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Telcos swarm to market as business recognises technology’s benefits

A TECHNOLOGY that has the potential to cut business telephone bills by around 90 per cent has obvious appeal.

But while the benefits of Voice over Internet Protocol have been recognised for some time, mass-market acceptance of the technology has faced several setbacks and delays.

In recent months, however, VoIP has been making headlines with several major organisations, including Westpac and the Victorian Government, signing deals to implement VoIP systems.

And with most major technology analysts predicting significant growth in the area of VoIP, vendors of the technology, along with developers of third-party applications, are rushing to fill a rapidly widening market space.

Analyst group Gartner predicts that the migration to IP telephony will reach the peak of its evolutionary life cycle toward the end of 2004.

At a recent Gartner breakfast in Perth, the group’s vice-president of research, Geoff Johnson, said Cisco’s competitors were making significant gains in the cost, efficiency and quality of service of VoIP.

These competitors included Alcatel, Nortel, Enterasys and Mitel, along with China-based firm Huawei, which has made significant gains in the VoIP market in the past two years, he said.

“Huawei is a company that is now doing in the IT space what is has been doing for years with clothing and textiles,” Mr Johnson said.

The increased number of competitors is driving down costs, reducing problems that in the past had deterred the uptake of VoIP and was now making it more viable for business, Mr Johnson said.

“It’s no longer a case of will you move to VoIP, but a case of when.”

IDC, another market analyst, has predicted that revenue in Australia for VoIP services will increase from $36 million in 2003 to $288 million in 2008.

IDC research program manager Landry Fevre said the changing dynamics of the telecommunications market were already emerging.

“Traditionally, you would go to your telephone company [for telephony service]. Now you might go to your hardware supplier,” he said.

Mr Fevre said surveys conducted by IDC indicated that cost remained a major factor for most businesses considering making the leap to VoIP.

However, he said the good news was that VoIP was more competitively priced than ever.

“It went from very expensive to very attractively priced in only a three-month period,” Mr Fevre said.

VoIP is broad technology category that works by allowing spoken conversations to be transmitted over an Internet protocol (IP) network in real time.

VoIP is now emerging as a viable alternative to traditional PABX systems and some companies are starting to migrate their voice traffic away from a Public Switched Telephone Network (PSTN) to their Virtual Private Network (VPN), which previously would have been used only for data.

The most compelling benefit for businesses willing to take the plunge is the significantly reduced telephone expenditure that, depending on the type of organisation, could be hundreds of thousands of dollars a year.

After the initial set-up costs of establishing an enabled network, businesses can make calls over that network – generally paying a fixed monthly Internet access fee at a significantly reduced cost compared with making long-distance calls.

Consolidating data and voice traffic onto one network provides other benefits, including allowing an increasingly mobile workforce the flexibility of plugging into any portal within that network to access a full range of data and voice services, such as individual telephone extensions and the transmission of fax and video.

However, until now there have been significant issues with VoIP that have dissuaded business from taking it up.

Initial set-up costs can be hefty, although those costs have reduced recently.

However, the expertise required to establish and maintain the network remains reasonably difficult to source.

Issues with unreliable quality of service have also been a problem for VoIP networks, with the early products resembling speaking over a two-way radio.

There are also issues with compatibility, with some VoIP offerings requiring parties on both ends of the line to use the same service.

This isn’t the case for all VoIP offerings, however.

 

 

 

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