IP Phones Challenge Bells

Business customers can expect a new communications tool to hit their desks starting this summer - an Internet Protocol telephone.

Business customers can expect a new communications tool to hit their desks starting this summer — an Internet Protocol telephone. Large enterprise carriers, including AT&T, Cable & Wireless and WorldCom, are getting ready to roll them out, and so are more nimble, vertically integrated carriers, such as Allied Riser Communications.

While phone calls over the Internet still arent ready for prime time, phones using the language of the Internet by moving conversations as packets of data are finally of business-grade quality, experts said.

IP phones, manufactured by such vendors as 3Com, Alcatel, Broadcom and Cisco Systems, range in price from $150 to $700. Businesses embracing this new technology will finally start to wave goodbye to regional Bells as telephone providers, and start completing phone calls over broadband connections. Backers claim the new technology will result in higher productivity and lower costs.

"An IP phone is basically a computer, and we say you are going to get 30 percent more features at 30 percent less cost using a pure IP softswitch and an IP telephone, because you now have a more intelligent phone on your desk that can do more things, naturally," said Jeff Weiss, vice president of engineering at Allied Riser.

With 850 commercial office buildings across Canada and the U.S. wired with Ethernet connections, Allied Riser plans to make a go of the IP phone project, starting in July with Cisco phones that cost about $400 and up. A business wont be required to do more than purchase new IP phones, a serious investment that Weiss said will be offset by the cost of the private branch exchange or Centrex service the business will no longer need.

And then there are the gee-whiz features. IP phones operate very much like local area network computers, so users log in to them to retrieve their identities — along with things such as saved preferences and voice-mail — from any location where a similar IP phone is deployed.

Allied Riser is far from alone in taking on regional Bells with an IP phone product. AT&T is testing an IP phone in the lab, as is Cable & Wireless, both companies confirmed. And WorldCom is on schedule for a gradual IP phone rollout, beginning this summer.

While there is still some argument as to which standard will win, most deployments appear to be Session Initiation Protocol (SIP)-compliant.

"We are planning to begin initial deployment of SIP phones, hopefully by the end of third quarter," said Barry Zipp, WorldComs senior director of enhanced voice services. "We are addressing some not unexpected challenges in making sure we can operate in the IP environment."

Zipp doesnt expect his companys IP phones to be adopted en masse until 2004.

AT&T might get to market quicker because of its 39 percent voting stake in voice-over-IP communications company Net2Phone. It already has an IP phone product that is cheaper than the ones proposed by Allied Riser and WorldCom and mainly used by international businesses.

"We produced and sold 20,000 phones since introducing the product in the fall. We have not been able to keep up with the demand," said Bart Bartolozzi, director of strategic development at Net2Phone.