Return on investment from VoIP ‘a long way off’


14 Jun 2006

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Businesses investing in internet telephony or VoIP-enabled (voice over internet protocol) systems will still be relying on traditional PSTN lines for at least two to three years until the local loop unbundling (LLU) problems are resolved, a telecoms expert has warned. The expert also revealed that businesses are discouraging employees from making mobile calls due to excessive costs.

Brendan Moran of telecoms brokerage MinuteBuyer told siliconrepublic.com that he is seeing increasing evidence of Irish companies encouraging employees to take a message and ring back on a landline rather than on their mobiles.

Moran explained: “Businesses in Ireland are still paying top whack on mobile to mobile calls. In terms of telecoms expenditure by businesses, mobile calls represent only 17pc of call volumes yet 40pc of the overall cost. As a result, lots of companies are discouraging calls to mobile.

“It is three times more expensive to ring an Irish mobile than it is to ring Australia,” Moran said.

On the subject of voice over internet protocol, Moran said that companies will be waiting at least two to three years before they see any return on their investment as true VoIP will not happen in the Irish market until local loop unbundling (LLU) is available across the majority of exchanges.

He added that telecoms equipment vendors were selling VoIP-enabled systems as if they were a silver bullet solution to telecoms costs issues. In reality, he explained, many of these systems, or PBXs, were hybrid boxes capable of working with existing PSTN networks but capable of migrating to VoIP when it becomes more widespread.

He warned that VoIP for business will not work in the same way as the Skype internet telephony service works for consumers, enabling them to make international calls for a fraction of the price.

“Business VoIP will not work like Skype for consumers,” Moran explained. “There will always be some element of cost involved.”

“VoIP for business is a different proposition. VoIP is will still be the love child of equipment vendors. It is coming, but at present systems being sold are a combination of the old and the new. The systems work with existing PSTN and are future-proofed to migrate to VoIP when it fully happens. Businesses are buying VoIP enabled PBX systems, but it is not a pure solution. It is being talked up. I take a contrary view.”

Moran explained that at present the majority of businesses with broadband access the internet through DSL, and more than likely will share elements of that access with other businesses and residential users in their area leading to contention issues. “You cannot build a business network on that sort of infrastructure. The benefit of VoIP will come when you have full LLU, or non-contended DSL for the cost of an ordinary phone line.”

He further explained: “With contention, you are basically contending with your neighbours for infrastructure on a local level. It can be annoying in the residential space but it is worse in a business environment. I like to use the metaphor of the M50. It went from being one of the best roads in Europe to being the worst road in Europe as traffic volumes rose.”

He warned that in the corporate arena, VoIP systems are also being positioned to piggyback on a business’s leased line network. “In the case of banks, there is no bank in the world that would allow you to piggyback anything on a mission critical data network for security and efficiency reasons.”

Equipment vendors he warned are also selling VoIP systems on the basis that they cut down on internal call costs as branches can connect to each other via a data network. “The real truth is that the majority of calls by a business are external rather than internal.”

He reiterated that it was vital that the LLU issues in Ireland are resolved to a point where the majority of exchanges in the country are unbundled. “Decentralisation could have been the perfect opportunity to resolve the LLU crisis. Infrastructure could have been pushed at particular regions and towns.

“Decentralisation brings infrastructure, jobs and prosperity into an area. The debate shouldn’t be about reluctant civil servants. If people in regional towns due to receive decentralisation knew what was going to come on the back of it the debate might have turned out differently,” Moran argues.

Moran confessed that VoIP equipment vendors won’t be too enthusiastic about his prognosis. “Equipment vendors will be less than thrilled,” he affirms.

By John Kennedy