Internet telephony finally engages

The potential savings from using wide area networks (WANs) for Internet telephony and voice over IP (VoIP) have been dangled carrot-like in front of the corporate donkey since the mid-nineties but the technology has been slow to take off.

Immature technology, the rift between voice and IT departments, and the failure of CRM and unified messaging applications to gel with users have probably contributed to the slow uptake of combined voice and data systems. A survey by market-intelligence company Rhetorik in 2001 showed around 59 percent of respondents were nervous of VoIP because they didn't feel the technology was mature enough.

But the momentum may finally be building. Several large UK businesses have announced significant investments in IP telephony in the last year. Abbey National could be the biggest so far, with a current project to roll out IP telephony handsets to some 9,000 of its employees across 750 branches. High street retailer Allders, clothes designer Paul Smith and drinks company Diageo have all made serious investments in the technology.

"The market for IP technology in the UK is expected to be more than $100m. That's probably up from about $50m a year ago," says David Atkinson, Cisco IP development manager. "Most of the companies I talk to now say it's not a question of if they are going to deploy the technology, but when."

One of the reasons companies may have avoided combining voice and data networks is that the terminology can be offputting before you even get started on the technological issues. VoIP and Internet telephony are confusing terms -- probably due to more-than-liberal use of language by the marketing departments of some vendors

IP telephony describes technologies that use packet-switched connections to exchange voice, fax and other forms of information traditionally carried over the circuit-switched connections of the public switched telephone network (PSTN). VoIP, on the other hand, is a term used in IP telephony for a set of services for managing the delivery of voice information using IP. For example VoIP uses the real-time protocol (RTP) to help ensure that packets get delivered in a timely way.

The different IP transport mechanisms across the WAN can also be confusing. According to analyst Gartner there are three IP networks being used for voice:

Internet-based VPNs
Voice quality can suffer because of congestion and the number of router hops, so this is only an option for internal communications or when cost is paramount.

Network service provider VPNs
Service levels can be better controlled and service level agreements are offered but performance can be still inconsistent.

Enhanced IP networks employing Multiprotocol Label Switching (MPLS)
Gartner claims that 'high fidelity' VoIP will be offered by most network service providers during the next four years.

Recent research from analyst Canalys showed pure IP systems are accounting for twice as many customer premises telephony equipment shipments worldwide in the second quarter of this year compared to last. Although this is only an increase of around 3 percent to 6 percent, hybrid-IP equipment leads the way -- at 52.7 percent of the total -- and traditional voice-only PBXes coming in at 41.4 percent.

The halfway house of hybrid-IP solutions -- Cisco sells router cards that allow people with traditional PBXs to make use of their Wan for voice -- give businesses some of the benefits of converged telephony. These include reduced call costs and unified messaging, along with a promise of smoother integration with/migration from existing systems, says Canalys.

The fact that IP voice products have had time to mature is also playing a part in the increased uptake, says Cisco's Atkinson. "We have very low-end IP phones, so it's much more affordable than it was a couple of years ago. The whole industry is behind it and there is a lot more competition even from the traditional PABX manufacturers."