Don’t believe the IP telephony hype

Delegates at a recent integrator conference have challenged the notion that IP telephony delivers substantial cost-savings to the end user, contradicting promises made by vendors.

Australia and New Zealand territory manager Peter Owen and worldwide director of product marketing Jeff Barker, of US-based application traffic management software vendor Packeteer, told CRN at Dimension Data Forum 12 that cost savings from an implementation of IP telephony usually flowed to the service provider rather than the user.

'The benefits go to the service provider and not so much to the end user, because it's cheaper for them to run on IP networks...It all looks good on the spreadsheet,' Barker said.

Barker and Owen pointed out that vendors, on the other hand, tended to market the technology as offering significant cost savings to the customer. The result was a number of customers dissatisfied with what was often a costly and time-consuming implementation, Owen said.

Meanwhile, sales executives were 'probably' offered better incentives, such as higher commissions, to push IP telephony to end users and to resellers seeking the best option for their customers, Barker said.

Owen said customers could have very good reasons for not wanting to move from older frame relay-based telecommunications to IP telephony. Frame relay was both reliable and cost-effective, he said.

'We're seeing some people moving back to sell more frame than IP networks, not so much the Tier Ones, but the Tier Twos that have an intimate relationship with their customers,' Owen said. 'There's a bit of a quandary at the moment now reality is starting to sink in. Companies wanting to make a change might not want to chuck away the frame relay network.'

'Frame is much more carefully managed and provisioned than an IP network,' Barker said.

Barker said that more staff were often needed to manage an IP telephony-based network, increasing the overall complexity of the system. More complex systems have more scope for problems, he said.

Most organisations have a couple of people managing their telephone switch for 1000s of users, and lots of data. Now they go from two managing it to a dozen,' Barker said.

System integrator Dimension Data is Packeteer's largest reseller in Australia.

Dimension Data has just signed a deal to offer Telstra IP telephony, initially to its larger business and government customers and, down the track, to SMBs.

However, Steve Nola, managing director of Integration at Dimension Data, said IP telephony offered considerable advantages - including cost savings - to users.

'The technology has now come of age, is now very reliable and works,' he said. 'The deployments are really picking up. I believe the market for it will continue to grow.'

Nola said implementing IP telephony offered 'anywhere between 12 to 20 percent cost savings' to end users.

Savings were centred around purchase costs, support resources and bandwidth consolidation, he said.

Telstra's IP telephony offering could be run with older-style PABX gear - a move aimed at maintaining end-user benefits from both technologies, Nola said.

Paul Geason, data solutions and sales MD at Telstra, said in his plenary speech at Forum 12 that IP telephony was a great opportunity for growth for Telstra, especially when considered alongside the growth in mobility, data services and network managed services.

'Service providers are going to have to differentiate themselves by services. The total cost of ownership of communications equipment and data is going to be a recurring theme,' Geason said.

Telstra's IP telephony service ran IP over frame relay - offering the strength, reliability and security of frame with the advantages of the Internet, he said.

'It isn't necessary to forklift it all out,' Geason said.

Fleur Doidge travelled to Forum 12 as a guest of Dimension Data.