Future calling
The story goes that Alexander Graham Bell had so much faith in his invention that he predicted every town would one day have one.
Little did he know that most of the people in the developed world would end up carrying a phone in their pocket and be able to call anyone from just about anywhere.
From then until now, there has been a steady evolution of telephone solutions, but the last five years have seen the most profound changes.
The private branch exchange (PBX) has been the gateway between the public switched telephone network and business for decades, but long-standing principles about how it works altered significantly with the arrival of IP technology.
The evolution of PBX combined with the rise of the mobile phone has prompted the biggest revolution of all, the commoditisation of telephone calls.
In a world where everyone has a mobile phone, there was always going to be more competition on call charges, despite how hard the operators have worked to protect their revenues.
In IP environments of converged voice and data traffic, voice becomes just another application on the network.
Running voice over IP, organisations get to make inter-office calls for free, and they can manage it all centrally, which means no more call-outs for adds, moves and changes. With the old TDM networks, moving users around required an expensive supplier call-out. Now it can all be done centrally by the ICT department using a single workstation.
More flexible and cost effective, the new PBX solutions also provide a platform for unified communications and more sophisticated applications.
Migrating to new systems is usually motivated by an event – moving to a new office, opening a green field site or simply replacing a legacy system.
According to Gavin McCarthy, business development manager at Siemens Enterprise Communications, swapping old digital equipment for IP technology can be carried out in phases and doesn’t have to be a risky ‘rip and replace’ project.
“Traditionally in the PBX industry, a refresh would occur every five to seven years,” said McCarthy.” That has completely changed.
Now organisations will only do it when it makes commercial sense and they are lot more focused about what they do.
“It also depends on where they are at in their investment cycle on existing infrastructure. There may also be green initiative drivers, or it may be about simplifying the communications process.”
The phased approach means a migration takes place where the business case is the strongest.” It all depends how they want to bleed the PBX investment and extend the life of old assets,” said McCarthy.
“Right now, many companies wil l stick with what they have, but there will always be a pool of users in any company that can benefit from a higher level of connectivity.”
A case in point is field service engineers and sales teams. IP connectivity means they can stay out on the road longer, conducting project meetings and conference cal ls remotely, something that was difficult to do before IP.
Another relatively easy win is wireless connectivity that seamlessly takes mobile calls onto the company IP network when users are onsite. Conversely, there are mobile solutions that connect mobile calls directly to the company PBX, without having to go through expensive fixed-mobile connections. Both deliver savings that make company phone bills look a lot more palatable.
Mobile is now a huge part of the telephony discussion and operators are being pressed to improve their deals.” Companies are coming back and renegotiating their packages looking for discounts,” said Alan Brown, business sales director at O2.”There is a lot of that at the moment in every sector with every supplier, and mobile is no different.”
Part of this has seen larger firms adopting an SME approach and opting for simpler packages.” They would have been more interested in customised pricing and price per minute in the past, but now they want to get a fixed amount of data for a set fee to give them more control over their spend,” said Brown.
Like the fixed-line providers, mobile operators have to look beyond voice for revenue. Mobile data services are starting to fil l the hole.
“If al l we were doing was voice calls then we would not be in a comfortable place,” said Brown.” Data, by contrast, is certainly not commoditised. We see ourselves as differentiating because of the quality of data coverage and because we have invested a lot over the years in our network.”
Other operators like Vodafone and Meteor have broadened their scope with one-stop fixed, mobile and broadband propositions – Vodafone through a deal with BT and Meteor through acquisition by Eircom. But O2 doesn’t believe it gives them any significant advantage.
“At the moment they are not offering anything different to what we can do,” he said.” We sell Eircom wholesale services. The challenge for every mobile customer is looking at evolving customer needs, which includes fixed.
“It’s down to what the customer wants and how you deliver, they are not worried about who is ultimately providing the bits and bytes and pieces of wire. It’s about giving them a service that meets their needs and providing a service when something goes wrong.”
Whatever the driver, Vincent McFadden, head of specialist and technical pre-sales at BT, said the floodgates were open.
“There is no doubt that voice traffic over the switch network is going to decline,” said McFadden.” The traffic will move to IP based networks.”
He said that IP PBX, VoIP and IP telephony were al l part of an overall convergenece of technology as organisations looked to bring the IT and communication function together to drive costs in their business and gain efficiency. But he warned against making the move for a one-off tactical win.
“It should be avoided because it will probably fail,” he said.” Organisations have to look at an overall strategic approach to manage costs and risks.
Something like IP telephony, for example, requires a fundamental change to the network infrastructure – new switches on the local area network and more bandwidth on the wide area network.”
The good news for businesses is that the rush of new technology has brought greater competition. Stephen Mulligan, unified communication principal at Eircom said that price was now the main driver, especially in voice services that had been largely commoditised.
“Customers are shopping around a huge amount more than they used to,” he said.” Part of it is the competition in the market and part of it is smarter procurement. They know there is value to be had and in the current economic climate they are heavily incentivised to drive down costs.”
Mulligan said that tenders were much more weighted towards price than they used to be, but argued that companies like Eircom were still finding ways to differentiate and deliver value. A new trend that ticks both boxes for customers is hosted telephony, where the customer pays a monthly fee to a service provider who runs and manages the PBX out of the cloud.
While it is certainly a trend, onsite systems still have a future, as large corporates and government departments still want complete control. For others, it is about sweating assets.
“A business case for a technology refresh is hard to get past financial controllers at the moment,” he said.” They are looking to extend the life of what they have to get through the recession.”
The challenge for vendors is persuading customers that new telephony solutions will deliver a return and meet the cost saving agenda. Unified communications is one area where this pitch works and it is getting some traction.
“Customers realise that the UC element really strengthens the business,” said Mulligan.” There are concerns about travel and trying to minimise it as part of the green and cost agenda.”
Jason Flynn, country manager for Avaya, said the discussion had moved beyond voice to added services.” Any new requests that come in now are about IP telephony.
Customers are looking at new telephony solutions that are coupled with other applications and enhanced benefits.”
