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Networking

Cisco inks Boeing VoIP deal

The deal is one of the router maker's biggest IP telephony contracts to date.

Cisco is set to announce one of its largest Internet telephony contracts to date.

On Tuesday, the company will announce that Boeing has selected Cisco to be its main supplier of Internet Protocol telephony gear, as the airplane manufacturer migrates from a traditional telephone network.

The entire project will take roughly five to seven years from start to finish, said Mike Terrill, program manager for network convergence at Boeing. The company, which is one of the world's largest makers of commercial jetliners, military aircraft and equipment for the United States space program, has more than 150,000 employees in 48 states and 70 countries.

Boeing has been testing the Cisco voice over IP technology in its network since 2001, with roughly 800 employees across the country participating in the pilot program. In April it started rolling out the first official VoIP deployments in the Pacific Northwest region.

Boeing's move to an IP-based phone network is being driven by cost savings, Terrill said. The company hopes to save millions in maintenance and management costs by converging its voice and data networks onto a single IP network. Because IP phones can be easily moved throughout the network, the company also expects to save a significant amount by reducing the cost it takes to add, move and change phones on the network, he said.

Neither Cisco nor Boeing would comment on the estimated value of the contract. Boeing also declined to disclose which other companies were bidding for the business. Boeing's traditional telephone network has been built with a patchwork of gear from several companies, including Avaya, Lucent Technologies and Nortel Networks, Terrill said. Avaya and Nortel also offer voice over IP products.

Even so, it should come as little surprise that Boeing would choose Cisco for its VoIP deployment. The networking giant has been supplying Boeing with IP routers and switches for its data network since 1988. Today, Boeing has one of the largest private enterprise-wide data networks in the world, built predominantly on Cisco products.

"We have had a long relationship with Cisco for a number of years," Terrill said. "And when we evaluated the technology, we decided that Cisco provided the best technology for the cost."

The Boeing contract comes as Cisco's IP telephony business seems to be gaining momentum. In August 2002, the company said it shipped 1 million IP phones, an accomplishment that took the company three and a half years to achieve. One year later, Cisco announced that it reached the 2 million mark, and in April of this year, its shipments increased to 3 million IP phones overall. The company claims that it is displacing more than 6,000 traditional business phones every day.

But the company has hit some snags along the way. A year ago, Merrill Lynch began replacing its Cisco Internet telephony gear with new equipment from Avaya.

"Merrill Lynch is still a large data customer of Cisco's," said Rick Moran, vice president of product and technology marketing for Cisco. "This deployment (Boeing's deployment) is much larger, and more global in its reach than what we had at Merrill."

Despite some customer churn, Cisco remains the No. 1 supplier of IP telephony gear.