VoIP turns out to be a ‘brainer’

Voice over Internet Protocol (VoIP) has long been touted by vendors who hail converged networks that run both voice and data traffic. But are the purported benefits — cheaper long distance calls, simpler network management and new applications — easily achievable?

The concept is essentially the two-way transmission of audio over a packet-switched IP network (TCP/IP network). When used in a private local or wide area network (LAN or WAN), it is generally known as VoIP. When the transport is the public Internet or the Internet backbone from a major carrier, it is generally called IP telephony or Internet telephony.

However, the terms IP telephony, Internet telephony and VoIP are used interchangeably.

To enable voice traffic to be placed on a packet-based network, traditional private branch exchange (PBX) systems need to be replaced with IP PBX equipment. A PBX is an in-house telephone switching system that interconnects telephone extensions to each other as well as to the outside public telephone network. An IP PBX supports the IP protocol along with the traditional analogue and digital circuit-switched connections to the public telephone network.

According to Jason Chan, technical manager for business development at 3Com Asia-Pacific Ltd., migration to converged IP-based networks will be a trend for small or large enterprises or service providers. “By 2005, we expect a boom in Internet telephony equipment,” said Chan.

He noted that many companies had upgraded their PBX systems in preparation for Y2K, much of which will depreciate and need replacing by 2005. Instead of reinvesting in traditional PBX systems, he expected companies to purchase IP-based systems as they are now competitively priced and are easier to manage.

According to a Frost & Sullivan report published recently, the IP PBX market in Asia-Pacific will grow at a compound annual growth rate (CAGR) of 65 percent through till 2008. Growth for 2001 was 324 per cent year-on-year, while traditional PBX sales declined 8.5 percent during 2001. However the report noted that penetration of IP PBX equipment was only one percent of the total PBX market in 2001.

So far, the early adopters of VoIP have been educational bodies and technology companies, and many of these have been small-scale installations, said Manoj Menon, director for Technology Practice at Frost & Sullivan Singapore Pte. Ltd.

“The sweet spot is in the market below 100 or 200 lines,” said Geoff Johnson, vice president & research director at Gartner Australasia Pty. Ltd. “It’s almost plug-and-play to get started.”

Johnson said that over the next five years that the number of VoIP deployments with less than 100 lines will exceed installations of more than 100 lines.

Porting voice to a data network is less of a challenge for small campus or office environments than for large enterprises.

“For VoIP in a campus environment, in 99.9 cases you don’t need to worry about putting voice on the data network because the bandwidth requirements are quite small,” said Andrew Vlachiotis, director for New Technologies Group at Cisco Systems Pte Ltd.

Vlachiotis noted that voice calls require only 10 to 12Kbps of bandwidth, which is negligible when most LANs have between 10 to 100Mbps of bandwidth available. The bandwidth issue only applies to WANs, he observed. In such cases, new equipment has to be acquired but “it’s only voice-enabling existing data platforms,” he added.

The problem for many larger enterprises when adopting VoIP is the need for quality of service (QoS). For voice quality to be equal to traditional phone lines, the voice traffic needs dedicated bandwidth and must be prioritized above other traffic, noted Chan at 3Com.

Johnson added that while enterprises now considered VoIP to be a strategic and necessary move, much of their current infrastructure could not support the QoS required. “The main limitation (for enterprises) is that their Layer 2 and 3 switching equipment is inadequate (in supporting voice traffic),” he said.

Johnson also noted that most large enterprises will have a higher total cost of ownership for VoIP compared to traditional PBX over the next three years. “This is down to uncertain integration costs,” he added.

However QoS concerns are not necessarily confined to large enterprises.

For Lotus Tours Ltd., a travel company in Hong Kong, voice quality was its main concern when implementing a Cisco-based VoIP system. “Currently, there are still intermittent problems with voice clarity and call stability,” said Ken Ng, general manager for Customer Service at Lotus Tours.

Ng noted that the benefits in terms of cost savings were hard to estimate as the implementation was ongoing. He expects the system to provide improved service at its customer call centre, better monitoring of services and improved features and productivity for the staff.

Another concern when considering VoIP is the need for expert management skills. Despite the potential for simplified management of a combined voice and data network, experts noted the lack of skills available to manage to the converged traffic.

“Most IT managers today are skilled in managing data, they often don’t have the knowledge of managing voice on IP networks,” said Menon. He added that staff training will be required and that outsourcing of management functions to service providers was likely.

Both Gartner and Frost & Sullivan recommend that large companies take a gradual approach to replacing legacy infrastructure. Johnson suggested pilot projects be initiated first, to gauge the potential benefits before considering wider rollout.

He added that despite the early entry into this market by Cisco and 3Com, traditional voice vendors like Nortel Networks Corp. and Siemens AG have maintained their relationships with PBX customers. “They understand telephony intimately,” said Johnson.

Gartner predicts that 70 per cent of successful VoIP implementations prior to 2007 will come from the former traditional voice carriers. It appears that the case of VoIP being a “no-brainer” is not so clear-cut.