Australian telcos champion Voice over Broadband for SMBs

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Voice over Internet Protocol (VoIP) is not a new term. Touted as a low cost alternative to traditional telephony, VoIP has a major role in a new wave of converged network solutions that are pervading the telecommunications market.

But while consumers and large enterprises have adopted the technology to some degree, Australian small to medium businesses (SMBs) have traditionally been deterred by VoIP's reputation for poor call quality at the cheaper end of the spectrum, and the large set-up costs of premium, business-grade services.

With the new introduction of Voice over Broadband offerings from telecommunications behemoths AAPT and Optus, however, VoIP adoption by SMBs is set to take a new turn.

Telecommunications solutions for businesses have been tiptoeing towards Internet telephony for some time. Although the copper wire still dominates a majority of outbound phone calls, traditional IP PBX systems that rout intra-office calls via a Wide Area Network have been utilised by large enterprises since the turn of the century.

"If you're using an IP PBX, and you set up your system so that you can call another office at another location through the Wide Area Network, phone calls that you make within the office are technically VoIP,"
explained David Cannon, senior analyst of telecommunications at IDC.

Cannon mentioned IDC's global telecommunications network as an example of a typical IP PBX set-up. When calling a counterpart in IDC's New Zealand or Singapore offices, Cannon makes an internal VoIP phone call. Meanwhile, other outbound calls to non-IDC phone numbers are still routed through the PSTN copper line.

But the reign of the copper line may not be long lived, as Internet telephony marches beyond IP PBX, and towards complete VoIP offerings that encompass all outbound communications.

Internet-based VoIP services such as Skype are fulfilling an increasing portion of small businesses' telephony needs – as well as those of the casual workplace instant message addict. And now, with the support of the likes of AAPT and Optus, as well as ISPs like iiNet and Primus, Voice over Broadband technology is expanding VoIP's reach to the SMB market.

"Voice over Broadband is probably the most interesting subject matter at this point in time, in terms of VoIP for SMBs, because it’s actually being championed by Telstra's primary competitors, being providers of other network infrastructure," Cannon said.

Cannon highlighted Optus and AAPT as the primary providers of Voice over Broadband services in Australia. The first SMB-centric VoIP service was launched by AAPT in 2006; however, Cannon is of the opinion that Voice over Broadband has only really become a viable telecommunications option for SMBs in the past six months.

Like the services that came before it in the Internet telephony space, Voice over Broadband relies on its low operating cost to attract users. Current offerings of Australian service providers involve packaged Internet and phone line deals, which cut down on line rental.
Such Voice over Broadband packages are estimated to save businesses around $15 per line per month on access fees alone, not to mention the added convenience that consolidated suite voice and data connections provides.

"Historically, what's going on is that the price of local, national and international phone calls have gone down," Cannon said. "The only part of the telephony bill that isn't coming down is the access price.

"The fee that you pay for access of phone lines, whether it be PSTN or ISDN, is sitting around about $33 per month. With a broadband connection at 512 kbps plus, telcos can deliver multiple phone lines on top of that.

"That means that over that one broadband line, you can literally replace the PSDN or the ISDN access component, and at the same time, you can consolidate your VPN connection, and you can also consolidate your Internet connection, all through that one pipe."

Current offerings

AAPT's Business Connect boasts to be the first fully managed and customised VoIP solution developed especially for Australian medium enterprises.

Launched in July 2006, the service was recognised at the 2007 Australian Telecommunications Users Group Awards as one of the most innovative products in the communications sector.

"Business Connect demonstrates AAPT's success in expanding our existing capability as a telecommunications service provider to a complete ICT provider in the business market" said Gregg Roy, general manager of AAPT Business Solutions.

"It is an innovative, market-first VoIP solution for medium business that represents true convergence of Information Communications Technology," he said.

To entice SMBs to make the jump to Voice over Broadband, AAPT's Business Connect advertises no set up costs and a service that is compatible with existing analogue phone equipment.

