TCS Daily

From Businesses to Consumers?

By Edward B. Driscoll - July 17, 2003 12:00 AM

There are several reasons voice over IP (frequently abbreviated to "VoIP", and pronounced just as it's spelled) is quickly becoming the way businesses are connecting their phone systems: more flexibility in routing customer's calls among several offices, the possibility of reducing the phone bill between offices, and tighter integration of voice and data.

But one big reason is that new development of the technology that makes up the traditional architecture of telephone systems, TDM (short for time division multiplexer), is being frozen by most manufacturers. Don Van Doren, the president of Vanguard Communications Corporation says that manufacturers such as Avaya, Nortel, Seimens, NEC and Mytel, are creating migration strategies to help their customers move to VoIP. And simultaneously, "they're not making significant enhancements and upgrades to their traditional TDM architectures. And so what's going to happen is that virtually every company out there is going to have to figure out how and when they make a change into this new voice over IP world."

When -- not if.

There are several advantages of a VoIP-based system over its TDM-based predecessor for a business. One huge benefit of VoIP is the ability to route calls among multiple call centers. Thus a call from an important customer can be identified via automatic number identification (or ANI for short) and routed to a firm's top salespeople. And conversely, a call from a low-end customer (or more impolitely, a deadbeat) can be sent to an interactive voice response system where that customer is pressing buttons on his keypad, rather than wasting the time of a more expensive human.

A VoIP system can also facilitate video over IP. Joe Gagan says that using ISDN for video conferencing is very expensive and difficult to setup. In contrast, "for intra-company video conferencing, IP's the definite way to go over ISDN." Gagan is the senior analyst for the E-Networks & Broadband Access research and consulting practice of the Yankee Group, a Boston-based technology research and strategic consulting firm.

Another plus for VoIP is the simplification of wiring in a new construction. Theoretically, one wiring network can now handle both voice and data, thus greatly speeding up the wiring of a new phone system.

Van Doren personally plays down the idea that VoIP is a telephony cure-all. He feels that while there can be some cost savings, particularly for calls between multiple offices of a single company that have been equipped with VoIP, "if you're trying to run voice calls over the public Internet for example, you quickly run into significant, and largely uncontrollable issues that directly affect the quality."

Just try experimenting with Internet telephony for a while. When calls are routed over the public Internet, latency, jitter, and other factors seriously degrade the quality of most calls. Two people who have consented to use it can agree that benefits outweigh the hassle: there's the ability to save money on long distance charges, or the sheer novelty factor, or to blend voice and data (Internet telephony is frequently bundled with instant messaging programs, for example). However, for the businesses that rely on the telephone to interact with their customers (which is the vast majority of businesses), routing calls over the public Internet is far from ready for primetime.

Instead, many companies are setting up their own private networks, where they own the bandwidth, and where voice traffic can be prioritized over data, allowing these systems to transmit packetized voice extremely effectively with no perceptible degradation in quality. And in terms of reducing the cost of employees calling from one office to another, or routing calls once they come into the private system, VoIP can be very effective.

Another area where VoIP can also reduce costs is the moving and reprogramming of employees' phones. Hank Lambert, director of product marketing for Cisco Systems says, "many of our customers were still paying money every time they moved an employee that had a TDM phone. At Cisco headquarters for instance, it was between $70 and $100 every time they moved an employee that had a TDM phone, and we were moving the average employee at Cisco headquarters twice a year at the time. So obviously, that's a significant amount of money per year."

Lambert says those charges are "completely gone when doing a move with an IP telephone. So today, an employee usually just unplugs the IP phone and takes it to their new cubicle or office and plugs it in, and it comes back up."

Control of Bandwidth is Crucial

Don Van Doren says that "as long as you can control your bandwidth, and control the quality of that bandwidth, you have the ability to setup a network that can handle VoIP very well." And the result, if handled carefully, can be a phone system that can handle both the growing demands of customers, and the changing technology of the 21st century as well.

VoIP is being heavily hyped by its manufacturers, and the benefits of a carefully installed system (incidentally, Joe Gagan describes VoIP's current installation process as more of an art than a science) have some real pluses for businesses. Watch for some of these to trickle down to consumers' phone systems as well.

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