Voice over IP: How a simple idea is catching on

The basic concept of voice over IP is straightforward: use existing data networks for voice calls. Jane Dudman reviews practical...

 I f it is good enough for users as diverse as Rod Stewart and one of the newest NHS hospitals in London, VoIP is clearly catching on. Husky-voiced rock singer Stewart has upgraded to an IP-based telephony system for himself and his staff at his base in England.

He may be one of the more high-profile users to move from a traditional telephone network to internet-based telephony, but many other organisations are now looking at the potential benefits of the technology.

Voice over IP has been around for a while, but its uptake has been held back by fears about the quality and reliability of running voice calls in the same way as data, over a packetised digital network. Now, though, some of those quality issues have been tackled and the benefits of VoIP, particularly the promise of lower call costs, are beginning to attract a growing number of organisations of all sizes.

The basic premise of VoIP is simple: rather than using a dedicated telephony network, voice calls are carried over existing data networks, using Internet Protocol. The concept may be straightforward, but it has proved much tougher to put into practice, mainly because of the different demands that voice and data make on the underlying network.

The advantages of VoIP over traditional telephony include:

  • Free inter-office calls
  • Lower maintenance costs, because only a single, converged network has to be looked after, rather than two separate networks
  • Lower costs and greater flexibility when moving staff around within offices - this is a particular advantage for organisations running call centres or project teams
  • The ability to provide the same features, such as voicemail, for all staff on the IP network, whether they are working in head office, a branch office, or at home.

But there are drawbacks with VoIP. Call quality remains a concern, although it has certainly improved since the early days of VoIP. "Quality of service can be an issue, but 95% to 97% of calls are fine," says Anthony Smith, IT manager at the Yorkshire Investment Group, which has implemented VoIP. "It might not be perfect for calling our biggest, newest prospect, but for everything else, it is good enough."

When implementing VoIP, it is important to clarify what exactly is included. One supplier in the US faces a possible lawsuit in Texas for allegedly not making it clear to customers that its IP-based telephony system would not include guaranteed access to emergency services. It is also important to ensure that the underlying IP network is in good order to support voice calls. This may require additional work on the network because voice calls are highly sensitive, unlike many data applications, such as e-mail.

Concerns have also been raised about security, because once voice calls run over an IP-network, they are prone to the same risks as any other application, including denial of service attacks or eavesdropping. Protecting voice calls requires as much care as protecting any other IP-based applications, but is not always something buyers think about.

Overall, an increasing number of organisations are showing interest in VoIP and IP telephony. Technically, there are a number of options for companies looking to move into the world of VoIP. The common factor is that the underlying network will be digitally packetised, but within this there are various choices.

At one end of the spectrum lies pure IP telephony (Pipt), where every part of the telephony system is IP-based, from software-based PBXs and IP-based voice applications to IP handsets. One Pipt customer is high street bank Abbey, which has installed IP-based telephony at its five call centres and more than 800 of its high street branches. The firm's contract with BT for the new system is worth £125m, but Abbey estimates it will save millions of pounds by running its telephony and data over a single network.

In most cases where companies move to a pure IPT system, like Abbey, they need to replace ageing existing systems, or, more rarely, they are starting from scratch. This is the case with the University College London Hospitals NHS Foundations Trust, which is building a new hospital on London's Euston Road. The trust has opted for a VoIP system to connect about 2,000 handsets in the new building to its network in which voice and data are running over a single cable infrastructure.

More usual, however, is a gradual migration into VoIP, where IP-based voice calls are transported over the IP network using gateway products. This requires less investment. But as IP telephony has evolved, so too has IP-PBX technology. Initially, many PBX manufacturers added IP capabilities to their existing switches, while third-party VoIP gateways became available as add-ons to existing IPBXs. Now the market has moved on and software-only IP switches are more common.

