Rather than being a risky fringe technology Internet Protocol (IP) for key corporate use has rapidly evolved into a mature, proven, stable architecture that allows the convergence of voice, data and applications onto a single integrated network.

Over the past 18 months many New Zealand companies have overcome their reticence to buying into Internet telephony.
Although the majority have opted for small pilot systems before a full roll out, IDC predicts the market will begin to boom next year and really take off by 2005.

It has been predicted that IP telephony will account for 30 percent of global telecommunication traffic by 2005 as broadband internet providers look to extend their bundle of services and organisations look to reduce their telecommunications costs.

Allied Business Intelligence says enterprises will migrate their voice from traditional networks to data networks at a rate that will create a $US16.5 billion dollar IP-PBX market worldwide by 2006. Philips Group claims  90 per cent of enterprises with multiple locations will start switching to IP systems for voice over next 5 years.

VoIP is the two-way transmission of audio over a packet-switched IP network (TCP/IP network)  in a private intranet or WAN environment. When it is on the public internet or the internet backbone and provided by a major carrier, it is generally called Internet telephony. However the terms are often used interchangeably.

While a growing number of PBX (private branch exchanges) can be upgraded to handle VoIP many of the older generation are simply becoming redundant and new PC or server-based technology is increasingly taking over the reins handling data and voice traffic.

By 2005, Gartner Group forecasts that 45 per cent of all new or extended telephony solutions will be IP-based. Gartner Australian analyst Geoff Johnson says VoIP is far more viable now that it was two years ago with traditional PBX vendors such as Nortel and Alcatel competing for business by extending the capabilities of their installed and new equipment at one end and network vendors Cisco and 3Com treating VoIP as just another application on the digital data network at the other.

Early VoIP failures have been attributed to network layer technology not being up to the challenge, poor installation or a lack of understanding of what was required.  VoIP is considered ideal where there are fewer than 100 phone lines and where it will result in a lower cost of ownership of the existing voice system and it can exceed the features, security and reliability of the existing PBX.

It used to be that IP voice traffic was discernibly worse quality than your typical telephone call but improved compression and voice management technology now means its difficult or in many cases impossible to tell the difference. Typically you would take VoIP services from an ISP or an existing telecommunications carrier with expertise in this area.

The big plus is cost saving, particularly for toll calls between branch offices, and a reduced need for voice specific technology. Essentially you are less dependent on your normal telecommunications provider, although they may also be in the running to provide that service.

The ideal site is a remote branch of an organisation with limited voice requirements where changes can be managed remotely and toll bills reduced significantly.

However IP phones can cost as much if not more than standard phone and the server based hardware is not always more affordable or easier to install than proprietary PBX equipment.

Cisco is one of the major providers of technology for VoIP, having dominated the market so far but has recently found competition in the form of 3Com which has begun delivering its solution into the new Zealand marketplace.

Among the main providers of VoIP bandwidth is Attica which has its own network and installed IP telephony for over 30 customers last year. Its first customer Tourism New Zealand experienced problems and backed off after it experienced voice quality problems.  Corporate services general manager Keith Thomas, says it reverted to the old phone system after 60 staff in Tourism New Zealand's Wellington, Auckland and Christchurch were involved in the trial. The problem experienced with the Cisco equipment on the Atticas’s brand new network has since been resolved and another attempt may be made later this year.

In New Zealand, the Department of Social Welfare was an early adopter and claims major cost savings through adopting VoIP about 18 months ago. The Cisco-based system using Clear (now TelstraClear) was rolled out to 8000 users in the ministry, Child Youth and Family service and Department of Work and Income within three weeks.

Wellington film production house Silverscreen Productions' decided on IP telephony when it moved to new premises where it couldn’t put in cable for a traditional phone system

The company has a single fibre optic cable running through its premises and Cisco equipment was installed in October 2000 by Logical CSI. Having a single system in place and running voice and data on the same cable led to significant cost savings. Silverscreen has 55 IP telephony sets in Wellington and between 35 and 50 in its Auckland office.

In June 2000, the Wellington-based financial services brokerage Unity became the first company in New Zealand to utilise VoIP technology connecting its website visitors to its contact centre while they remained online.

David Mason, product marketing manager for Agile, which helped implement Unity’s system using Avaya VoIP technology, says the voice signal is sampled, compressed and encapsulated into data packets to allow it to be switched, routed and bridged along with all other data packets.

ASB Bank has over 100 staff and 250 non-branch personnel connected to its Cisco-based IP telephony system, installed in partnership with Logical CSI. The early stages revealed a “fault free roll out”.

Auckland University of Technology (AUT) has 20 staff using Cisco IP phones, and once its confident this is the way forward plans to increase that to 120 by the end of next year.

Tauranga Hospital has 60 people in two non-clinical departments, a remote site, a community health location and a disability centre using IP telephony. The vision is that in 10-years time al the hospitals voice communications will be on IP.

So far, the Cisco system installed by Logical CSI, has proved "more stable" than the legacy PABX, says Bay of Plenty Health Board IT systems manager Grant Ardern.

Sky City is excited by the possibilities of voice over IP. It has a Avaya Definity switch in Auckland and is considering options for developing a VoIP network between its existing Adelaide operation and a planned Hamilton casino.

Meanwhile Telecom is ensuring its not left behind in the rush to deploy voice-based IP technology and is gearing it’s network up to be totally IP-based. It has formed a strategic relationship with Alcatel to move its fixed line networks in New Zealand and Australia to next generation technologies.

 Telecom's chief technical officer, Murray Milner says that every 20 years or so a new technology comes along that changes Telecom's business.

He says the next 10 to 15 years will completely redefine the way Telecom conducts its business, with the movement of existing services to the new environment and the introduction of new offerings.

The shift will involve upgrading or replacing most of Telecom's network electronics, although existing fibre and copper will remain in the ground.

The move will change the way Telecom offers its services. In the past it has needed multiple platforms to deliver its various services into a business – with a completely IP-based network everything can be provided from a single platform and customers will require only one point of contact with the company. The move will enhance Telecom’s ability to gain rapid ground in the voice over IP market.

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Leading New Zealand VoIP providers:  Cogent

By Keith Newman 

22 January, 2002