The New Voice Choice

The time has clearly arrived for voice-over-IP technology with its compelling cost savings.
Congress is planning hearings to explore the proper way to regulate voice over IP. Sen. John Sununu, R-N.H., said last week that he plans to introduce a bill that classifies voice over IP as an information service, not a phone service. The bill also would give regulatory jurisdiction to the FCC and restrict the ability to impose taxes on VoIP service.

That worries states, which fear unregulated and untaxed VoIP calls will cost them substantial tax revenue. Many have started their own proceedings on how to regulate the technology. A lot of users and potential users aren't fans of regulation. More than two-thirds (68%) of the 300 survey respondents say voice over IP shouldn't be regulated. Of the 95 who support regulation, 90% say the FCC should handle the job.

Trinity Valley's Fleming isn't worried about regulation, at least for voice-over-IP calls that travel over a corporate network. "I can't see the government regulating a private network," he says. "There's no way for them to regulate the stuff that we do."

Vendors are rallying to protect the technology from regulation. Last week, a group called the Voice on the Net Coalition, which includes AT&T, MCI, Microsoft, and Texas Instruments, revealed plans to lobby in Washington against new regulation.

Quite a mix of service and hardware vendors are involved in voice over IP. Many local and long-distance phone companies have disclosed plans to offer services and hardware in an effort to keep customers' voice traffic flowing over their networks. But businesses are more likely to turn to a hardware vendor or a systems integrator than a service provider when they decide to deploy voice over IP. Less than 10% of business VoIP deployments include the active involvement of a telecom carrier, according to research firm Meta Group.


  • Voice over IP has arrived. A survey of 300 business-technology executives shows that 29% use the technology, 18% are testing it, and 34% plan to deploy it

  • Most users expect voice over IP to cut their telecom costs; they also expect it to improve productivity, collaboration, data access, and customer service

  • The biggest concerns are quality of service, reliability, and security, although users have fewer concerns than nonusers

  • A regulatory cloud hangs over VoIP; rules haven't been set, and it's unclear whether normal phone taxes will apply

  • About 34% of users that InformationWeek Research surveyed bought their technology from a networking hardware vendor, 28% from a reseller or integrator, and 24% from a telecom company. Most of the survey respondents (55%) use or are planning to use networking leader Cisco to fill their needs in the next 12 months. Two other major network hardware companies--Avaya Inc. at 25% and Nortel at 24%--also ranked high.

    How does a business choose a vendor? "Very carefully," Trinity Valley's Fleming says. It's important to find a technology vendor that has a plan to steadily improve, upgrade, and support its gear. Don't dismiss phone companies, he says, especially if you're worried that regulatory or legal changes could reduce or eliminate many of the benefits of VoIP. Phone companies have a better handle on that process than hardware vendors, he says.

    One thing the InformationWeek survey makes clear is that those who are using VoIP are moving toward merging their voice and data networks into one communications infrastructure. Most respondents who are just planning to deploy the tech- nology say they haven't combined any of their voice and data networks. In contrast, 55% of those using VoIP say that half or more of their voice and data networks are converged into a single communications infrastructure.

    There's mixed advice on how companies looking at VoIP should proceed. Swinerton's Mathews urges new users to "start small. You need to test your infrastructure." Businesses need to look closely at the features and functions their current phone systems offer to ensure that the VoIP system can match the important ones, he adds.

    However, Minnesota's Valentine says starting small isn't a good way to benefit from the technology. "It doesn't work phone by phone," she says. By the time you buy the switches and the hardware needed to deploy the technology, "the cost on the front end doesn't lend itself to small pilots," Valentine says. "The sooner you do it, the sooner you'll start seeing the benefits."

    Project manager Benner agrees. "We're still thinking of things we can do with this," she says. "The exciting thing about voice over IP is that the voice part of it is the tip of the iceberg."

    Illustration by James Steinberg

    Editor's Choice
    James M. Connolly, Contributing Editor and Writer
    Carrie Pallardy, Contributing Reporter
    Roger Burkhardt, Capital Markets Chief Technology Officer, Broadridge Financial Solutions
    Shane Snider, Senior Writer, InformationWeek
    Sara Peters, Editor-in-Chief, InformationWeek / Network Computing
    Brandon Taylor, Digital Editorial Program Manager
    Jessica Davis, Senior Editor
    John Edwards, Technology Journalist & Author