With the switch to BT’s 21st Century Network steadily approaching, there is a lot of talk about voice over IP, but is the market ready to adopt the technology yet? Simon Meredith reports.
With all the hype and talk about voice over IP (VoIP) you might easily be forgiven for thinking VoIP is already here and generating income for the channel. But while there is some activity, particularly in the higher end of the market where companies are replacing expensive leased lines and reducing costs by putting voice across the network, taking it out onto the internet is a different prospect.
Keith Humphreys, managing consultant at channel analyst and consultancy, EuroLAN, said that although the arrival of consumer-oriented services such as Skype and Vonage has caused a stir in the market, they have not yet managed to convince business of the quality of their service.
“When pushed on the subject, Vonage has admitted that a 512KB line is not really sufficient to offer any reliable quality of service (QoS), so it is solving the problem by throwing bandwidth at it. That will not be a problem if we can get 8MB with low contention ratios but we need that before we can move forward,” Humphreys said.
Of course we do already have 2Mbps and BT is expected to start testing lines for the 8Mbps later in the year. This will give everyone more bandwidth, but that still might not be enough, said Neal Tilley, solution marketing manager in the enterprise solutions division at Alcatel. “The increase in bandwidth isn’t as important as the ability to deliver QoS and prioritisation. The voice takes a relatively small percentage of the pipe, so the jump to 8MB is irrelevant if the contention ratio forces the need for QoS intervention,” he said.
While BT and other infrastructure providers such as Tiscali and Cable & Wireless are investing in these areas, it will be some time before most businesses are willing to stake their vital external voice communications on a relatively untried technology, said John Carter, managing director of broadband specialist DMSL. He thinks that many – especially in the SME market – will wait for BT to make its big switch.
“When BT implements its next generation 21st Century Network in 2009, all calls will be VoIP calls. Firms are putting in IP-capable PBXs today so that they can make that switch in four years time. Yes, some are already replacing leased lines with high-speed broadband connections and running VoIP across Multiprotocol Label Switching (MPLS) to link remote offices and this makes perfect sense. There is a definite cost saving to be made. But I don’t believe we will see everyone using VoIP until BT makes the big switch at the end of the decade.”
Tilley said that timing is crucial in this market. “VoIP on the web is no pipe dream, but I wouldn’t buy my surfboard just yet,” he said. Like Humphreys, he believes that a better infrastructure needs to be in place before VoIP can be run across the web with confidence.
“VoIP does exactly what it says on the tin: it sends voice over IP. The internet is the epitome of IP, so in terms of evolution, with step-ups such as broadband and MPLS, there will be eventual acceptance that VoIP is ‘for everyone’. Add the next steps – fibre to the home, broadband wireless and so on – and it will become as accepted as windscreen wipers and indicators on cars,” said Tilley.
There is also talk of even higher bandwidth with new entrants such as Be Unlimited claiming that they will be able to offer bandwidth of up to 24Mbps later this year. This may accelerate uptake of VoIP in the consumer and business markets to a certain extent, said Colin Curtis, principal consultant at Commstrat, but he is not sure how effectively resellers will be able to address the market in the short term.
“Although VoIP is gaining enormous momentum, the drive to keep prices down and the high cost of support means that this is a difficult market for resellers to approach while still maintaining margins, particularly with BT and other carriers already starting to make offerings in this space,” Curtis said.
The arrival of single-handset services such as BT Fusion, which combine the use of cellular and Wi-Fi to route calls across the internet is likely to confuse the picture even more – especially as these will initially be aimed at home users. That said, “truly innovative” services will need to be offered to make VoIP a mass-market hit, said Curtis, who believes that VoIP will need to combine with other data services and video – the so-called ‘triple play’ proposition – before it can really take off.
The type of service offered and the price of those services, Tilley noted, will be key to mass-market adoption. “Customers are looking to this technology not only for new levels of application integration and increased productivity, but for simple delivery, in terms of price per user per month – as basic as your home telephone bill. Price is the touch paper, if you like. It just needs to be lit.”
But it will be a very different story in the pure business market, he added. Here customers will need help deciding when and how to adopt VoIP. “The battleground is not in VoIP, but in the multitude of decisions that can be made by an organisation. These cross many vital areas that customers must consider before acceptance, including decisions about what is required in terms of features, interface, interoperability, integration, cost, security, management, mobility, ease of use and so on,” said Tilley.
This will create opportunities for VoIP-savvy resellers, but ironically, it is complexity that frightens off resellers from committing to convergence and investing in the necessary in-house skills in the first place, said Tilley. He believes that these are the very areas in which resellers can offer more value and expertise.
Humphreys said that VoIP will certainly open up new potential for resellers but it will also cause those not used to selling telecoms some difficulties. “Resellers have a good opportunity in managed services. They can sign up with a carrier and get an annuity revenue stream. The difficulty is rewarding sales people who prefer to take commission on a sale and not as an annuity,” he said
Voice resellers will also need to adapt, he noted. “The voice guys get good service revenue from adds, moves and changes [on PBX equipment], which go out the window with IP telephony (IPT), so they will have to change. Also the margin on IPT is lower than traditional voice.”
Whatever their background though, and while it might take time to be accepted as something you can run across the open web, rather than just internal IP networks and VPNs, resellers should start to learn about VoIP and get their customers ready for it now, said Carter. “Make no mistake, VoIP is coming and if you don’t start getting your customers ready for it today, someone else will,” he warned.
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