VoIP Comes of Age

Whether it's IP-PBXs, IP telephone handsets or line cards, Voice over IP (VoIP) is poised to grab more market share from traditional phone systems, known as time division multiplex (TDM) equipment, used by enterprises for the past 20 years. And that means business for VARs of all sizes, whether they deal in the high-end platforms or after-market services, applications and integration.

Corporate customers using IP telephony say they like the technology and that it works as advertised. But they want more from IP telephony and are open to VARs who can step up to the challenge. Among the items on their wish lists: better management tools, off-the-shelf applications for training or conferencing, and integration with legacy systems, such as voicemail and wireless LANs.

The Dell'Oro Group in Redwood City, Calif., says 2.6 million IP-PBX lines got shipped in the fourth quarter of 2003, a 19 percent increase over the year before. Total revenue for 2003 was around $6 billion, a figure that has been doubling year-over-year since 2002. That won't continue in 2004, although it will still be a "strong year," according to Dell'Oro director Steve Raab. He says enterprises are still being pretty conservative in their IP-telephony implementations, even though IP-PBXs have achieved feature parity with the TDM forebearers, for the most part.

IP-PBXs, IP lines and handsets are still slightly more expensive than traditional telephony products. And the cost of an IP line vs. a digital or analog line is also at a slight premium. But those gaps are narrowing. Cost per seat for a TDM-based PBX is around $700 per seat; IP-PBXs are as much as 30 percent more, though the gap is narrowing each quarter, Raab says. But cost concerns will recede as IP telephony products become more prevalent.

As Kevin Lopez, national manager of telecommunications for Chicago-based global accounting firm Grant Thornton, points out, IP telephony is a "migration point." He thinks IP-PBXs are superior to TDM in terms of technology, physical footprint size and ease of use. "For a similar price you get a better warranty and updated features," says Lopez, who has Avaya's IP-telephony equipment installed in 44 offices around the country. "If you can buy new, why would you go for older technology?"

IP Fast Food
That's pretty much the mindset at Burger King in Miami, where the company decided to go with IP telephony when it moved to a new building.

"We were going to have to buy a new PBX because our technology was at the end of its life," says CIO Rafael Sanchez. "We took the revolutionary approach as opposed to the evolutionary approach." Using Cisco's Avvid technology since July 2002, Burger King now has 1,100 IP users between two offices in Miami, 80 in Canada and 30 in the Netherlands. The fast-food company's longtime VAR partner, BellSouth, assisted with the installation and maintenance.

While most Burger King restaurants are owned by franchise groups, Burger King owns more than 1,000 of the restaurants around the world. In addition to looping them into IP telephony, along with the restaurant-support centers and other administrative sites, Sanchez has his hands full.

"There's always an opportunity to include VARs," Sanchez says, as the fast-food concern moves beyond simple connectivity with packetized voice. It would be enormously helpful, he says, to be able to approach enterprise users with shrink-wrapped applications for interactive training or some other value-added application. He said VARs and integrators can also play a role in getting legacy voicemail systems to work better with IP-PBXs.

Bringing IP into the unified messaging arena would also be tremendously useful, Sanchez notes, and "softkeys," which convert a Blackberry device from a cell phone to an IP phone for in-office use, would also be great. "It would really help if the VARs brought some of this to the table," he adds.

Management That Illuminates
Another enterprise, Pennsylvania Power and Light (PPL), Allentown, Pa., began looking more seriously at IP telephony a couple of years ago as its centrex contracts began to expire. Dave Stever, PPL's manager of communication technology service, says it didn't make sense to continue paying the monthly fees for centrex when the company could consolidate the number of T-1 lines it was using via IP trunking.

PPL saved money by using Category-5 wiring in an older building where the copper lines for voice were much older than the Cat-5 wiring used for LANs and enterprise data. "We avoided the cost of [copper] rewiring by using the Cat-5. Putting in copper would have been extremely expensive," he says.

About 1,100 lines are enabled across PPL's IP-telephony network, which uses Nortel's Meridian and Succession equipment. The company worked with reseller NextiraOne for a tactical solution in a remote part of Montana where support resources were scarce. Otherwise, the utility works mainly with Corporate Networking, Skipback, Pa., for data networking, while PPL taps Commonwealth Communications for voice design and installation.

Stever's not complaining about the training and expertise of the techs who worked on his far-flung installations. But from his own experience and based on secondhand stories from other users, Stever says the voice resellers need better training on IP. "The telephony folks are still new at IP networking, and it's going to take time," he says. PPL mitigated any risk of glitches or outages by using good on-site staff and involving Nortel as necessary, Stever adds.

Even though PPL uses Nortel's Optivity software to manage the IP-PBXs, it has "some real gaps," according to Stever. "Optivity only looks at one PBX at a time, so the ability of a reseller to layer on additional PBXs and the full suite of platforms out there would be very valuable," he says. In addition, he'd like to be able to eliminate the call-forwarding feature, as well as softkeys on the IP handsets to scroll through a company directory, set up a conference bridge and adjust conferencing volume, for example. While some of that is possible now, it requires a cryptic set of commands.

Accounting For Voice
Many IT executives and staff dismiss voice as a simple application, but fail to understand what it takes to sustain a dial tone, Grant Thornton's Lopez says. "A PC can reboot three or four times a day and no one blinks, but if that happens to your voice system, you're fired," he notes. So the issue of who gets delegated to deal with IP voice gets tricky for some organizations, Lopez says.

And many new IP-telephony users find that packetized data is a lot more robust than packetized voice when traversing the WAN. "When we first started, we were getting a lot of drop-offs and noise," Lopez explains. While the guys managing the routers told him everything was fine, he discovered the routers were set in such a way that packets were getting dropped. It didn't affect data, but it disrupted the packetized voice traffic. The problem went away after resetting the routers to lower thresholds and adding quality of service mechanisms, which give different priorities to certain traffic types on the router and WAN.

While Thornton didn't use a reseller for its initial installations, Lopez's wish list has begun to grow since then. Like PPL's Stever, Lopez is looking for better management capabilities. He continues to push for a fully redundant architecture to improve performance and availability. "It would also be great to have alarm viewing and trapping built into the system," he says. "And as things become more server-based, it would be great to have that information in real-time as opposed to people calling you from your service contracting company."

Thornton also extensively uses the IP "soft phones," essentially a PC application that tries to mimic a telephone handset display for itinerant users, complete with a "message waiting" light. Lopez would like the screen views to be more customizable by the user or administrator, and formatted in a way that makes it easier for users to understand. He's also looking for help with integrating unified messaging, faxing and wireless applications into the IP-telephony mix.

Clearly, IP telephony is shedding its image as a niche solution and becoming a strategic part of different enterprise networks. Richer functions will come in time as vendors and resellers sense customers' greater willingness to spend. New applications, richer management features, and tighter integration with existing systems and applications will ensure IP telephony matures into a cornerstone of enterprise networking.