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Voice over hype

01 October 2004  |  7941 views  |  0 Source: Finextra Research two cans and a bit of string

Bank of America's decision to migrate its entire phone network to voice over IP telephony would seem to send a clear message that technology for transmitting voice calls over the Internet is now ready for prime-time deployment.

The west coast bank is ripping out 362 PBX switches, 180,000 traditional desk phones and myriad voice messaging platforms and installing a single Cisco-supplied IP-based voice, video and data system.
Bank of America is not alone in making the switch. Research published last week by the Economist Intelligence Unit and Avaya indicates that 43% of US companies are using, testing, or planning to implement VoIP within the next two years.
The financial sector has been in the vanguard of the movement, lured by the seductive promise of 30% cheaper telecoms costs, simplified systems management and employee productivity gains. Dealing room vendor IPC says that more than 60% of the trading turrets it supplies are IP-based.
So when Cisco chief John Chambers refers to IP telephony as his company’s next $1 billion business, this is not so much a triumph of hope over experience as a proclamation of hype over actuality.
For all the dotcom-style bluster surrounding VoIP, question marks still hang over issues relating to call clarity, back-up and security. The EIU study, for instance, found quality of VoIP service as the overwhelming primary concern of survey respondents. Tellingly, quality was more of a concern for those already using or testing VoIP (67%), than for those who have yet to implement the technology (64%). For all the obvious advantages of VoIP, transmission interruptions and delays continue to be a part of the package, and a critical stumbling block to widespread business adoption.
And while banks may be installing IP networks on the dealing floor for streamlining communicatons between front and back office, none has yet been so bold as to introduce the technology for external calls to buy-side clients.
Research from International Data Corp. suggests that adoption of the technology will grow fastest among businesses opting to outsource the switch. IDC puts the size of this hosted IP voice market among US businesses at $7.6 billion by 2008 – representing a compound annual growth rate of 282 percent.
For business users, hooking desktop IP phones to a secure hosted switch realises all the mobility and cost-savings benefits of IP telephony without the capital expense of an IP PBX and the hassle of dealing with associated back-up and maintenance issues.
Banks looking for a prudent business model may wish to follow the experiences of UK bank Abbey, which is currently implementing VoIP services across its national network of 800 branches under an outsourcing deal with BT. As part of the roll-out, the bank has implemented a 'voice quality service level agreement' with the vendor, and is using technology from Psytechnics to monitor the network.
Further reading:
Bank of America begins roll out of Cisco VoIP telephony technology
Abbey selects Psytechnics to ensure VoIP quality

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