Big businesses handle VoIP alone

Large corporations have been slow to embrace hosted or network-based voice-over-IP (VoIP) services despite the hype about lower costs and compelling applications.

Today, most of the momentum in business VoIP services — customer premises equipment-based managed PBX, hosted IP Centrex and network/softswitch-based voice VPN — is in the small-to-midsize business (SMB) market. And of those services, hosted IP Centrex is the most sought after because smaller companies were traditionally TDM Centrex customers.

Similarly, because large corporations traditionally have had their own PBX networks, a managed or unmanaged IP PBX service is most appealing to them, analysts say. As proof, they point to the large managed IP PBX contracts recently awarded by Ford Motor Co., Bank of America Corp., The Boeing Co. and Merrill Lynch & Co. Inc.

The market is evolving this way because large corporations with entrenched and knowledgeable IT departments and custom applications are reluctant to outsource their VoIP infrastructures. They’d rather have a service provider manage the routers than dialing plans, call routing and administration of specific feature sets.

Smaller customers don’t have the wherewithal to staff an internal service provider, so they would rather farm it all out to a hosted service, which is essentially what they have been doing up to now with Centrex.

“What’s driving this market? It’s cost reduction,” says Will Stofega, an analyst at IDC. “It’s not find me-follow me, or visual voice e-mail or things like that. It’s not increasing worker productivity. Those things don’t really hold water right now.”

Somebody should tell that to Notre Dame. The Indiana university is going to pilot an IP service from carrier SBC. The chief motivator is the imminent obsolescence of Centrex. Dewitt Latimer, the university’s CTO, says the cost savings from VoIP will come years later, when price declines in traditional Centrex bottom out while those for IP keep plummeting. Businesses can potentially shave up to 50 per cent or more from their telecom expenses by using a VoIP service, analysts note.

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Jim Love, Chief Content Officer, IT World Canada

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