Enterprises Tuning in to a Brand-New Voice

Satisfied with service quality, many enterprises are expanding VOIP use.

Until recently, Barnes Aerospace Group Inc.s international phone bill was big enough to keep the European Union afloat. Working out of an office in Darby, England, the companys lone European salesman was generating monthly phone bills of $1,500. If the office was ever going to soar as a European sales headquarters as planned, Jim Richardson, the companys senior technical support specialist, in Windsor, Conn., would have to find a solution.

Richardsons answer? Use Internet technology for trans-Atlantic voice communication. After hearing discouraging words from some traditional voice hardware vendors and after initial concern about voice quality and bandwidth requirements, Richardson in the fall oversaw a $15,000 project to install a 3Com Corp. NBX 100 IP-based PBX and six IP phones. The gear worked so well, virtually eliminating monthly tolls, that Richardson is now working to get $75,000 more into next years operating budget for another IP PBX, IP phones and associated equipment to roll out IP telephony to the companys nine domestic facilities.

Like Barnes, growing numbers of enterprises are beginning to overcome initial skepticism about VOIP (voice-over-IP) service quality and are accelerating deployment of the technology to cut toll and administrative costs and enable new services. Earlier this month, for example, The Dow Chemical Co., of Midland, Mich., announced an expanded VOIP pilot test project and plans to deploy Cisco Systems Inc. switches and 40,000 VOIP phones by early next year.

Like Barnes and Dow, most enterprises are not yet ready to use VOIP technology over the public Internet, preferring VPNs (virtual private networks) and private networks. Still, experts say, VOIP is beginning to find its voice in the enterprise.

Although VOIP has taken only 3 percent of market share away from traditional circuit-switched PBXes in the last year, by 2006, IP telephony could account for more than 50 percent of PBX shipments, according to Ronald Gruia, an analyst with consultancy Frost & Sullivan Inc., in Mountain View, Calif.

Early adopters typically look to VOIP to lower telephone bills and provide new, sophisticated applications that combine packaged voice, text and video. Because long-distance calling plans charge businesses as little as 3 or 4 cents per minute for calls over the public, switched telephone network in North America, lower phone bills arent the argument for VOIP they once were. However, companies such as Barnes Aerospace, which rely on expensive overseas communications, can still see significant savings, Gruia said.

Todays VOIP cost savings come primarily through easier system installation and maintenance, experts say. In time, converged voice/data applications may become even bigger inducements for users to make the VOIP switch.

First, however, enterprises must satisfy themselves that VOIP service quality will be good enough to make switching from PBXes worth the trouble. Packet loss, latency and jitter can create the inaudible conversations that have long caused users to shy away from VOIP. To avoid these problems, network administrators are creating separate LANs or WANs using ISDN or frame relay, for example, or subscribing to commercial VPN services to give both traditional data and VOIP a wide pipeline. In addition, vendors including 3Com and Cisco now incorporate data-coding protocols into their VOIP hardware to give voice packets network priority when theres heavy network traffic.

Thats all making many enterprises comfortable with the idea of expanding the use of VOIP. Barnes trans- Atlantic calls travel over a 386K-bps asynchronous transfer mode network link outsourced from Inc., in Trumbull, Conn., which also supplies Barnes with quality-of-service guarantees.

Also cautiously expanding VOIP use is Key Corp., in Cleveland. "We see ourselves deploying IP to another 10 sites in the next few months," said Tony Farinacci, a senior vice president for the financial services companys technology arm. The company switched 10 branches to Cisco VOIP equipment using a frame relay network last winter.

"If were comfortable with how things go, then well continue to maybe 50 more sites this year," Farinacci said.

The VOIP rollout is one consequence of an aggressive period of mergers and acquisitions in the 1990s that left the company with more than 920 branches and 450 ATM machines, all served by a wide variety of PBX, key telephone systems and data networking vendors. A vendor consolidation effort on the data networking side encouraged Key to buy IP communications equipment from its main data equipment supplier, Cisco.

Farinacci said he values being able to contract with a single equipment vendor that is responsible for both the data and voice pipelines. What about the 150 Avaya Inc. PBXes still in Keys enterprise and still providing a strong foundation for its high-end call centers? "Were not replacing them with IP," he said. Instead, he said he plans to mix and match equipment based on which is better for small branches or larger financial services centers. For now, with the newer, high-end PBXes humming at the banks larger facilities, its the smaller branches that are prime candidates for VOIP.

So far, Farinacci said, hes had no VOIP reliability or voice quality complaints. Instead, he said, the main barrier to more aggressive deployment has been getting his IT staff to embrace the idea of managing both voice and data traffic.

"People who were configuring key systems are now having to learn how to set up dial plans for large groups," Farinacci said.

His response has been to give everyone the new title of convergence engineer to emphasize the future of networking. "Youve got to get your organization to buy into IP," Farinacci said. "Its little nuances like that that will determine your success." And perhaps how fast the next phase of VOIP deployment takes place.