VoIP speaks up for Canadian companies

A study concerning “converged network adoption” among Canadian corporations suggests IP telephony plays well in this country, although the technology also faces hurdles.

Frost & Sullivan, a research firm with analysts in Toronto, completed its “2003 Canadian Enterprise Network Adoption Study” this spring. The report says Canadian companies have “tremendous interest in voice over IP (VoIP) solutions.”

However, it adds, “the Canadian uptake for voice and data convergence in the enterprise has been more subdued than in the U.S.” That’s for a number of reasons, said Jon Arnold, Frost & Sullivan’s Toronto-based VoIP program leader.

For example, Canadian businesses are less likely than U.S. businesses to take risks on new technology. Also, IP telephony vendors pay more attention to U.S. prospects than those here, which makes sense, Arnold said: Canada has only a handful of enterprise-class customers for vendors to tap. “It feeds back to vendors focussing on the business that they can get now: big enterprises.”

Frost & Sullivan’s study says, “IP-centric PBX line shipments have shown explosive growth” between 2001 and 2002, jumping 134 per cent. The firm defines “IP-centric” PBXs as platforms capable of supporting TDM and IP, as well as platforms designed purely for IP.

Frost & Sullivan says it expects the IP-centric market to experience an annual compound growth rate of nearly 40 per cent from 2002 to 2006, “reaching about…$454.47 million by the end of the forecast period.”

The firm says large companies come to IP telephony for operational savings. Since IP puts voice on the data network (“convergence”), companies no longer need two network teams – one for data and one for voice – to take care of communication. Also, large companies like the multimedia applications that convergence supports, such as unified messaging that incorporates voice, video and e-mail.

Small- and medium-sized enterprises (SMEs) find operational savings and simpler network management attractive when it comes to IP telephony. Frost & Sullivan says SMEs also like the low cost of expansion that IP-centric systems afford; adds, moves and changes are easier and, in turn, less expensive to do.

But the SMEs also worry that converged systems are not as reliable as legacy gear. Large companies, meanwhile, cite the high, up-front price of IP systems as a hindrance for adoption.

Still, some are forging ahead with IP telephony, Arnold said. “The key thing is the flexibility of IP. It allows you to do old things in new ways, and new things you couldn’t before.”

Labatt Breweries, for example, uses Onlinetel Corp.’s VoIP backbone to support its “Blueline” initiative. This program gives many Ontarians free long-distance calls if they’re willing to listen to a five- to 15-second-long advertisement.

“It just seemed like such a unique way of doing things,” said Kathy Murphy, Labatt’s public affairs manager in Toronto. “When you look at young adults, the people we communicate with in the 19- to 24-year-old demographic, they are all about communication.”

Jason Jakob, CTO of Kitchener, Ont.-based Onlinetel, said VoIP is a prime element of Blueline. Since the carrier uses the Internet to connect far-ranging correspondents, transport costs are low. “I can’t get into detail on what we’re charging [Labatt], but it’s a tenth of what they’d spend with any other carrier.”

Arnold said the obstacles that IP telephony faces will fall by the wayside. Capital expenditure, for instance, “that’s one of the things holding this market back.” However, “the price of IP phones is coming down.”

For more information about Frost & Sullivan’s study, visit www.frost.com.