Mike Budd, managing director of Bristol-based VoIP supplier Budd Communications, says there is a lot of interest in IP. "The most common driver is getting free calls between sites and for remote workers," he says. Budd's firm sells both pure IPT systems, from Swyx, and IP-enabled traditional telephone systems. "Some 90% of what we sell is IP-enabled. We sell Swyx to firms with remote sites and multiple offices, who pretty much know what they want. The others like to tick the IP box, but do n0t always know why."

One good reason for "ticking the IP box" is that it provides a migration path forward. Few customers buying a new telephony system today will opt for a traditional system only; they want at least the possibility of moving on into IP-based telephony when they are ready to do so.

As a result, although there are some innovative new players in the market selling pure IPT systems, the market for IP-enabled systems is dominated by traditional telephone and network manufacturers that have realised they cannot ignore the inexorable move towards VoIP.

On the one hand, there are suppliers such as Avaya and Nortel, both of which have a large installed base of users running their existing, traditional telephony systems. On the other hand, there are data network providers, such as Cisco, which are looking to IP telephony to bring in new customers.

"In both markets - traditional, IP-enabled voice systems and IP telephony - there are only three main players - ourselves, Nortel and Cisco," says Bruce Everest, convergence business development manager at Avaya UK. Avaya's main product for enterprise IP-based telephony is its Communications Manager platform, which it launched three years ago. It also has IP Office, aimed at small and medium-sized organisations.

There is also burgeoning interest at the lower end of the market for PC-based internet telephony from suppliers such as Vonage and Skype. Skype has grown rapidly and now has one million customers for its internet-based telephony software.

"The proposition from players like Skype is very simple and many people are using these kinds of product as a secondary form of communications, but they are difficult to deploy and manage across an enterprise, so we do not see them as competition in our enterprise business," says Everest.

Interest in VoIP and in IP-based telephony continues to rise, as companies look for ways not just to cut costs, but to handle their overall communications more effectively. The day may dawn when we no longer have anything resembling a phone on our desks and calls are another screen-based application.

Case study: Yorkshire Investment Group finds greater business flexibility

The Yorkshire Investment Group offers professional financial services to business and personal financial planning. It employs 100 staff and operates from five sites, including its head office in Pontefract and two branch offices in Leeds, as well as a couple of smaller, satellite offices.

"We wanted to bring in technology to help us to meet our business goals and VoIP seemed to be the technology that could help us with how we operate and provide potential cost savings," explains Anthony Smith, the company's ICT manager.

Although the company hoped to cut costs, it was mainly interested in VoIP as a way to provide a more consistent and flexible phone system for all staff, wherever they were working, as well as for callers. 

"In our smaller offices, for instance, it was not worth having a receptionist, but with VoIP, all calls come in through the head office, can be answered by the receptionist there and passed on to any of our users, wherever they are," says Smith.

The firm used its existing supplier, Dartford-based iQual, to implement VoIP equipment from manufacturer Avaya, linking up all parts of the organisation, including staff who want to work from home.

"I myself have a VoIP connection and an IP phone at home, which means I can work flexibly," says Smith. "IPT certainly makes home working a lot more effective."

The main benefit has been in the way the company now operates. "Staff in satellite offices, and those working from home, now feel more part of the organisation as a whole," says Smith.

"They have an internal number, they have voicemail and they can see when their colleagues are on the phone. It gives us a lot of additional options in structuring the business and looking at where we put staff."

Smith says cost savings have been relatively low. "But then we are not talking about a lot of investment, provided you have a good IP network in the first place."

Internal calls are now free and there have been other savings, such as replacing a dedicated leased line from the head office out to a satellite office with a simple connection into a much nearer branch office.

"The leased line was obviously fairly expensive and we were able to rip that out and put in a line that only cost about £100," says Smith.


IP-enabled: telephony systems that include some IP components, such as gateways to transfer calls from traditional TDM circuits over to IP-based networks

Pure IPT: software-based IP telephony, where all components are IP-based

Voice over IP: technology that makes it possible to have a telephone conversation over the internet or a dedicated IP network, instead of dedicated voice transmission lines.

Read more on Voice networking and VoIP

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