NO QUESTION: IP TELEPHONY IS COMING. IT IS MATURE, EASY-TO-USE, AND FAR MORE PRODUCTIVE THAN CONVENTIONAL PHONE SYSTEMS. WHILE THE LATTER WILL NOT BE THREATENED YET, EXPECT IPT TO BE A FIXTURE IN ENTERPRISES SOON.

There are 3 acid tests to gauge the viability of a replacement technology. The first is usage test: This technology should be able to work interchangeably and transparently with the incumbent technology. Second is adoption test: Some of your neighbours should be already using it, and you're already convinced enough to have pencilled it down for your next upgrade. And third is vendor interest test: There should be a rush of vendors clamouring to go to market with the technology.

If any new technology can pass all three tests, then it not only has arrived, it is here to stay-as is the case of IP telephony (IPT). This technology, which started as a novel way to dovetail public data networks like the Internet into the world of voice communications, is rising on a fast-track-both in user acceptance and technology maturity.

Telecom experts are bullish about IPT, and many have predicted that IPT adoption will be explosive. International Data Corp (IDC) has predicted that worldwide IP telephony service revenues will rise to US$18.7 billion by 2004-or 10 times more than last year (which already raked in an sizeable US$1.6 billion). IDC also predicted that Asia will be a major IPT hotbed, with the IPT service market in Asia-Pacific (outside Japan) to hit US$6.9 billion by 2005.

Much of this rise will be at the expense of traditional telephone services, which will not only see its usefulness shrink, but become more costly by comparison. This is already happening. TEQConsult Group recently reported that sales of traditional private branch exchanges (PBX) shipments declined last year for the second year in a row. It found that there was a 12% drop of traditional PBX sales in 2001, adding to the 10% drop from 1999. This means that PBX sales had declined by more than 22% since 1999.

Another analyst tracking PBX sales is Frost and Sullivan. Based on current shipments, the US-based market researcher predicted that IPT will account for more than half of PBX shipments by 2006.

THE REASONS: COST SAVINGS
All these figures point to rising levels of user acceptance for IPT. But what makes it so appealing? Let's consider the reasons first from a cost savings standpoint.

IPT enables voice, data and video collaboration over existing IP-based networks and the Internet. With IPT, only one network is required for voice, multimedia and data. The result is better network manageability, the potential of a new breed of collaboration tools, increased productivity and ultimately, lowered costs.

In fact, cost benefits begins right at deployment. Given that most organisations already equip each employee with a desktop PC and data network connection, setting up IPT incurs almost nothing in terms of network infrastructure costs. What's more, combining data and voice wiring infrastructures will result in a savings of between 33 to 50 percent per user, according to a Cisco study. In new-so called "greenfield"-environments, savings of up to US$300 per seat is possible-just because organisations can now run a PC and an IP phone via the same Ethernet port. In its own earlier IP telephony deployment, Cisco Systems saved over $1.5M on wiring costs across six new facilities.

Any premise administrator will tell you that the costs of moves, adds and changes (MACs) is a regular pain for any organisation. It is estimated that re-configuring a traditional telephone system can cost is as much as US$500 per telephone point. Given that a 1,000-strong company is likely to experience an attrition rate of between 10% to 20%, this translates to an expense item as high as US$100,000 a year-just to move people around. While this may be less marked in the Asian context because labour costs here are lower, the cumulative effects of MACs are still valid-and painful.

Another area for cost savings can be found in the hardware connection between your PBX and voice mail. In a traditional telephony setup, connecting an existing voice mail server to PBX typically requires two E1 cards, which, at a combined cost of US$6,000, provide a 2 Megabit link. This in turn supports up to 30 concurrent sessions.

When you move to a converged IP-based network with 100 Mbps or Gigabit Ethernet connections, a unified messaging solution can easily support up to 2,000 concurrent sessions. With it, you swop the two E1 for two Gigabit Ethernet cards. And the cost of the Ethernet cards? Only US$600 in total. Talk about getting more for less.

In the long term, the mere fact that PBX upgrade costs can be eliminated will mean huge savings for some organisations, especially those which has PBX-leases that are due to expire. And savings on network management, due to the merging of voice network infrastructure into the LAN or WAN, will also be significant. In fact, many organisations will find that they will be able to manage more users due to the infrastructure convergence. A good example is the Ministry of Social Policy in New Zealand, which found that it was able to support an additional 2,500 users with the same network support staff of 10 people-after it migrated to IPT.

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