Analysts say it could be years before most companies are willing to throw out their old PBX (private branch exchange) phone systems and run end-to-end Internet telephony. And that could mean a slower road to the IP promised-land that Cisco Systems and other IP supporters have been preaching.
"We aren't seeing large enterprises ripping out and replacing old systems with new ones," said Tom Valovic, program director for IP telephony at market researcher IDC.
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"About 90 percent of the deployments out there with IP-enabled PBXs are using a mix of IP and TDM (time division multiplexing)," said Brian Riggs, an analyst at Current Analysis.
TDM is also known as circuit-switched technology because it creates an end-to-end connection to complete a call. IP, on the other hand, uses packet switching, a method that involves breaking a call into pieces for more efficient delivery and then reassembling it at the other end.
Depending on the size of the company and the state of its existing, rolling out a VoIP network can take years to complete. For example, Grant Thornton, a Chicago-based accounting and consulting firm servicing midsize companies, is already three years into a VoIP deployment that began in 2001.
The company has 51 offices throughout the country and employs roughly 3,500 workers installed a hybrid PBX solution from Avaya, which allowed it to maintain portions of its switched telephone network, so that some employees could continue using their existing digital analog phones while others used the IP phones.
"Once you begin a deployment like this, you realize how much there is to it," said Kevin Lopez, national manager of telecommunications for Grant Thornton. "When we first implemented the five-digit dialing system, we saw how many IP addresses we had to change. We realized how much work it was going to be to rollout the entire network, so we decided to do it over a longer period of time."
Since then the company has slowly deployed other services, such as unified messaging, and it is about to implement "soft" phone technology that will allow employees to make phone calls from their laptops. A few of the company's locations are all IP. But most locations still use a mix of IP and the traditional switched telephone network. In those locations, the VoIP network is only about 7 percent saturated.
Up goes the work load
The larger the company, often the longer it takes to deploy the service. Not only is the basic installation of the IP phones time-consuming and labor-intensive, but the IP technology used today also requires more management and maintenance than traditional digital phones.
"You never have to update a regular digital phone," Lopez said. "You just plug it in and it works. But the IP phones need software updates. You need to be sure you have the staff and a user base that understands when those updates need to happen."
Larger networks also require more testing to make sure the existing IP infrastructure can handle the additional load from the IP voice services. Some companies may even have to deploy additional infrastructure.
For example, Jenny Craig, the nationwide weight-loss company, has spent the past year and a half IP-enabling its network. It started with basic connectivity linking its 430 remote locations in North America and an additional 130 offices in Australia and New Zealand together via encrypted IP tunnels. The company is now just starting to roll out IP telephony to its branch offices.
"I'd say we are still dabbling in the technology," said Jeff Nelson, director of technology for Jenny Craig. "Going forward, everything will run over IP. But we are taking our time getting there."
Slower rollouts could mean that companies won't be spending as much on VoIP gear over the short term as some have predicted, Infonetics' Riggs said.
"With a staged environment, companies can move to the next phase of deployment whenever they're comfortable," he said. "That could be next year, or it could be in 2010."
But Cisco doesn't seem worried about revenue delays. The company boasts that it sold its 2 millionth IP phone in June. It also said that it's sold an additional 400,000 IP phones in the third quarter of this year, proving that momentum is building.
Rick Moran, vice president of product and technology marketing for IP communications for Cisco, admitted that some companies may take longer to deploy VoIP end to end than others. Either way, the movement toward VoIP means more business for Cisco--at some point. p>
"Some companies will be faster than others," he said. "It's interesting how companies are starting to look at VoIP like it's a business application rather than a telephony service. As a result, they tend to try it out in certain remote offices or in a particular department before they roll it out to the entire company."