According to research by International Data Corp. (IDC) late last year, 60 percent of companies in Singapore are not planning to bundle voice and data on their wide area networks (WANs) while an estimated 33 percent are considering doing so but at a later time.
"The public switch telephone network (PSTN) infrastructure in Singapore is very good which made companies reluctant to use a new technology," said Sandra Ng, vice president for communications and peripherals research, IDC Asia-Pacific. "There is a natural resistance among human beings to move away from what's comfortable."
The benefits, however, of moving towards IP telephony can be substantial. Even a casual survey of service providers reveal that long distance calling services using VoIP technology may have discounts of more than 50 percent off traditional PSTN rates.
In order to stay competitive, most service providers in Singapore are offering long distance dialling services using VoIP. Singapore Telecom (SingTel) and StarHub are touting similar international calling services called V019 and I-Call 018 respectively.
According to Lim Eng, SingTel's vice president of corporate products, VoIP-routed calls constitute about 20 percent of the company's total international voice traffic, and the importance of the technology is only expected to increase.
"IP is rapidly becoming the predominant protocol for communications networks due to its ubiquity and inherent flexibility," said Lim. "VoIP will certainly play a significant part in SingTel's strategy as it will reduce our cost of providing services if the technology improves to a stage when it can replace traditional switching technology."
And with the onset of telephone deregulation last year, even the newer Internet-based startups like Wherever.net and UGotACall are aiming to serve the IP segment of the market. More such offerings are expected to crop up, increasing the volume of IP traffic.
However, a move to VoIP portends more than just making cheap long distance calls.
Most voice calls are made via the PSTN using circuit-switched technology -- or in other words, the plain old telephone lines that we use to talk to each other every day -- while computer information tends to be transmitted over a separately maintained packet data network.
"In data networks, bandwidth is usually shared between different computing without voice," said James Lin, manager, MultiVoice business development, Asia-Pacific, Lucent Technologies. "VoIP is a technology that was introduced in the last decade to allow real time voice communications on packet networks that utilize the Internet Protocol (IP)."
Whether the IP-networks are the public Internet, private corporate intranets, or extranets, VoIP allows businesses to integrate voice into these platforms, saving on maintenance and overhead costs of ownership for telephony systems.
In addition, the basic VoIP architecture allows for applications that are not available from today's PSTN voice switching equipment.
For example, enterprise call centers can use voice over IP to voice-enable Web pages. Using voice-over-IP-enabled browsers and a "click-to-talk" feature, customers, road warriors and telecommuters can connect across Internet and intranet connections.
Integrated e-mail, voice mail storage and call records are also made possible using voice over IP. A calling party can leave voice mail that is stored on the called party's e-mail system. The called party can retrieve his voice mail and click on the text message to return the call or leave a voice mail reply.
Other applications include Internet fax, and multimedia collaboration.
Applications that launch a Web-initiated call can also create savings for enterprise customers.
For example, by downloading NetSpeak's plug-in, businesses can let customers anywhere in the world contact them at no charge using a click-to-talk feature.
These are compelling reasons why one would want to abandon the traditionally stable PSTN and move towards an IP infrastructure.
Gartner Group advises companies to make voice-over-IP technology a part of their strategic local area network (LAN) and WAN plans.
David Neil, the research organization's analyst, recommends that small companies or remote offices -- those with less than 100 end-user stations -- may want to consider tossing out their old key systems or other telephony systems for new VoIP gear.
Gartner estimates that by 2003 more than half of the fewer-than-100-desktop PBX shipments will be IP PBXes, which are servers running call management software and connected to a LAN. Neil emphasized that companies going the IP PBX route must insist on solid service-level agreements from the vendors of these newfangled products.
PBXs is one of a few ways to implement VoIP on a LAN, although the most popular route is to use a VoIP gateway that plugs right into existing infrastructure. Gateways intercept incoming phone calls, digitize them, compress the signal, and packetize them for transport across the Internet or managed IP network. The same gateways also take IP-encapsulated voice packets and hands them back to a PSTN.
"If an organization already has an existing network, it can use this method to quickly deploy VoIP and reduce costs," said Lin. "All that is needed is a VoIP gateway box and a gateway manager which could take the form of software on a Windows NT box."
Meanwhile, larger sites are better off waiting till the technology matures.
Neil expects more than 95 percent of organizations to continue building separate data and voice paths to desktops through the end of 2002.
He also pointed out that installing VoIP gear in an enterprise network will not be straightforward. Router cards may need to be upgraded, gateways may need to be added, bandwidth will have to be increased and staff will need retraining.
Many companies will be able to milk their PBXes for a few more years, though he said doing so may get costly. He said it is getting harder to find parts for older PBXes and that the prices for used equipment are going up.
Equipment suppliers include vendors like Lucent, Cisco, Nortel Networks, 3Com, and NEC, all of which sell the necessary IP PBXs or standalone VoIP gateways.
On the WAN services side, customers can start testing the VoIP waters now and save money, Neil said.
Next-generation carriers in particular are investing heavily in IP networks, recognizing that revenue from voice traffic is flat or falling, while revenue from data traffic is booming. These carriers figure it makes sense to throw voice and data traffic on the same net and invest heavily in that combined network.
According to Lin, such IP networks provide carriers with savings opportunities, increased flexibility, and the ability to differentiate service offerings.
"Next-generation voice equipment is estimated to save carriers at least 50 percent in both capital and operational costs compared to traditional equipment," he said.
Local service providers like StarHub or SingTel are looking to provide VoIP over their VPN offerings.
Lim notes that SingTel is exploring the use of VoIP for voice communications on its VPN offering.
"However, the actual deployment will depend on its ability to meet the more stringent quality requirements of our corporate customers," he said.
Other companies like Equant and Cable & Wireless have also embraced VoIP in a big way, Neil said.
What customers are likely to see from VoIP service carriers are flat-rate and volume-based pricing schemes, rather than call-based ones, he said.
However, he added that carriers are still working to develop or implement billing systems that can support such pricing schemes. Neil said he even spoke to one carrier recently that was considering offering voice for free because it would be so costly to come up with a new billing system to support packet-based voice.
Regardless of the form, it clearly makes sense to look into using VoIP for business use as it brings with it new integrated applications and substantial cost savings. Companies must explore the different VoIP products and services available, and see how they can best glean the most benefit.
