Enterprises pilot VoIP balloon

A recent study says the voice-over-IP (VoIP) test equipment market will balloon to revenues of US$221.3 million by 2009, suggesting that VoIP is on the rise. 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; increased interest in IP PBXs and IP Centrex services, and the need to overcome interoperability issues between VoIP network elements.

Jon Arnold, an analyst at Frost & Sullivan in Toronto, said the VoIP market may not be ablaze, but it is gaining momentum in Canada.

“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,'” he said.

A variety of factors contribute to VoIP’s slow uptake. For one, many organizations – both large and medium enterprises – already upgraded their network systems during the Year 2000 crisis. VoIP 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. Arnold said Bell Canada, for example, is rolling out more bundled services that encompass both voice and data offerings.

For the moment, however, enterprises, not carriers, lead the VoIP push, mainly because corporate Canada has found a 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, 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 roughly 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 has the hottest VoIP market in new deployments, along with China, which is also building out new VoIP networks, rather than running solutions for voice and data over existing ATM or Frame Relay infrastructures, said Agilent’s Anderson.

Frost & Sullivan’s report suggests a huge uptake in revenues a half dozen years down the road. Arnold predicted that strong demand for VoIP was still at least two to three years away.