Voice over internet protocol soar
A majority of corporate executives now predict that they will implement voice over Internet protocol (VoIP), according to a new survey and report on networking and business strategy from AT&T in co-operation with the Economist Intelligence Unit (EIU).
VoIP, the ability to transmit voice calls over the Internet and IP-based data networks, means companies can carry calls within their own enterprise on their own networks, bypassing traditional telecom providers and avoiding toll charges. The additional promise of greater functionality and flexibility than conventional fixed lines finally positions VoIP as a true rival to the dominance of today’s fixed line telephony.
The question is no longer if but when VoIP will become the new standard for voice traffic, says Cathy Martine, AT&T's senior vice president of Internet telephony.
Survey
The EIU survey of 254 senior executives worldwide on the future of corporate networking reveals that 43 percent of respondents report that they are currently using, testing or planning to implement VoIP within the next two years, and another 18 percent believe they will implement it in the long term. Market forecasts reflect the same bullishness. Research firm Gartner Dataquest predicts that retail voice revenue from today’s public switched telephone network (PSTN) will drop slightly through 2008 while retail VoIP revenue soars by 38.6 percent over the same period.
Thus, after ten years in development, VoIP has grown up. The major barrier to adoption had been hurdles in VoIP’s performance, reliability and security. Another hurdle was the difficulty encountered by managers in performing return-on-investment (ROI) analysis on a relatively young technology.
Cost studies are now easier to perform, savings are more predictable and the questions of quality and reliability have now largely been addressed thanks to the development of international standards and stable software and hardware solutions, says Ms Martine.
Specific savings realised through VoIP can be significant and varied. Moving voice to IP allows companies to merge two disparate existing networks—one for fax and phone, the other for data and multimedia ”that they currently have to maintain separately at considerable expense. Running them together allows not only for reduced capital expenditure but also of operating expenditure through the consolidation of maintenance, administrative and support functions.
The use of VoIP also slashes usage-based telephone bills. Calls within a VoIP network bypass local telephone companies and are routed at low or no cost over a company’s data network, just like e-mail. Calls made from a VoIP line to a telephone on the conventional switched network are also far cheaper, since they can be carried within data networks practically all the way to the called party, thus eliminating expensive long-distance toll charges. Eighty seven percent of our respondents identified the reduction of telephone charges as critical or important in their decision to use or plan to implement VoIP.
But VoIP investments ultimately should not be judged on cost savings alone: Bringing voice and video applications together onto a PC desktop unleashes an array of new capabilities that can radically improve communication amongst employees. Seventy one percent of the survey respondents cited VoIP features such as unified messaging and follow-me as critical or important in their decision to use or plan to implement VoIP.
Companies adopting VoIP are doing so in an evolutionary way. Organisations tend to trial the technology first and move it across the organisation over time. Hosted and managed services are also emerging as turnkey solutions for companies that want experts to help design and implement their migration and manage the ongoing network.
Roadmap
A typical roadmap for VoIP implementation covers mainly three stages. First, a company has to enable the underlying data network to ensure voice security and high quality. Second, it has to plan for the interoperability of equipment during a migration toward VoIP. The third area is the Holy Grail, where companies begin to drive the adoption of new applications made possible by IP-enabled telephony. You can flip a switch overnight and introduce VoIP across an enterprise, says Ms. Martine. The migration to VoIP is evolutionary. Companies first want to get to know the technology, ensure its reliability and quality, and better understand their employees acceptance of it.
In a separate announcement today AT&T announced it has signed 23 multi-national companies to participate in its Voice Over Internet Protocol (VoIP) Global Remote Worker pilot for a solution targeted for general availability in the first quarter of 2005. Some of the firms participating in the four-country trial include Air Products, BASF Australia LTD, Bausch and Lomb, Global eXchange Service and VTech.
The trial, announced in June, is hosting participants located in Hong Kong, Singapore, Australia and the United Kingdom. This represents one of the most comprehensive initiatives leveraging the capabilities of VoIP for the global remote workers of top multi-nationals.
The company also is focused on delivering new business voice applications and services like IP-Centrex, call centre applications and Telework solutions. These are especially critical for the rapidly growing international teleworking community. The service provides portability of features and significant cost savings compared to making calls from hotels or using mobile roaming service for travelling professionals, affinities and communities that have need to communicate frequently.
As part of the research for the paper, the Economist Intelligence Unit conducted an online worldwide survey of 254 executives. The majority of respondents came from Europe (40percent), North America (27percent) and Asia-Pacific (21percent). Other respondents came from Latin America the Middle East and Africa. The top five industry sectors represented by the survey respondents were financial services, professional services, manufacturing, transportation and energy. In addition to the survey research, the EIU conducted a series of one-to-one in-depth interviews with senior executives and analysts. The survey was run in March and April 2004, while the interviews and other research was conducted August and September 2004.
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