Catch up with IPT

As IP telephony reaches maturity, we reveal how and where the technology is proving profitable for vendors, customers and resellers

After years of being a promising but niche technology, IP telephony (IPT) has finally reached acceptance as a valid choice. Analysts are predicting rapid growth, and IPT sales are expected to overtake conventional telephony well before the end of the decade.

IP and IP hybrid extensions made up 77 per cent of shipments in the UK during the second quarter this year, according to analysts at MZA. IP extensions made up 13 per cent of the total extensions market during the period, up from eight per cent in the same quarter last year.

"The IPT market is reaching complete maturity, and we're seeing wholesale adoption in all markets," says Colin Curtis, research and development manager at converged IP reseller Xpert Communications.

"We're finding little difference between the markets for IPT and traditional telephony, because customers no longer seem to question IPT as a technology and there are almost no limitations when it is compared with traditional telephony."

By using the IP technology which underpins the internet and many private data networks, IPT can transmit voice and fax traffic using the same infrastructure as data traffic. It integrates more easily with data applications and obviates the need for separate voice networks with their own switchboards (PBXs, or private branch exchanges). IP phones can be plugged directly into data networks.

Cost saving is a major driver, especially across multiple sites where phone calls can be piggy-backed for free on existing data WANs or broadband connections.

"The cost benefits of IPT are so substantial that it's simply sensible to lead with them when talking to customers about converging their voice and data networks," says Mike Valiant, international market development manager for enterprise voice solutions at vendor 3Com.

And free phone calls are only part of the saving. "The key benefit for distributed organisations is lower total cost of ownership," says Roger Jones, convergence director at telecoms vendor Avaya.

"Businesses are always impressed when you can show them how easy it is to change things such as speed dials," says Valiant.

"The second demonstration - and often the one that helps close a sale - is moving a handset. Telecoms managers have been used to a move taking hours or even days. With IPT, resellers can achieve it in a matter of seconds."

Paul Rowe, IPT marketing manager at vendor Nortel, says the simplification of multi-site networks can save companies 30 per cent of annual operating costs, and greenfield sites can deploy IPT at no price premium over digital PBXs.

Andrew Terry, managing director of system integrator Switch Communications, says: "One of our customers saved more than £100,000 and increased bandwidth across its WAN by a factor of eight. It also slashed networking costs, deferred hardware purchase costs and centralised its customer service strategy."

However, cost savings are not necessarily the top priority for IPT users. "IPT installations can generate concrete ROI within months," says Campbell Williams, head of channel marketing at telecoms vendor Mitel.

"But firms are happy to use IPT to generate productivity gains and wait longer for ROI."

IPT can be a key enabler of mobility and flexibility, with home workers and satellite offices connected seamlessly to their company's data network and telephone system. Their colleagues and customers need never know they are not at an office desk.

"It offers a 'wherever I log on, that's my home' environment that makes people immediately productive wherever they work from," says Rufus Grig, chief technology officer at telecoms reseller Azzurri.

The simplest application may be IP-based voicemail, or unified messaging combining voicemail, email and fax, which are accessible via almost any device from PC and fixed phone to PDA and mobile. These can be extended to 'presence' or 'find me/follow me' capabilities.

The benefits of IPT are perhaps best illustrated in the contact centre, or rather, outside its physical walls. Classic computer telephony integration applications, such as screen-popping, transferring voice calls with relevant data, and integration with web sites, email and instant messaging, can be facilitated by IPT, although they are possible without it.

IPT makes it easy to implement hunt groups and ring groups, and to integrate other applications.

Above all, IPT is enabling call centres to become truly virtual, with agents not only in major centres but at satellite offices, in their homes or even abroad.

"We've taken the phones to the agents rather than bringing agents into the contact centre," says Grig. "All the infrastructure and applications are managed centrally. We've done this a number of times, and it's an extremely effective solution to a genuine business problem."

Previously a mainly corporate product, IPT is now appealing to a complete cross-section of businesses, although the most interested sectors remain those with multiple sites, branch networks or a distributed workforce, such as banks, building societies and retailers.

Some resellers are finding that SMEs are actually more adventurous than more cautious corporates. Vendors such as Cisco are producing router-based single product IPT solutions for SMEs.

IPT is bringing contact centre applications within their range, and there are hybrid products and hosted solutions that allow SMEs to carry on using their existing PBXs until they feel the time is right to replace them.

Despite its manifold benefits, however, resellers must still expect to put their backs into selling IPT, warns David Atkinson, a consulting engineer at Cisco. "Resellers must demonstrate to the customer that they have a track record," he says.

The traditional sales models of the voice and data channels have been quite distinct, according to Valiant, with voice resellers tending to focus on price, discount levels and service contracts, while data resellers focus on solutions and customer service.

As a result, IPT vendors and distributors are keen to sign up data resellers. "We see the data networking and IT VAR as an important channel," says Trefor Davies, technology director of converged comms distributor Timico. "There's often a consultative element that requires a skillset telephony resellers lack."

Data resellers took an early lead in the race into IPT, but their voice counterparts are developing more complete propositions. Resellers that have made a go of IPT believe it is essential to master both technologies. Grig advises resellers to maintain a distinction between data and voice. "In general the voice guys don't understand data and vice-versa," he says.

"Just because voice equipment is now shaped like LAN equipment, it doesn't make it a data switch or a router. Successful resellers acknowledge the difference between voice and data and manage them as separate components working together to deliver a solution."

For resellers which cannot get to grips with both technologies, partnerships are the likely solution, with the voice and data channels converging just like the technology they sell. Those that go it alone must skill up or get out, according to Grig.