Other benefits include: the ability to rout a single incoming call to multiple phones – for example, an office line, home phone, as well as a mobile number – which increases the contactability of sales staff; the ability to forward voicemail to e-mail inboxes; low per-minute call rates and free inter-office phone calls.

One adopter of AAPT's Voice over Broadband technology is Global Insight Market Research. The Queensland-based full-service market research firm makes an estimated 2,000 calls per month, so cost was no small consideration in the search for a telecommunications service provider.

"We were interested in moving from our traditional telecommunications infrastructure to something that could streamline our operations and provide advanced functionality not available in standard services,"
said Murray Dempsey, managing director of Global Insight Market Research in an AAPT Business Connect case study.

"The AAPT Business Connect solution offered us great call rates and volume discounts, halving our communications spend by allowing us to use a DSL connection for all our communication needs. We no longer need to maintain and pay for separate access for voice and data needs."

While Business Connect primarily targets medium-sized businesses, Optus has opened its arms to the entire SMB sector with its ipPhone service. Launched in June 2007, the service bundles 12 cent flat local and national calls with a variety of traditional telephony features including call transfer, call hold and call wait, as well as newer Internet telephony features like the ability to rout incoming calls to multiple lines.

Available to Optus Business DSL customers, ipPhone comes in two flavours - Optus ipPhone Premier and Optus ipPhone Express. The former offers superior call quality at $19.95 per month excluding the set up costs of a professional installation. The latter is priced at $12 per month and comes as a simple, plug and play service.

According to Optus' estimates in its IP Index 2005, almost one half of its IP customers already utilise a VoIP solution, and a further 17 per cent are evaluating or trialling VOIP technology. Optus expects VoIP adoption to yield between 30 and 50 per cent in cost savings for a typical organisation.

"Broadband penetration has really accelerated in the SMB market over recent years and as a result customers are now looking at how they can better utilise their communications infrastructure," said Paul Kitchin, managing director of Optus SMB.

"Optus recognises that SMBs want and need more than the traditional core telecommunication products of fixed, mobile and internet to complete daily business operations," he said.

Shove over, Telstra?

Despite the benefits touted by its champions, the uptake of Voice over Broadband technologies has been slow. IDC's Cannon estimates VoIP to occupy no more than 300,000 phone lines in a six million line market, representing a mere five per cent of Australian phone lines.

"It's not [a large uptake]," Cannon said, "but then again, because the big, competitive telcos have only launched these products in the last six months, in reality, it's [VoIP] got a long way to go."

One major hurdle that VoIP currently faces is its reputation for poor, unreliable audio quality. And indeed there have been VoIP service providers for which the popular opinion holds true.

As network infrastructure improves, however, so does the quality of Internet telephony. Using the business-grade broadband connections of today, which advertise 99.95 to 99.99 per cent availability uptime, Cannon expects the call quality degradation associated with VoIP services to be negligible.

Recent guidelines
developed by the Communications Alliance to regulate the quality of VoIP services and Internet Protocol (IP) networks are also expected to increase the uptake of the new wave of converged voice and data offerings.

"I think that a phone call going astray here and there isn't that huge of an issue," he said. "I think that that happens regardless [of if a company is using VoIP or PSTN], and people can accept that.

"It's just that a majority of the time, the audio quality in particular needs to be clean. You can achieve that now, certainly with the business-grade broadband infrastructure that's out there."

So, should Telstra be kissing its landline monopoly farewell?

Cannon is doubtful. The quality of IP infrastructure is still not as good as the traditional PSTN, and as he points out, current champions of Voice over Broadband also have large shares of the traditional telephony market.

"I would say that it [VoIP] doesn't at this point in time pose a threat [to Telstra]. Anything that is a competitive service is threatening, but I wouldn't suggest that Telstra are about to lose market share as a result of this product – not at this point in time,"
he said.

"Going forward, maybe five years from now, perhaps," he said.

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