Corporate Roundup: Hold on a Minute ... Checking Out the IP Marketplace

Telephony vendors are aggressively pushing new products, but most businesses, while increasing their IP budgets, remain tentative about a full-scale implementation.

Businesses of all sizes plan to nearly double spending on IP-based voice communications this year, and vendors and service providers are busy showing off products to fill that need.

Enterprises and small and midsize companies will spend an average of $100,000 this year on IP equipment and services, up from $63,000 last year, according to a new study by consultancy Infonetics Research.

Voice-over-Internet Protocol has become an umbrella term for a wide variety of voice-delivery methods and applications that at some point send traffic across IP-based network equipment. For businesses, the least expensive form of IP telephony—free computer-to-computer service offered by companies such as and Skype Technologies—isnt an option because calls cannot be made to anyone outside the providers network.

For the small office, home office and remote user, there is a variety of low-cost offerings from companies such as Vonage Holdings, 8x8 Inc. and CrystalVoice Communications that combine computer telephony with the Internet and public switched telephone networks.

For large companies, voice over the public Internet is generally not an option because of a lack of enterprise-class reliability and security. Voice-over-IP offerings for business are for the most part limited to those based on IP upgrades to the corporate network or IP upgrades to the carrier networks.

Proceeding With Caution

Although IP telephony has become a banner selling point for the major telecom equipment manufacturers and service providers because of its inherent cost efficiencies, most businesses continue to approach it cautiously. Illustrating the ongoing wariness, the most popular enterprise avenue to IP migration is the hybrid version of the IP PBX, which allows enterprises to continue using legacy equipment.

"If you go all IP, it can be quite an expense," says Matthias Machowinski, an analyst with Infonetics. "With the hybrid PBXes, you can save on that investment."

The fixation on a no-surprise voice service has enterprises continuing to lean toward managing their own IP systems rather than letting service providers take responsibility, according to Machowinski.

Telecom service providers aim to change the business mind-set about managed IP services. All of the major carriers, looking to differentiate their offerings and find new sources of revenue without having to invest huge amounts of capital, are developing business-class IP systems.

Competitive local exchange carriers and other new entrants have invested heavily in IP infrastructure, which in turn is pressuring incumbent carriers such as the regional Bell operating companies and long-distance carriers to accelerate their own upgrades.

According to Daniel Klein of The Yankee Group, the RBOCs have aggressive plans to offer hosted IP telephony services to the small and midsize markets, and SBC Communications has been the most aggressive in launching IP services for businesses. Several local carriers recently announced partnerships with vendors, including Verizon Communications teaming with Nortel for servers, softswitches and media gateways.

BellSouth and Lucent Technologies said in May that together they plan to accelerate BellSouths IP service expansion.

Long-distance carriers, including MCI and AT&T, are leveraging their own IP backbone infrastructures to provide new enterprise services. According to The Yankee Group, AT&T continues to focus on large enterprise time-division-multiplexing PBXes and IP PBXes, in partnership with Cisco and Avaya.

Caron Carlson is a senior editor at eWEEK. She can be reached at


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