Enterprises pilot VoIP balloon

A recent study found that the voice-over-IP (VoIP) test equipment market will balloon to revenues of US$221.3 million by 2009. But industry observers float different opinions about whether enterprises or carriers are driving the ascent.

Frost & Sullivan’s report: World VoIP Test & Measurement Equipment Market, examined the growing interest in VoIP among both service providers and enterprises, the increased interest in IP PBXs and IP Centrex services, and the need to overcome interoperability issues between VoIP network elements.

However, the report suggests that any big uptake in revenues is at least six years down the road. Even strong demand for VoIP technology is still two to three years away, Arnold said.

“There isn’t a huge demand driving VoIP. There aren’t a whole lot of enterprises, big or small, banging down the doors of Bell Canada, Telus Corp., Nortel Networks or Cisco Systems saying, ‘We want this stuff,'” said Jon Arnold, an analyst at Frost & Sullivan in Toronto.

“But the market is gaining some momentum,” he added.

A variety of factors are contributing to VoIP’s slow uptake. For one, many organizations – both large and medium-sized enterprises – already upgraded their network systems to prepare for Y2K. VoIP also represents a cost that many companies would rather avoid. As Arnold explained, moving to IP telephony literally means ripping out the existing phone system and starting anew.

VoIP’s claim to fame is convergence, meaning the ability to run both voice and data over a single network. On the carrier side, IP Centrex provides similar benefits as a service. Arnold said Canadian carriers are pursuing IP Centrex projects.

Analysts and vendors alike say carriers must push VoIP for the technology to gain traction. Some telcos are doing just that – Bell Canada, for example, is rolling out more bundled services that encompass both voice and data offerings, Arnold said.

For the moment, however, enterprises, not carriers, lead the VoIP push, mainly because corporate Canada has found a better cost justification for installing the technology.

“The IP telephony market in Canada has been the best market in the world for Cisco.…Canada represents over 10 per cent of the IP phones that we’ve sold globally,” said Brantz Myers, national manager of enterprise marketing at Cisco Systems Canada Ltd. in Toronto.

He pointed out that businesses outpace carriers in adoption in Canada. Cisco has sold approximately 150,000 IP handsets to 350 customers here.

But that’s not to say carriers are out of the picture. While enterprise clients have been running VoIP pilots, Myers noted that Canadian carriers are Cisco’s largest resellers.

John Anderson, product marketing manager at network-test equipment maker Agilent Technologies Inc. in Colorado Springs, Colo., said his firm has also seen more growth at the enterprise level – with good reason.

“It’s easier to meet the business objectives of lowering cost of overall IT services versus the carrier that is trying to gain revenue from the services,” he said.

Worldwide, Japan is seeing a lot new VoIP deployments, as is China, which is also building out new VoIP networks rather than running solutions for voice and data over existing ATM or frame relay infrastructures, Anderson said.