Voice over IP raises its voice

A problem was stirring at one of three family-owned, Ottawa-based car dealerships about two years ago. And before it reared its ugly head and got out of control, the staff there decided to slay the dragon.

That dragon was communications.

The Hunt Club Ford Lincoln dealership, along with Donnelly’s Ottawa Ford, Sunrise Pontiac Buick and Donnelly’s Collision Centre are all located within close proximity of each other, but each location had its own receptionists and its own PBX.

The costs alone for the receptionists required to handle the incoming phone calls was high and the number of phone lines required for each building was adding up on a monthly basis. On top of that, an in-house survey showed that 60 per cent of calls made from the company weren’t even made to people on the outside – they were made to someone else within the company.

But a bigger issue was at hand. At the time, the dealership’s largest building, which employs about 75 people, had a phone system that was not Y2K-protected. The search then began for a new infrastructure. The company happened to have a computer engineer on staff who was promptly sent out to do the research. What he came back with was a proposal for “state-of-the-art technology,” says Maureen Donnelly, dealer principal at Hunt Club Ford Lincoln. The idea was to implement voice-over-IP (VoIP), which sounded fairly sensible to Donnelly.

“If you are going to go and spend money in technology, you’d better get the best thing because it all gets outdated so quick. It was state-of-the-art stuff. And what it enables us to do, and how [our engineer] sold it to us, was [to look at] the amount of monthly fees that would go away,” Donnelly says.

The history of voice and the network has not always been a simple one. There was a point not too long ago when VoIP was commonly associated with a few choice words: ‘poor quality’ and ‘inconvenience.’ Given its weak reputation, most people could not be bothered exploring it, let alone implementing it – equipment vendors excluded, of course. They were the ones to stand by it and its future.

Well, it appears that future is here, and the landscape is changing. For as time has passed, the quality and awareness of the technology have increased. Analysts are now offering up glowing projections for VoIP and its adoption rate in Canada.

Hear me out

Recent findings from International Data Corp. (IDC) Canada in Toronto project an astonishing climb in the number of VoIP minutes used, which will in turn have an effect on the amount of money spent on VoIP services. Lawrence Surtees, senior telecom analyst with IDC, noted that the number of minutes of business use of voice on an IP network in Canada hit 20.8 million in 2001. That number is expected to climb to 164 million this year, and will hit more than 5 billion by 2005. Residential use – which is ahead of business right now – will also climb, but business use will eventually surpass it. And, while businesses spent $1.4 million on VoIP last year, they will spend $12.3 million this year. By 2005, IDC predicts that that number will reach a staggering $995 million.

Surtees attributes the astonishing climb to growing awareness. “If the quality is there and the products or gear is there that is more reliable…we’re assuming that each year is going to skyrocket. Already last year there were products…and a big key thing between 2000 and 2001 is, especially in the business arena, there’s products that have gone a long way to really resolve the quality issue, to eliminate the echo delay.”

Who will continue to generate this awareness? The vendors, mostly, Surtees said. They are the ones pushing their products, which will in turn offer a push for the technology.

But the business case for VoIP is another factor in its pending success. While the initial monetary investment can be hearty depending on an enterprise’s existing equipment, the fact of the matter is that adopters of the technology are realizing savings overall.

Mississauga, Ont.-based Elroy Jopling, principal analyst with Gartner Inc., believes this is what will really move the technology into the adoption stage.

“I think in my mind the key thing is in any new technology or anything like that it goes through what we call a ‘hype cycle,’ and initially it is over-hyped and then reality strikes and it isn’t what they thought it was,” Jopling says. “And it kind of moves into a trough of disillusionment. And voice over IP has moved passed that. It’s now at the point that it has moved from being a ‘gee whiz’ technology to ‘How can I make money at this?’ People are looking at it from a business perspective rather than a technology perspective. And that will create a little change for some of the vendors because the ‘gee whiz’ is not going to work anymore. People are going to be looking for hard and fast dollar-and-cents-type of answers. And probably that’s where VoIP will suddenly start to take off.”

The car dealerships began by implementing VoIP in the largest building. After using it for a short time, Donnelly says the reality set in that they didn’t need to have a receptionist in each building. And, she says, the eight-year-old system in her building was getting a bit outdated. She was looking to get a little more sophisticated.

“So we realized that maybe if I piggyback my phone acquisition on top of [the first building’s], then we could eliminate a bunch of the monthly fees and we could eliminate one of the two receptionists – at least at night.”

The venture ended up paying off, and the company decided to bring the two other buildings on board. But it was not too much longer after that the things began to go awry. Instability was becoming a problem, and the dealerships began to question if the issues they were experiencing was due to the technology.