"LANs and WANs are different from telephony," he says. "In general they're 'infrastructure' or 'plumbing' whereas telephony is an application, but it's not impenetrably complicated. Decent analysis tools, surveys, strong project management and customer buy-in are all essential for a successful IPT deployment, and resellers need to have these in place."

Despite the difficulties, however, it is possible for nimble-minded resellers to migrate to IPT, even without prior experience. "We are proof of this, as in our original incarnation we provided application services," says Darren Boyce, managing director of Nortel reseller Applinet.

"But the demands of our clients dictated that we embrace the full spectrum of skills and solution sets quickly. Resellers with an application awareness can move quicker than typical hardware providers."

Margins in voice have traditionally been fatter than in data, so convergence could spell good news for data resellers, but only if they stay out of the commodity zone.

"IPT is becoming more commoditised, but resellers offering more complete solutions can maintain high margins rather than just offering handsets and call processing," Curtis says.

According to Grig, the term 'reseller' is now out of date. "Most major channel players involved in IPT think of themselves as system integrators," he says.

Terry believes IPT resellers should start at the bottom, with the infrastructure.

"The best opportunity is to offer the capability to install the network infrastructure on which IPT hardware can run," he says. "That way they can take ownership of the entire project and act as a one-stop shop for all of their clients' IPT needs."

Other items in the reseller's portfolio are likely to include IP phones, analogue terminal adaptors, firewalls, gateways and servers. In addition, fixed line, broadband and, increasingly, mobile connectivity can all bring in margin for resellers.

Even resellers which cannot or will not acquire the necessary skills may still be able to participate in the IPT revolution. A breed of hosted services is emerging in the US from firms that require no expert knowledge to resell.

"These services are typically consumer products or hosted PBXs with only a few features that involve a fully automated web-based sign-up process and little on-going support," Davies says.

Major IPT vendors have emerged from both sides of the data/telephony divide, including Avaya, Cisco, Mitel, Nortel and Siemens. Vendors' products now show a considerable degree of maturity, leaving customers free to nag their resellers about other issues.

"Now that vendors have levelled the playing field in terms of feature set and cost, the most common considerations for clients tend to be security and integration," says Andrew Dayman, sales director at Siemens reseller STS. "This is where the resellers' skills make all the difference."

As many customers cannot risk or afford a big-bang move to IPT, integration with existing PBXs during the migration stage is key. "Offering customers the ability maintain the same service between all phones during the migration is an attractive proposition, although it takes careful planning and design," Curtis says.

Placing voice traffic on an IP network exposes it to the same risks as data: delay, corruption or destruction by viruses, denial-of-service attacks or technical failure, as well as eavesdropping using snooping devices.

Eavesdropping can be prevented using standard access control technology such as firewalls or session border controllers and, if necessary, encryption. But reliability and resilience can cause greater concern.

"Most businesses agree that telephony is their most critical application," Grig says. "If the accounting system is down for 15 minutes, the bean-counters can have a cup of coffee. But if it's not possible to talk to customers, suppliers and staff, the business grinds to a halt."

On the positive side, IPT offers alternatives which can help keep the calls flowing. "Distributing a telephony system over a global data network can improve reliability," says Rowe.

"An IPT phone can use alternative resources if a call server or gateway is unavailable, or a user who can't get to their building can divert to an alternative location and continue working. Reliability is achieved by having a back-up alternative PSTN route if the WAN data connection becomes unavailable."

Audio quality is seldom an issue. "When properly implemented it's impossible to tell the difference between an IPT call and a digital phone call, both of which are noticeably better than an analogue call," Dayman says.

"The only exception is running IPT over standard shared internet connections where the QoS mechanisms still don't exist. However, specialist ISPs can offer QoS across their network, and these are best partnered with a competent data VAR from an integration perspective."

QoS can be enhanced by giving voice traffic priority over data using technologies such as DiffServ or IP ToS, by implementing software which compensates for lost packets in a call, and by using uncontended Digital Subscriber Lines for broadband links.

Bandwidth requirements are not great - 80Kbps on a LAN, compressed to 24Kbps over a WAN - although allowances must be made for additional applications such as voicemail playback.

Standards are an issue, with many vendors using proprietary technology ostensibly designed to support the features they have built up over decades of PBX competition. As a result, there is little interoperability between different vendors' products.

This could change over the next year or so, however, thanks to the Session Initiation Protocol (SIP) standard, supported by various IPT vendors. Built on existing internet standards such as HTTP and DNS, SIP should become the standard for multi-vendor interoperability and will facilitate integration with desktop applications such as instant messaging.

Once the standards and integration issues are settled, the productivity and cost saving advantages of IPT should propel it into a commanding position in the telephony market.

Curtis says: "To the user, IPT is telephony as normal, but with a different technology supporting it. IPT offers great opportunities for resellers because it is the future of telephony."

CONTACTS

3Com (01442) 438 000
www.3com.co.uk

Applinet (01635) 848 900
www.Applinet.co.uk

Avaya (0800) 698 3619
www.avaya.co.uk

Azzurri (01635) 520 360
www.azzurricommunications.com

Cisco (020) 8824 1000
www.cisco.com

Mitel (0870) 909 2020
www.mitel.com

Nortel (01628) 433 117
www.nortel.com

STS (0116) 250 4000
www.sts-communications.com

Switch (020) 8664 5554
www.switchip.net

Timico 08700) 949 600
www.timico.co.uk

Xpert (01925) 851 111
www.xpertcommunications.co.uk