporate move to VOIP was one that many might overlook: improved disaster recovery and business continuity.

Thiele Kaolin achieved this, he said, by using redundant call managers to re-route calls. In other disaster-recovery benefits, he said he now keeps replacement parts on-site and can relocate his telephone system easily in an emergency, a capability known as survivable remote-site telephony.

Thiele Kaolin replaced a fifteen year-old PBX in 2004 in favor of a Cisco AVVID device, which at a cost of $235,189 saved his company $55,000 in annual maintenance. It also enabled Thiele Kaolin to extend the corporate telephone system to remote sites and eliminated telecom charges between those sites.

Next Page: Other benefits of VOIP.

Other Benefits of VOIP

"We wanted to converge voice communications and leverage the data network," said Bailey, explaining that the VOIP system also gave administrators a Web interface which they could use to manage the system from any physical location using VPN access.

Other benefits include better call reporting, delivery of applications to IP phones, and the ability to view voice messages in Microsoft Outlook.

Another user, Bo Simmons, founder and president of Cool Blue Interactive, an Atlanta-based Web design firm, called on Cbeyond, an Atlanta-based managed service provider that delivers integrated voice, mobile and broadband Internet services to small businesses.

Now Cool Blue Interactive pays $525 per month for its service, which replaces POTS (plain old telephone service) and DSL services, which Simmons called expensive, unreliable and slow in uploading big files.

He pegged his monthly savings at $200. The next step, Simmons said, is integrating fax and e-mail communications, implementing secure backup and deploying mobile services from Cbeyond.

Case Western Reserve University in Cleveland, Ohio, initiated a forklift upgrade of its campus network in 2002, installing 10,000 fiber optic Gigabit Ethernet drops to dormitory rooms, classrooms and other locations to create a VOIP-enabled campus, said Lev Gonick, CIO of Case Western Reserve.

Now at Case Western Reserve, he said, intracampus calls cost almost nothing. And the university is aggregating long-distance calls to drive down costs.

In June, 2003, the university helped form a consortium called OneCleveland to provide Gigabit Ethernet connectivity among the regions non-profit institutions. "It makes the entities more productive and allows them to collaborate," said Golnick.

Eventually, One Cleveland intends to connect 3,000 community entities and a total of 50,000 seats.

Customer contact centers have also cut costs and improved performance by adopting VOIP technology.

Bill Peters, vice president of reservation services at Outrigger Hotels and Resorts, opted to use Sprints Echopass call center service along with call center operators who work from their homes.

Echopass, which is VOIP-enabled and based on Microsoft technology, combines voice calls with e-mail and chat functions for call agents.

The result: 35 percent savings over Outriggers previous call center budget and Outrigger avoided the use of offshore outsourcing providers. Peters said he is looking to add more VOIP-enable functions, including e-learning systems to train employees.

Sovran Self Storage was stuck with aging, unreliable technology, high cost of ownership, and difficult administration tasks, said Randy Hillman, customer care manager of Sovran Self Storage in Buffalo, N.Y.

Like Thiele Kaolin, Sovran Self Storage also needed a better disaster recovery system. The company implemented a VOIP system from ShoreTel, at a savings of $20,000 per year.

Joseph Roark, associate architect at Ford Motor Company has not yet implemented a VOIP-based call center system, but said the day is coming when Ford will make such a move.

He has examined existing IP-based contact center technology, but could not find a system that will be able to record both voice calls as well as data traffic between the agents and customers.

He also said he needs a completely delay-free system, so that customers dont hang up in the belief that a telemarketer is calling.

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