And while they kept experiencing downages, the company’s supplier – which Donnelly would not name – could not come up with a solution. It pegged the problems on the dealership’s network and infrastructure. After being with that company for a year, the dealership decided it was time to take action.

A different company – Kanata, Ont.-based Mitel Networks Corp. – convinced the dealership to give the technology another go, although the staff was not fully convinced.

“We said, ‘Fine, we’ll give it a try,’ fully intending if Mitel didn’t deliver, that after six months it was getting ripped out and we were going back to basic phones,” Donnelly says. “But by that point, when we switched to Mitel our staff was…badmouthing all phone companies. Then the head of Mitel said to us, ‘Your God-given right is a dial tone.’ We felt so happy when somebody said that to us, because that didn’t seem to be the deal before.”

Within three weeks, the first and secondary buildings were converted. While she noted that was followed by a short period of instability, the situation had been remedied.

The dealership now also plans to implement speech recognition software to help ensure that customers get prompt service. Instead of having to dial an extension, customers will only have to say the name of the person they are trying to reach.

“Much easier than remembering extension numbers,” Donnelly notes.

A sound business plan

For another Canadian company that has deployed VoIP, cost was also a major issue, but the stability of the technology was also a concern right from the start. Accounts Recovery Corp. (ARC) in Victoria was originally not looking at VoIP specifically, but were simply searching for the best voice system to meet its needs. While it had arrived at the conclusion that VoIP was a strong contender, the company wanted to sit down and talk to someone who was already doing VoIP, says the company’s vice-president and assistant general manager, Joe Polard. But it was difficult to find anyone who was using VoIP to call from one location to the other, and then going out over the PSTN from that other location – which is what ARC wanted to do.

Finding an example of a company using the technology is not so difficult anymore, according to Nick Tidd, managing director, 3Com Canada. In fact, he said the company is able to offer a reference site from every major city, in every province across the country. And the fact that there are so many references is what is in part enabling others to jump on board with confidence.

“We’re able to present to folks that hey, you’re not going to be the guinea pig. That somebody’s already gone and done this. (Then) their comfort level increases that much more,” Tidd says.

ARC, however, was not originally looking at VoIP specifically, but was simply looking at putting in a new voice system that would be the best solution to its situation.

“We are looking to take our one-to-one Centrex, and our sort of distributed call centre – we’ve got offices in Victoria, Vancouver, Toronto, Montreal, and actually now Moncton, N.B. – so taking that distributed sort of calling pattern and saying, ‘Hey, everybody here has got a single Centrex line. How do we implement a phone system that will get us from using 250 lines down to using 50, and also allow us to call Vancouver, Toronto, Montreal from any of the branches and have it be a local call?’ And in looking at the different phone systems it appeared everybody could do it, there was just different ways of doing that,” Polard explained.

The process began by looking at everything that various vendors had to offer. As time passed, ARC could see that there would be certain benefits in VoIP, based on originally looking at linking the offices with T-1 lines, and knowing how many channels it could send over that T-1.

It was the monthly costs that the company was trying to attack, and when it came down to it, the savings that VoIP was going to bring clinched the deal. The company forged ahead and at press time was about halfway through its implementation of 3Com equipment.

“Right now we can attest to Victoria – we’ve got about 125 users working on IP telephones…they go over the LAN to the switch and the computer room makes a call to wherever they are calling,” Polard says. “In Victoria we are now able to, in the dial plan, dial Vancouver. It will go over our WAN to Vancouver and pick up an analogue line there as a local call. So now we can attest to people in Victoria dialing Vancouver without any problems.”

Voices of the future

But before taking the plunge, Gartner’s Jopling warns that potential users should first weigh what the technology will be able to do for them. He added that there are a lot of interesting applications that go along with VoIP, and these could be what push a customer to take it on.

“You suddenly get into nearly virtual call centres and what that can mean to your organization,” he explains. “Actually, I’m more excited about the applications that revolve around it, and I think that will be what produces the greatest revenue for voice over IP and at the same time cause it to be a more significant product.”

Things such as unified messaging, collaboration and working well with remote workers will enable more flexibility, he says.

“The big enchilada down the road is, will voice over IP, and therefore IP-based networking, supplant old traditional circuit switched?” notes IDC Canada’s Surtees. “Theoretically it can, and who knows when. But last year with the launch of the first IP VPN services, that’s the toll in the water that’s going to start to move the carriers in this direction. And it has the potential to make a paradigm shift along the lines of digital replacing analogue. And I think the analogy is the same because it will also take that same kind of investment over that same long period for the public networks, if they can’t turn it all on a dime.”