Press Release: VoIP connects on far more than cost now

By Eric Lai
East Bay Business Times
Updated: 7:00 p.m. ET Nov. 28, 2004 and picked up from msn.com 12/04

Phone calls made over the Internet used to be inconvenient - callers were tethered to their desktop PCs by their phone headsets - and sounded awful.

Voice-over-Internet-Protocol, or VoIP, technology had been, like many things technological, overly hyped during the late 1990s. Truly, VoIP's only advantage over regular phone calls was that it was really cheap, or free, for the callers.

Much has changed. Internet phone users can now place calls from regular phones, cordless phones or even cell phones. Users can also enjoy sparkling sound quality, as consumer services such as Vonage and Skype have shown.

But long-distance and cell phone rates have plummeted, too. So is there any reason to upgrade to Internet telephony?

There is. For companies, Internet telephony is less about making cheap cross-country or international calls than about upgrading their clunky analog phone systems to digital IP ones that are easier to manage and more powerful.

New VoIP features allow firms to easily forward calls to cell phones of workers in the field; send voice mail as e-mail attachments; and allow firms to consolidate their telecom and IT staffs into single teams.

"VoIP is no longer about cost savings. It's about features and flexibility," said Gilbert Hu, CEO of AltiGen Communications Inc. The Fremont company makes VoIP systems for businesses with 25 to 200 employees. The company, which has won more than 40 industry awards for its phone software, announced its first full year of profitability last week. AltiGen expects its sales to grow by 25 percent in the coming year.

To oversee multiple incoming lines and employee voice mail systems, companies have traditionally relied on either PBX boxes that they managed themselves, or paid a monthly fee for an outsourced service, such as Centrex from Nortel Networks Inc.

Hu remembers when analysts in the late 1990s predicted that more than half of businesses would dump their PBX or Centrex phone systems in favor of VoIP ones by 2004, The reality, says Hu, is that just one in 10 businesses have made that upgrade.

One reason was the economic downturn, which chilled IT and telecom spending. PBX boxes, while expensive to maintain, weren't breaking down very fast. So although companies could expect to save on maintenance by upgrading to VoIP, doing the switch wasn't cheap - not when new VoIP phones themselves cost at least $200 each.
Then carriers began offering a hosted VoIP service - sort of a digital version of Centrex - whereby customers could avoid massive upgrade charges and pay on a monthly basis.

"It eliminates the need to invest or manage the equipment. And it takes obsolescence out of the question," said Jason Hillery, a spokesperson for SBC Communication's business services unit.

SBC is aiming its hosted VoIP service at smaller firms, although it announced this month that it had signed up the University of Notre Dame, with 7,000 users, as its largest customer.

Fremont wireless Internet Service Provider NextWeb Inc., will begin offering a hosted VoIP service starting early next year.

"The real sweet spot for this kind of product is a company with between five to 25 employees," said Eric Warren, director of marketing for NextWeb.

For most larger firms, however, investing in VoIP equipment makes more economic sense over the long run.
Challenge Dairy, a 200-employee Dublin-based farmer's co-operative that makes the popular Challenge Butter brand, is having a VoIP system installed by Trans-West Network Solutions of San Diego.

The new system will allow Challenge to save money on intercompany calls, which will be transmitted over the company's data network and the Internet. It will also make it easier for sick workers or telecommuters to log in from home, said Alan Maag, Challenge's CFO. And it simplifies phone number changes from temporary or permanent moves.

"We're getting a better platform," Maag said. "And our savings are paying for the new technology."
Best known for its voice and video conferencing products, Polycom Corp. has a wide range of IP-based desktop phones and conferencing products.
© 2004 East Bay Business Times

Since 1991, Quality Connections Inc. has been committed to problem solving, forward thinking, and innovative communications systems design for small and medium-sized businesses and organizations. They manage communications networks for 300-400 customers and are becoming a regional leader in secure and reliable Internet Protocol (IP) telephony systems and communications systems, software applications, and services. Quality Connections helps customers leverage existing and add new networks to achieve superior business results. For more information visit the Quality Connections website: http://www.qualityconnections.com.

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