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An unstoppable force

The dramatic growth of IP telephony is being driven by the tangible benefits it can deliver to business.


January 1, 2004  


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Fire breaks out in a municipal building. A worker tries to call emergency 911 to raise the alarm but is beaten back by flames before he can give the location to the emergency services.

In many cities, firemen would be powerless to halt the calamity without another call, but not in Mississauga, Ont.

Earlier this year, the city’s administration spent $3.3 million on an IP telephony system that incorporates Enhanced 9-1-1 (E911), a service that automatically gives the location of a caller’s phone to the emergency services.

In addition, if someone moves or there are changes or additions to the directory, the E911 function discovery service automatically changes with the new location. There is no need for any reprogramming or system entry to have the E911 service follow the new location of the IP phone.

Mississauga was the first Canadian municipality to launch this feature, but all across Canada and around the world, businesses and governments are introducing the technology in the place of traditional PBX (private branch exchange) telephone systems.

Gaining Momentum

IP telephony is becoming established as the new global standard for voice communications — to the point where Gartner recently predicted the imminent demise of the traditional phone system.

“By the end of 2007, traditional enterprise telephony system manufacturers will have ceased development … and announced their intention to discontinue support for their TDM-based PBX and contact center systems within five years,” the analyst group said.

This is a far stretch from the situation barely five years ago, when IP telephony was considered risky and unreliable.

The basic idea behind IP telephony is to send a telephone call over the same network that carries data throughout your company. To do so, the technology breaks the sound into tiny digital units called packets, then sends those packets over the network and reassembles them in the correct order on the receiving end.

Making this technology viable was not as straightforward as it may seem, for a few reasons.

First, telephone calls are latency dependent, meaning people want little or no lag time between when one person speaks and when the other person hears what was said.

Second, telephone calls are full duplex, meaning that both parties on a phone call — or all parties in the case of a conference call — can speak and listen at the same time. But IP was initially designed for receive-and-respond communication: A user sent a request to a server and the server responded.

Third, early on, not everyone had the necessary equipment to handle IP telephony. In the early days of home-based Internet usage, several companies touted free Internet phone calls, but both parties on a call had to have equivalent software and up-to-date hardware.

These obstacles have been solved and the quality of IP-based calls now equal to or actually better than traditional telephony. According to Infotech, approximately 80% of the enterprises that have already implemented IP telephony have indicated that the quality resiliency and scalability of the technology has either met or exceeded their expectations.

As a result, IP telephony is gaining momentum, in Canada and around the globe.

Uneven growth

This growth, however, has been far from even in different regions and in fact, early adopters of the technology hailed from all over the world.

One of the largest IP telephony installations of 2000, for example, was an 8,000-phone project for the Ministry of Social Policy in New Zealand. The Middle Eastern Dubai Internet City development took another 2,000 phones at around the same time.

By 2001, IP telephony was even being taken up in places such as Mexico, where i-Next, the data division of Operadora Protel, was among the first Latin American companies to adopt the technology.

Since then, there has been a vast difference in the way the IP telephony market has evolved in different regions. In North America, multi-site and multinational enterprises have led the charge for IP telephony, seizing upon the return-on-investment advantages of carrying voice and data over one network.

This is in marked contrast with the European experience, where small and mid-sized companies were the first adopters or Asia, where telecommunications service providers have been the ones to lead uptake.

They include China Unicom, which has the largest voice-over-IP network in the world, measured by size, capacity, traffic and the number of cities it reaches.

The public sector has also come around to the technology in a big way, with significant installations including the Royal Borough of Kingston in London, U.K., with 2,000 IP phones, and Landspitali University Hospital in Iceland with 2,400 phones.

The latter is one of a growing number of examples of IP telephony working in mission-critical environments, laying to rest previous fears over the reliability of the technology.

Landspitali’s IP telephony system covers 29 locations with a service level agreement-guaranteed 99.997 percent uptime. Elsewhere, York Hospital in England has had a 1,600 phone network covering its accident and emergency departments for the last two years.

The dramatic growth of IP telephony is being driven by the tangible benefits it’s delivering to business. Compared to traditional telephony, IP technology is more flexible, costs less to manage, provides lower phone bills, and offers far more capability to improve productivity.

IP communications doesn’t offer some blue-sky promise of great rewards somewhere in the distant future. Again and again, the customers who have migrated to IP communications systems have reported immediate and substantial returns on their investments. According to a recent study by Sage Research, roughly 80% of all companies reap the majority of IP communications benefits within six months of deployment.

Improved productivity

Productivity improvements can be as basic as reducing the time it takes employees to communicate or as advanced as helping companies deploy advanced multimedia applications for improved collaboration or workgroup interactions.

According to Sage Research, half of the companies surveyed said they saved almost four hours a week per employee from a reduction in “telephone tag.”

The survey also noted that nearly 50% of those companies with IP communications infrastructures gain four to five hours a week through improved productivity for remote office workers and telecommuters.

On the more advanced end of the scale, customers utilizing IP Contact Center can combine inbound and outbound voice, Web, and email to allow agents to use the media which is most productive at any one given time.

Cisco believes that the “killer app” for IP telephony is not one single application, but the ability to provide a multitude of personalized applications over a phone system, which previously could do little more than ring.

Thanks to IP telephony and its capacity to seamlessly integrate with data, companies can now use their phone systems to provide a wide-range of companion applications on their voice system. Those include unified messaging, contact centers, personal calendars, meeting schedulers, service alerts, and information databases, among many, many others.

Ultimately, IP telephony is emerging as a mainstream technology because it delivers real, measurable business benefits.

From technological curiosities just a few years ago, Voice over IP and IP telephony have grown in importance to a point where it is almost difficult to find an enterprise or service provider that is not looking into the migration of its voice services to IP, or has not already made the switch.

Christian Bazinet is national manager, product and technology marketing at Cisco Systems Canada Co.


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