More Companies Are Routing Calls via Internet

[Dave Farber <dave () farber net>]

> Date: Sun, 31 Aug 2003 22:24:33 -0700
> From: Dewayne Hendricks <dewayne () warpspeed com>
>
>
>
> September 1, 2003
>
> More Companies Are Routing Calls via Internet
> By ADAM BAUMAN
> <http://www.nytimes.com/2003/09/01/technology/01VOIP.html>
>
> It was after the terrorist attacks of Sept. 11, 2001, that Tom Pyke, the 
> chief information officer for the Department of Commerce, realized that he 
> needed to expand the agency's emergency communications.  Just over a year 
> later, in December 2002, after a competitive selection process, a new 
> telephone system was installed to support 4,000 people at agency 
> headquarters in Washington and another 6,000   at the department's nearby 
> Bureau of the Census.
>
> Instead of selecting conventional phones, the Commerce Department chose  a 
> setup made by Cisco Systems that uses Internet Protocol, or I.P., 
> technology. The system routes  internal voice communications over the 
> same  lines as e-mail messages and other data traffic. It also has a 
> function that allows an emergency message to be broadcast to all phones.
>
> The department is saving many of the fees tied to conventional phone 
> service between employees, and it  is  saving maintenance and support 
> costs on the 132 older telephone systems that the new Internet-based 
> system has replaced. "Over 25 percent of our 40,000 employees are now 
> using this technology," Mr. Pyke said.
>
> Internet telephony, as it is known, is no longer restricted to adventurous 
> techies. The technology, based on  software technology that enables the 
> Internet to route traffic, has  matured to the point that  voice quality 
> is virtually indistinguishable from that of a conventional phone call.
>
> The  systems are flexible, enabling   calls to be routed through a 
> company's internal data network, the public Internet  or both. Besides 
> major agencies like the Commerce Department, Internet telephony is being 
> adopted by businesses, including JetBlue Airways and the bank holding 
> company SouthTrust , based in Birmingham, Ala.
>
> About 2 percent of United States businesses were using some form of 
> Internet telephony by the end of last year, according to the market 
> research firm In-Stat/MDR. The firm cites the cost savings as a primary 
> motivation for using the systems and predicts that one in five companies 
> will be doing so by 2007.
>
> Industry analysts  say that the equipment costs of an Internet telephone 
> system are lower than the those  of a comparable-size conventional  system 
> that uses an on-site switch known as a PBX and the handsets that  work 
> with it. A company with 100 employees, for example, would spend about $600 
> a  phone to buy  a conventional PBX system, but $500 a phone for an 
> Internet setup, said  Nick Lippis, the president of Lippis Enterprises, a 
> network computing consulting firm in Hingham, Mass.
>
> A spokesman for Cisco Systems, Jim Brady,   said that in 2002, Cisco's 
> I.P. phones displaced approximately 2,000 traditional PBX circuit-based 
> phones each business day; a year later, in 2003, that figure has more than 
> doubled.
>
> Charles Giancarlo, general manager of product development for Cisco, said 
> his company was now replacing more than 5,000 traditional phones a day 
> with I.P. phones. "The unalterable direction now is I.P. telephony," Mr. 
> Giancarlo said, "and it is just a matter of time before I.P. telephony 
> extends itself to the consumer market as well." Cisco makes Internet 
> telephone  switches and phones, among other products, and says it 
> has  more than 10,000 Internet telephony customers.
>
> SouthTrust, which has nearly 700 bank branches  in the Southeast, has 
> almost completely replaced its PBX  systems with Internet telephony, all 
> controlled from a switch in Birmingham that was made by Cisco Systems. 
> Stan Adams, the group vice president of network services at SouthTrust, 
> said the company was saving more than $5 million a year using the system, 
> which it began phasing in three years ago.
>
> SouthTrust saves money because  it no longer needs on-site support at each 
> bank branch,  with such  tasks now able to  be performed from the 
> central  switch in Birmingham, said  Don Proctor, the general manager of 
> Cisco's voice technology group.   This capability was not possible with 
> traditional phone systems,  he said.
>
> Even though the traditional phone companies have billions of dollars 
> invested in their older technology, they are likely to  move toward 
> offering some form of Internet  services.     But they will probably be 
> collecting    significant revenues from their local and long-distance 
> services for some  time to come. For one,  a company must make a 
> considerable investment to switch to Internet  telephony. And calls to 
> parties outside the company often must still use the conventional  public 
> network for at least part of the call.
>
> But Mr. Lippis said that because in many businesses about 30 percent of 
> voice traffic is between employees in various branch offices, using an 
> Internet system for all employees can shave 30 percent off the company's 
> phone bill.
>
> One company that has seen cost savings from an Internet-based  system is 
> JetBlue Airways, the upstart discount airline. It uses Internet technology 
> to create a "virtual call center" for its 700-plus reservation agents, who 
> work from home in and around Salt Lake City, using computers and 
> equipment  provided by JetBlue.
>
> The commute to work is as quick as a mouse click for the reservation 
> agents, who use application software known as Avaya Softphone. The 
> software  connects them to the airline's Internet telephony switch, which 
> routes customer reservations calls to them.
>
> Frankie Littleford, JetBlue's vice president for reservations, said the 
> airline was saving money by not needing to maintain office space for its 
> call agents.  "We will handle 9.6 million phone calls in 2003," Ms. 
> Littleford said, "and all of those will be routed to at-home representatives."
>
> Besides Cisco and Avaya (a Lucent Technologies spinoff) companies that 
> produce  Internet  telephony gear include Alcatel , Mitel, Nortel, Siemens 
> and 3Com . Cisco predicts that the market for such systems will reach $15 
> billion within four years.   Jorge Blanco, the vice president for  product 
> marketing at  Avaya, also sees a growing market.  "I think that 2003 is 
> turning out to be a giant leap forward for I.P. telephony," he said.
>
> As the adoption of Internet  telephony by mainstream businesses continues 
> to speed up,  at least one influential communications industry group is 
> embracing the technology.  The Telecommunications Industry Association, 
> which is based in Arlington, Va.,  and represents communications equipment 
> makers,  has  replaced its own 10-year-old   PBX with a new Internet  system.
>
> "These new phones and features, I think, will revolutionize the way any 
> business operates," predicted Matthew Flanigan, the association's 
> president. "I think it gives the ability for all of the workers to be much 
> more efficient and accomplish a lot more at your desk, and I think that is 
> crucial for the economy."
>
> Archives at: <http://Wireless.Com/Dewayne-Net>
> Weblog at: <http://weblog.warpspeed.com>

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