InformationWeek

February 5, 2001

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Voice-Over-IP Plans Leave Questions Unanswered

AT&T and worldcom won't disclose pricing information or other details needed for evaluation

By Bob Wallace (bwallace@cmp.com)

More on VoIP:

TechWeb News: QoS Unveils Portfolio Of Products (1/30/01)

TechWeb News: Networking Remains Hot Spot For Integrators (12/22/00)

TechWeb News: Voice Rises Up (12/4/00)

T&T and WorldCom are starting to let businesses send voice and data traffic over a single IP network. But AT&T's new and WorldCom's planned voice-over-IP services are still very much works in progress.

Neither company has provided pricing details--required information if the vendors want to back up their claims that using voice over IP is less expensive than using a separate voice network. Also missing are service-level agreements, which are critical because voice quality is a major concern with the new services, and details on how the carriers will price calls that go to destinations not on the corporate network.

"AT&T and WorldCom will have to demonstrate incentives--such as substantially lower total costs and business benefits--before customers can properly evaluate the services," says Lisa Pierce, a fellow at Giga Information Group. "Customers will still try the services at a few locations to see firsthand how they work. You won't see companies totally replacing their voice networks or services with these evolving services."

Both carriers acknowledge that their voice-over-IP services may not supplant customers' voice networks for years. They've designed them to work with legacy PBX telephone systems and their public network-based (and low-priced) virtual voice network services. AT&T's services are available now; WorldCom is promising a March launch.

Tower Automotive Inc. saves $20,000 a month by running AT&T's Managed Router Service with voice over IP between sites in Michigan and Mexico, says Mark Huang, an IT executive at the Grand Rapids, Mich., parts supplier. But he says it's tough to compare established voice pricing models with voice-over-IP pricing, which makes it difficult to determine which other sites might save money by moving to voice over IP.

"The claimed cost savings isn't very clear for domestic locations, so we'll focus on international," he says. Analysts agree voice over IP is far less expensive than using public networks in foreign countries.