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The Straight Talk

There has been much talk about voice over IP among industry professionals of late. But how far has the technology come, and how far does it have to go before you opt to put your money where your mouth is?

January 1, 2001  

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KPMG Consulting’s new Toronto offices, which opened last spring, have no private branch exchange (PBX) and no telephone wiring. No, the consulting firm has not gone back to office boys scurrying up and down the halls bearing memos written with quill pens. It has taken a step forward, wiring the premises with an Internet Protocol (IP) network that carries voice conversations as packets of data.

“We were moving into a new location and a fairly substantial size of location, roughly 500 people or so,” says Peter Chiddy, chief executive of KPMG in Canada. “We had a requirement to put telephony into the location, and we had a choice to make.” KPMG saw an opportunity to get ahead of the technology curve by becoming one of the first in Canada to install a voice over Internet Protocol (VoIP) system internally.

How many other companies will follow suit only time will tell. The world is not — and probably will not be any time soon — chatting over the Internet, but VoIP is finding a role.

The public Internet remains too haphazardly managed to offer the voice quality most people expect. Voice requires little bandwidth compared to graphics-intensive web pages, but unlike data it must arrive promptly. If one packet of data takes longer than the one before it to reach your browser — a problem called latency — there is a barely perceptible pause as a web page downloads. If a voice packet does the same, the conversation is noticeably distorted.


One solution is to give priority to voice traffic, and in some cases to other time-sensitive traffic. This is called Quality of Service (QoS). This is quite easy on private networks, but not at all easy on the public Internet. Thus, while latency is not a serious problem on private networks, it remains an issue for traffic over the Internet itself.

Possibly not forever, though. Managing QoS on the public Internet is difficult, but the other way to beat latency is to throw bandwidth at it, and that is happening. Bill St. Arnaud, senior director of network projects at the Canadian Network for the Advancement of Research, Industry and Education (CANARIE) in Ottawa, says the latency issue is already fading, simply because so much more bandwidth has been made available to the public Internet in the past couple of years.

Service providers in South Korea and in several other countries where telephone rates are high and regulatory structures favour new Internet-based competitors, offer the ability to make overseas calls via the Internet. Even on calls from the Far East to North America, St. Arnaud says, the sound quality is surprisingly good.

TeleGeography, a research firm in Washington, DC, reported last November that Americans made 1.7 billion minutes of international calls over the Internet in 1999 — up 1,000 per cent from 1998. Most were to countries that charge American carriers large fees for completing calls from the U.S., the study noted.

However, Internet-based carriers are exploiting a limited market opportunity that may not last. Eamon Hoey, a Toronto-based telecommunications consultant, says using the Internet to compete with traditional long-distance carriers only works in countries with excessive long-distance rates. In Canada, the United States and much of Europe, long-distance rates have already dropped substantially in the last few years, and Internet telephony just does not have a compelling advantage any more. “The market pretty well evaporated,” St. Arnaud agrees.

But even if Internet telephony is dead — which it may not be — long live IP telephony. The distinction is between carrying voice traffic over the public Internet and carrying it over private IP networks. Rather than waiting for consumers to abandon them for bargain Internet carriers, established long-distance carriers in North America have cut rates, thus holding on to customers but also putting themselves under pressure to reduce costs. One way to do that is to use IP in their own networks, which are private and therefore easier to manage for quality of service than the Internet.

While less than five per cent of major carriers’ voice traffic is carried in IP packets today, St. Arnaud says, the figure will probably approach 50 per cent within two years. Bell Canada and some other carriers already offer Centrex IP services to small businesses. Ann Swenson, senior marketing manager for IP telephony at Nortel Networks Corp. of Brampton, ON, says her company has “been doing some very large deals with carriers all over the world” for IP telephony gear.

Still, Hoey thinks the real promise for IP telephony lies not so much in the long-haul network as inside the organization. Chiddy agrees. “It is going to allow a whole bunch of things that you can’t do now.”


One promised advantage of IP telephony is cost savings. If you convert voice traffic into packets that look to the network just like data, you can transmit voice and data over a single network, rather than running telephone wiring and Ethernet cables side by side to every workstation. “I only need one cable drop to every station now,” says Rod Weir, Toronto-based Cisco Systems Canada Inc.’s solutions manager for the Architecture for Voice, Video and Integrated Data (AVVID) system, the VoIP platform installed at KPMG.

Ironically, KPMG chose not to take advantage of this initially. The network that carries voice through the Toronto office is currently dedicated to voice, while a parallel network handles data. Stephen Chow, director of information technology at KPMG Toronto, says the firm did this because it was pioneering a new technology and could not afford to take risks with its voice service. Before long, he says, the networks will be integrated.

Even without eliminating the second cable drop to each station, though, KPMG already sees cost savings. Chow explains that installing the VoIP network was almost like installing a data local area network (LAN) and that maintaining and supporting it is like running a LAN. This presents some initial problems — for instance, technical staff with voice backgrounds must learn new ways of doing things. In time, though, it will lead to efficiencies because firms will need one set of skills, not the largely separate data-network and voice-network skill sets.

For a small organization, Chow observes, that might mean one person supporting voice and data networks rather than one person supporting each network. For not-quite-so-small organizations, it will eliminate the problems that come with having one data and one voice person, including being left high and dry when either one is sick or on vacation. For any company, it should bring efficiencies in training and support.

Ted Schirk, manager of products and application specialists at the Toronto office of Avaya Inc., maintains that for every 10 information technology positions in a company, an average of four are vacant at any one time. “Companies don’t have time to manage networks,” he says. VoIP promises to help.


The benefits do not end there, though. Perhaps more important than either up-front cost savings or simplified support is the potential to convert moves, adds and changes (MACs) from a telecom manager’s recurring nightmare to a breeze.

