Boeing bets big on Cisco with VoIP system for 150,000

The Boeing Co. last week said it will install up to 150,000 voice-over-IP phones and other networking equipment from Cisco Systems Inc. over the next five to seven years — a project that analysts called the largest VoIP deployment thus far involving one vendor.

Boeing expects to buy 130,000 to 150,000 of Cisco’s VoIP phones as part of the planned rollout, said Mike Terrill, program manager for network convergence at the Chicago-based aircraft manufacturer. It will also replace about 125 circuit-based telephone switches with an undisclosed number of Cisco-made IP switches, he said. In addition, Cisco will provide Boeing with its Call Manager software, gateways and network-traffic trunking devices.

Boeing and Cisco wouldn’t disclose the expected value of the deal, but several analysts said it could easily surpass US$150 million based on an average cost of $1,000 per worker for VoIP phones and related software. The price tag could be much higher depending on how much of Boeing’s underlying network infrastructure is replaced, said Elizabeth Ussher, an analyst at Meta Group Inc. It’s possible to spend $1,500 to $1,700 per worker on such projects, she added.

The size of the planned deployment impressed Ussher and other analysts who view Boeing’s project as another indicator of a recent uptick in the adoption of VoIP technology by corporate users.

“We’re finally starting to see the floodgates open,” said Kathryn Korostoff, president of Sage Research Inc. in Natick, Mass. “Every company knows VoIP is the wave of the future, but it’s been a matter of when it will take off.”

Increased interest

Korostoff said the increased interest is partly the result of two developments: The cost of VoIP phones has started to drop, and many traditional voice switches are aging and need to be replaced.

Other large installations that are under way include a project at IBM, which in March outlined plans to provide VoIP phones to about 400,000 employees and contractors over the next five years. IBM is using a combination of gear from Avaya Inc., Cisco and Siemens AG.

Boeing officials said the Cisco phones and switches will replace devices made by Avaya, Lucent Technologies Inc. and Nortel Networks Ltd. The contract with Cisco covers a five-year period and could be extended if needed, according to Terrill. He said Cisco already is the primary supplier of the more than 1,000 WAN routers and 5,000 LAN switches that Boeing has on its global data network.

Cliff Naughton, director of network services at Boeing, said the company expects to get cost efficiencies by running a converged network for voice, video and data traffic, but he wouldn’t elaborate. “There is a payback in operating expenses,” Naughton said. “It met our own internal rate of return.”

Both Terrill and Naughton repeatedly used the word “journey” in describing the planned rollout, pointing out several concerns they have had about VoIP technology — some of which have yet to be fully resolved.

For example, Boeing has run a VoIP pilot program for the past three years with 4,500 Cisco phones at operations in four states. Terrill said the tests have shown that voice quality is lessened for home-based workers who use cable modems or Digital Subscriber Line connections, as well as for employees with PC-based IP phones, which are known as soft phones.

All of those devices lack quality-of-service capabilities that can give voice traffic priority on networks to prevent disruptions in calls or videoconferences. For now, Terrill said, “we’re being very conservative with soft phone implementations.” Naughton added that Boeing is starting to implement quality-of-service technology on broadband connections used by employees who work at home.

One big corporate culture challenge that Boeing faces is bringing together its voice and data networking staffs to make the VoIP project work. The company has partly dealt with that by hiring for the project a group of about 10 traditional voice network engineers, who have also been trained to understand IP so they can deal with Cisco and subcontractors in making technical decisions about the rollout, Naughton said.

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