Cashing in on VoIP

The stage was set for an excellent evening of entertainment long before Eric Clapton stepped out to an expectant crowd at the Air Canada Centre last June. For many weeks prior, phone calls were placed across North America between booking agents, production and accounting staff to make sure there would be no unpleasant distractions for this masterful guitarist/singer and his entourage.

Ensuring that about 1200 live concerts and events a year run smoothly is the work of House of Blues Concerts Canada, where CIO Howie Gold has led the company and its Los Angeles-based parent HOB Entertainment Inc. into using Internet Protocol telephony – or voice over IP (VoIP) – to facilitate communication.

“In our business, we require a high level of communication between similar positions in different offices,” Gold explains. “Our production manager in Toronto will want to speak to our production manager in Vancouver who has just done an Eric Clapton show so we’ve got everything ready and waiting when they come here. It’s generally known that happy artists are not only going to play for you the next time around but they’ll probably put on a better show and the whole night will go much more smoothly.

“E-mail increased our level of communication with our remote offices, then VoIP put us through the roof,” he continues. “You’re able to get much more accomplished speaking with someone directly, as opposed to sending text messages back and forth.”

city of Mississauga

Ensuring that tax payers get the best service and value for their money was what prompted the City of Mississauga to replace its existing telephony with VoIP. The City has 72 locations, including pools, arenas, community centres, libraries and fire halls. In 2001, when the existing telephony contracts were expiring, an alternative was sought to replace the predominantly Bell Centrex private branch exchange systems which had become expensive to operate.

At the time, Mississauga had about 40 key phone systems and used T1, DSL and even dial-up lines to connect with the Civic Centre as the main office. A higher bandwidth was needed for the various locations to accommodate applications such as SAP financial systems, registration and booking systems, and an extensive security camera system. Earlier, Mississauga had teamed up with neighbouring municipal jurisdictions to install a fibre optic network. Having that network in the infrastructure made it easy to move to VoIP and fuelled the decision to do so.

Last February, Mississauga completed the final phase of its telephony replacement project by expanding the converged data/voice network to its multiple call centres.

The VoIP system is based on Cisco AVVID (Architecture for Voice, Video and Integrated Data) technology and includes 2,300 Cisco IP phones for a total cost of $3.3 million.

return on investment

So what’s the expected ROI for these two VoIP installations?

“Five years is the payback,” says Jack Lawrence, Mississauga’s director of information technology. “We’re looking at about $700,000 a year in recovery or cost avoidance.”

He says they were paying about $1.2 million a year, primarily for the actual telephone lines and services. Long distance costs were not a concern since most of the outbound calls for Mississauga remain local.

Reducing long distance phone charges did initially prompt House of Blues to turn to VoIP, although improving the connections between locations and with agents and artists has probably been its most significant benefit.

Gold says their ROI was within a year, based mainly on their long distance charges from up to $2,000 monthly dropping to as low as $300. The House of Blues head office in L.A. took note of those savings and followed the Toronto lead for their clubs in Chicago, New Orleans and Anaheim, with plans for Cleveland and Denver.

In addition to the Molson Amphitheatre along Toronto’s lakeshore, which also serves as its headquarters, House of Blues Concerts Canada stages events at several venues across Canada and owns facilities in Vancouver including the historic Commodore Ballroom dance hall.

“Our long-term plan is to tie all our clubs and all our amphitheatres together and have our own little long distance dialling network where we can reach anyone at any location just by dialling a four-digit extension,” Gold states. “That will cut the company’s long distance costs by tenfold.”

installation not a problem

Both organizations report the implementation was not difficult, with vendor support.

Gold says the House of Blues went into VoIP at their own pace. The Nortel Networks Business Communications Manager (BCM) they had chosen supports both digital and IP telephony in a single system. Uncertain of the phone quality, they tested a couple of IP phones before fully implementing IP telephony across Canada. He estimates they saved as much as $30,000 by being able to keep their existing digital phone sets from their previous Nortel Networks Norstar system.

Lawrence recalls it took about three months with Cisco staff to configure and test it within the City of Mississauga’s project room. Then they rolled it out into just the IT department, where staff used the new phones exclusively for about a month. That success prompted the full roll out across the 72 city locations. The city provided staff with online training and set up optional training for two months with actual phone sets.

realizing the benefits

Beyond reducing costs, both organizations cite the usual benefits of improved productivity from enhanced features like unified messaging, caller ID and the four-digit access even to external sites. Then there’s also the ability to add, move and change phones according to one’s own schedule.

Lawrence appreciates the enhanced emergency calling that pinpoints the precise location of a phone used to call the 911 dispatch, rather than just a general building address. He adds that the small browser screen on the Cisco IP phones could also be used to send messages such as notices to city staff, perhaps during an emergency. These phones also indicate the length of the current call and show who else is trying to call in. He says he often uses the ‘missed call’ feature to provide great customer service when people don’t bother with the voice-mail. “I will call back and say ‘I noticed you called, can I help you?'”

House of Blues’s Gold is also enthusiastic about the benefits. “There’s so much functionality with the BCM that is just tailored to our type of business because of our mobile workforce,” he said. “A lot of our accounting people and production staff are always on the road because they’re touring with the band. With software phones on their laptops, mobile workers can access their faxes, voice mail, e-mail and their telephone calls all from a single interface.”

The ability to tandem BCMs gives toll-free access to any number in an area wherever a House of Blues venue connected to the IP telephony. This capability made House of Blues a topic of conversation among artists’ agents and managers, “which is good when dealing with festivals down in the States,” Gold notes.

words of advice

When choosing your ISP, use the same care as you would in choosing a telecom provider because that data connection is now going to be part of your lifeline, Gold cautions. Make sure they can give you the 99.999 per cent up time and guarantee the upstream and downstream bandwidth.

Recognize you have additional responsibilities to keep the system operational and perform the maintenance, patches, and upgrades to software, advises Lawrence. “It’s not unlike what we do on systems or for the network.”

Build in a multi-level contingency power supply, because the phone company is no longer powering your phones, he adds. “Today, Cisco has the power in their switches, but at that time we put UPSs (uninterruptible power supply units) at each switch location for battery back-up.” As well, all phone sets are on a generator which performed well during last summer’s power outage. One emergency Centrex phone per floor provides a third-level back-up in case everything else is gone.

Lawrence admits that not having the fibre optic network would have meant an additional challenge and cost, but still sees that VoIP would have been only a matter of time since “everything is now converting to IP.”

Indeed, the Stamford, CT-based research firm Gartner predicts that shipments of IP-capable phone systems in 2007 will constitute nearly 97 per cent of the market.

Freelance writer/editor Susan Maclean covers a wide range of IT management issues and technology applications. Based in Guelph, Ontario, she can be reached at

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