KPMG’s Toronto office is a “full hotelling” operation, meaning employees do not have permanent offices. Since consultants spend much of their time at client sites, the firm need not provide enough offices for everyone to sit down at once. So in a kind of information-age musical chairs, those at the office on any given day check in and are assigned offices. This could make routing telephone calls tricky, but KPMG has an easy solution. Each employee has a telephone, which is collected in the morning and plugged into the jack in the assigned office. The phone identifies itself to the network using its IP address, and the network routes the appropriate calls to it.

Weir explains that this does not have to stop with one location. In an organization with offices across the country, linked by a private IP network, a Toronto-based
employee could take the telephone to Calgary and plug it in there. Calls to that employee’s Toronto number would travel over the private network to Calgary and ring on that phone. The next step, Weir adds, will be to eliminate the need to carry the phones along, simply allowing people to log in on whatever phone is handy and receive their calls.

The flexibility of an IP network could mean more than not missing phone calls. Schirk cites distributed call centres as an example of the possibilities. Today, a call centre usually involves a number of people sitting in one room, linked by a system that distributes incoming calls among them. A distributed call centre could send those calls almost anywhere — to several offices across the country, for instance, or to people outside the call centre at peak times or when special expertise is needed. “If I’m able to spread my application across the enterprise,” Schirk says, “guess what? I now have more people to respond to customer requirements.”

For organizations with far-flung locations, especially overseas, saving money on long-distance traffic could be an attraction. Long-distance tolls in North America are low enough that IP telephony will take some time to pay for itself, admits Swenson at Nortel, but for traffic to some points overseas, an organization that takes advantage of an existing private data connection might see the benefits within four or five months.

In spite of the benefits, VoIP will take time to penetrate the office. Perhaps the greatest obstacle is the installed base. Phone systems last many years. Organizations moving into new offices are starting to look at VoIP technology, but those already settled in a location are in no rush to rip out what they have and start over.

Added to that is cost. Today, Schirk says, a traditional phone system costs about $450 per seat while a VoIP system costs $600 to $700. “The economies of scale aren’t there yet,” he admits. The promised savings of integrating two networks are attractive, but there is no immediate benefit in replacing existing voice and data networks with an integrated network, and the promised savings over time may not yet be enough to convince many organizations to take the plunge. As costs decline, and as VoIP systems become more widespread and their value is proven — assuming it is — momentum will build.

Still, it does not have to be an all-or-nothing proposition. While those opening new locations may choose an all-IP option like KPMG’s, using a computer server in place of a PBX, it is also possible to add IP gateways to existing PBXs. Swenson notes that Nortel offers gateways both to link remote PBXs using IP and to allow internal traffic to travel over a packet network alongside data.


The other issue is standards. Today, the only practical way to buy VoIP technology is from a single vendor. A number of compatibility issues remain unresolved. “I don’t think we have a totally interoperable standard at this time,” St. Arnaud says, “and it may be some time.”

For instance, telephones traditionally get power from the network, unlike computers, which are plugged into wall outlets. The Ethernet network can be adapted to provide the small amounts of power that phones need, but there is no agreed way of doing so. Cisco’s system senses whether a device is a phone or a computer network card and provides power if it is a phone. Others are looking at similar approaches, but as yet there is no agreement on which pair of wires in the Ethernet cabling scheme should be used. Some buyers will hold off on purchasing plans until these issues become clearer.

Weir says the market for traditional corporate phone systems actually declined last year for the first time since 1993, and he believes growth in VoIP technology is the reason. Cisco has already shipped more than 250,000 IP phones worldwide, he says. Schirk at Avaya projects that in a year-and-a-half to two years, VoIP will be a “pervasive technology” in the office. It will take longer than that, though, for the huge installed base of conventional PBXs to vanish.

Chiddy at KPMG advises those considering VoIP today that it is the right path, but there is no immediate rush. “If you’re moving into a new building,” he suggests, “do it right away and get yourself positioned for the future. But recognize that that’s what you’re doing — positioning yourself for the future.”CS

With new technology, comes a whole host of three-letter acronyms (or TLAs). Here are some of the more common acronyms that you should know in order to get up to snuff on Voice over IP:

API Application Programming Interface

ATM Asynchronous Transfer Mode

AVVID Architecture for Voice, Video and Integrated Data

BDS Bundled Digital Services

CLEC Competitive Local Exchange Carrier


DRAM Digital recorded announcement machine – dynamic random access memory

ENUM tElephone NUmbering Mapping

FTTH Fiber To The Home [House]

IETF Internet Engineering Task Force

IP Internet Protocol – Intellectual Property – Intelligent Peripheral

ISDN Integrated Services Digital Network

ISP Implementation Support Plan – International Signaling Point – International Standardized Profile – Internet Service Provider – Internet Selective Polling

Mbps Million bits per second or megabits per second

Megaco MEdia GAteway COntrol

MGCP Media Gateway Control Protocol

OSS Operational Support System

PBX Private Branch Exchange

POP Point of Presence – Post Office Protocol – Total populations of market [potential subs]

PPP Point-to-Point Protocol

PSTN Public Switched Telephone Network

QoS Quality of Service

SNMP Simple Network Management Protocol

RTP Release to Pivot – Real Time Protocol

SDH Synchronous Digital Hierarchy

SIP Session Initiation Protocol – SMDS Interface Protocol – SIR Interaction Pulse

USB Universal Serial Bus

VoIP Voice Over Internet Protocol

WAN Wide Area Network

WWW World Wide Web

(This list of acronyms was provided by For a more comprehensive list of acronyms, please visit

Grant Buckler has written about information technology and telecommunications since 1980. He is now a freelance writer and editor living in Kingston, ON.

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