It used to be said you could always spot those pioneering new technology. Like the pioneers of the old American west, they were frequently the ones with the arrows in their backs. So it was with IP telephony.
Early implementations were plagued with problems. According to Stuart Hendry, Managing Director of network integrator Logical Networks, this was largely due to poor network design rather than inherent problems with the technology. "We've learned a lot since those early days," says Hendry. "Now IP networks go in and work as they are supposed to."
For most companies the decision to switch to an all-IP network comes at a turning point in the organisation's history, according to Richard Knott, Managing Director of Equant, a supplier of IP services.
"The trigger could be the end of life of an existing PABX or a merger/acquisition or maybe a major strategic change within the company," says Knott. Equant has built a global IP network available from more than 60 countries.
Hendry agrees and adds that many more companies want to move into IP telephony, but are still paying off their investment in PABX technology.
Multiple benefits
The initial promise for IP telephony was lower costs. It also had the advantage of running voice and data over the same network. But there are other significant advantages, as Krone Australia has discovered.
The company is well known to most communications managers as a supplier of copper- and fibre-based cabling systems for telecommunications and data networks. In a blaze of public relations activity from its technology supplier, the company announced more than a year ago it was moving to voice over IP as the first stage of an integrated network for data, voice and video.
The starting point for Krone's decision to move to IP telephony was the end of life of the PABX at its Australian head office near Wyong on NSW's Central Coast.
"The move to IP telephony promised cost savings, a single network infrastructure and the ability to handle the next generation of applications," says Robert Milne, Krone's Manager for Information Services in Australia. "Sure we had some teething problems in the beginning, but we've achieved the savings we expected in toll bypass."
Toll bypass involves routing long distance phone calls through the company's network rather than over the PSTN. For most companies this toll bypass feature has become less relevant with the falling cost of interstate STD rates.
But for Krone's non-capital city head office, it was a significant feature. For example, Krone has achieved further savings by routing calls through the company's network to its Sydney branch office for connection via the PSTN to destinations not on the Krone network. "STD charges from capital cities to other capital cities are generally lower than they are from regional locations such as our Wyong head office," explains Milne.
But he says the major savings have been in the area of network management. "We don't need to call in consultants or Telstra or any outside help to handle adds, moves and changes to the network," Milne says. "Our network administrator can handle the whole thing. It's hard to put a dollar figure on that, but it has made a huge difference."
There have been other benefits for Krone. The Cisco technology it is using has in-built teleconferencing facilities. This has allowed the company to quickly set up teleconference calls over its network. "The big plus for this has been reduced travel costs," according to Milne.
The initial plan was to add video to the network. This is still on the cards, but first the company will link its Melbourne office into the network. Brisbane is already online. "Looking back I'd say we've achieved everything we set out to do," summarises Milne.
National Jet Systems is one organisation that has been able to put a dollar figure on the savings realised from moving to a converged IP network. The company operates passenger and surveillance aircraft services around Australia. It has communications network services sites in Adelaide, Broome, Perth, Darwin, Cairns and Brisbane. With more than 800 employees, National Jet operates more than 30 aircraft ranging from four-engine jets downwards.
Like Krone, National Jet's springboard into IP telephony came with the end of life of its PABX network. It picked NEC to install its IP network.
A spokesman quoted Daniela Marsilli, Managing Director of National Jet Systems, as saying the company expects to save up to $48,000 a year with the new network.
National Jet also expects longer term productivity gains as a result of users' increasing adoption of server-based applications, such as staff rostering and enterprise resource planning, across the network. The company also sees lower administration and call costs and an increased ability to monitor and prioritise network traffic.
The argument that IP telephony gives an organisation the infrastructure to handle the next generation of applications is a compelling one, according to Equant's Knott. This is true if the company sets up its own network or outsources to a provider such as Equant.
"The whole point is you are future-proofing your networking," Knott says. "From IP telephony you can springboard into converged voice and video and easily handle the new generation of applications such as those from SAP," he says.
The low road or the high road
Having made the decision to move to IP telephony, you are now at a crossroads. There are two competing groups of companies eager for your business. On one side are the traditional telcos with a history stretching back - in many cases - to the start of telephony itself. These include major carriers such as Telstra and traditional telco equipment manufacturers such as Alcatel and NEC.
On the other side is the new generation of companies that have grown up solely in the IP era. The biggest of these is Cisco.
Complicating the issue is the variety of alliances between companies from both camps. For example, Equant chose an alliance between Nortel, a traditional telco, and Cisco to supply its international network.
Rob Porter is the Product Marketing Manager for Enterprise Voice Systems at Alcatel in Australia. Alcatel's roots stretch back almost to the start of telephony in the 19th century.
"The major strength of traditional telcos is that we have the ability to support existing infrastructure and migrate a customer to IP telephony," Porter says. "We can also provide a 'green field' IP solution."
"You have to remember that for all the talk about IP there is still a lot of circuit-based infrastructure," says Porter. "It's important we don't force the customer one way or the other."
Fausto Marasco, CEO of Premier Technologies, offers a differing point of view. His company specialises in the provision and implementation of contact centre technologies throughout Australia and South East Asia using IP telephony.
"The newer companies are much more flexible," he says. "The key to the new technology is that it's not about IP or open standards. It's all about the increased functionality that comes with the features that IP telephony provides.
"It means distributing increased functionality across an organisation. In effect the enterprise becomes the call centre."
Marasco sees one obstacle in the widespread adoption of IP telephony. It is what he calls the 'eye-gouging price' of IP handsets. "They started at about $1000 a piece but they have slowly come down to about $600 a pop. Multiply that across a major organisation and you can see it's a major cost."
"Compare that with the cost of an analog handset - typically less than $100. With them you also have the advantage of being able to plug into any PABX."
Whichever company you choose for the move into IP telephony, all vendors agree it is the future trend.
"There is intense speculation on which companies will survive in this business," says Logical's Hendry. "We could be in the same situation as mainframe and mid-range computer businesses were with the introduction of the PC.
"How many of those traditional mainframe companies are around now, and of those that are, how have they adapted?"
"Whoever you go with, you have to ask yourself, 'Do you want to be the last organisation to buy a PBX?'" Hendry concludes.
