Mr Harry van Streun Issue: Europe 2005
Article no.: 11
Topic: Voice over IP–ready for a breakthrough
Author: Mr Harry van Streun
Title: President
Organisation: Infonet Europe, Middle East and Africa
PDF size: 308KB

About author

Harry van Streun is the President of Europe, Middle East and Africa (EMEA) for Infonet Services Corporation, responsible for 31 throughout the three regions. Previously, Mr van Streun was CEO of Infonet ASP BV. Mr van Streun has held a series of positions within Infonet. Mr van Streun started in a sales position for Infonet Nederland B.V. and, after three years, he moved into a general management position, eventually becoming Managing Director of Infonet Nederland BV. Mr van Streun has a Bachelor of Arts in Economics from the Ichthus School of Economics, in Rotterdam.


Article abstract

Until recently, voice and data were carried over separate networks. This made networks more difficult to manage and more costly to build, maintain and manage. The cost and complexity of the legacy voice and data networks makes traditional telephony too expensive for many people. The Internet can also transmit voice, but does not offer guaranteed quality. MPLS technology enables high-quality voice over IP–VoIP. Both developing countries and corporations will benefit from the low cost of VoIP.


Full Article

This may be the stuff that dreams are made of, but quite a number of IT/TC managers and controllers are finding out that dreams can become reality. For years, the hope that companies that do business internationally could use the Internet to cut their heavy phone bills, control their budgets and tighten their planning seemed futile. Yet in the past few months, realistic business cases with Voice over IP (VoIP) have been possible. Telephony today: expensive and unpredictable Most large companies have two different types of networks for international communications. They use packet-switched networks–based on technologies such as Frame Relay, ATM or the like–for data. These networks can provide guaranteed quality, security and service levels. They also use circuit-switched telephone networks for voice; these are tough to manage and costly, but the quality is dependable. Companies usually acquire their telephone network from a variety of local phone companies. They receive bills in different currencies and there is often inconsistent detail information, or even none, on the bill. Therefore, it is difficult to allocate telephone charges to the cost centres responsible. In order to obtain the information needed, the financial department often has to allocate additional manpower. The running costs of traditional circuit-switched telephony are high and they change every month, since–unlike data traffic, which is usually charged at a flat rate–they are based not only on time, but on the distance and, as well, upon various local market factors. Exact planning and cost control is scarcely possible. Often, the Comptroller will find–after the event–that there has been a substantial budget overrun despite the best efforts to control usage. In addition, the investment costs for traditional company networks are high. At virtually every site, expensive Private Branch Exchanges (PBXs) are installed, which requires the use of local technical specialists. The equipment, often supplied by a number of different manufacturers, becomes obsolescent after just a few years and the customer has no choice but to run this risk. Connecting new sites to the network is complex and time-consuming. With traditional networks, different departments often manage the company’s voice and data networks separately. This increases the complexity and makes it difficult to use technical and human resources efficiently. Internet: hope and reality In recent years, the Internet has developed into a third network. It is based on the universal platform-independent IP protocol, which has now established itself as a de facto standard at applications level. IP applications are totally independent of the transport. Voice and fax signals can be split into data packets and transmitted using the IP protocol. This has brought a universal global network within the realms of possibility, overcoming distances and local market conditions in voice and data communication, creating uniform and transparent conditions throughout the company. The structural weaknesses of the public Internet and the nature of telephony were initially the reason that the VoIP vision remained just a dream. A high quality network is needed for voice transmission. The data stream must be uninterrupted. Delays, bottlenecks and loss of data packets–not as important with less time-critical applications such as email–are not acceptable here. Transmission almost in real-time is required, otherwise effects such as echo and pauses occur and the spoken words are difficult or impossible to understand at the other end of the line. In hybrid networks, different applications compete with each other–email via ERP applications, for example, might compete with very high data volumes or with digitised voice. If the voice packets are to be transmitted in real time, they must be given priority in competing situations. This is done by assigning a different Class of Service, or COS, to each type of traffic according to priority rules. However, the public Internet operates according to the principle that whichever application arrives first will be transmitted first. It is also not subject to service levels with the graduated quality and availability guarantees (quality of service), which are usual on private data networks. Although, in principle, the Internet can also transmit voice, it does not offer guaranteed quality. Internet telephony, as it existed in the past, may have satisfied enthusiastic amateurs, however, it is not suitable for the everyday requirements of business. Breakthrough: MPLS technology If VoIP in businesses is ready to make a breakthrough, it is because the network technology now meets the high requirements of speech. MPLS technology (Multiprotocol Label Switching) builds a bridge between voice, video and data applications on the same IP network infrastructure. It sends data packets efficiently through the network by combining the techniques of routing with those of switching. So the latter fundamentally faster method can now also be used for speech. Using MPLS is possible to classify applications into classes of service with different priority levels. For every class of service, a different quality level can be agreed, which is tailored to the needs of the applications concerned. The real-time transmission necessary for voice communication can be achieved without the need for over-dimensioned expensive bandwidth. With Voice over IP, the PBXs at the individual company sites are connected via gateways to the MPLS-based IP network and thus become part of a virtual private network. A specific computer, the Call Control Complex, provides the network management system functions for registration, access, controls the route taken by the data packets through the network and status, converts telephone numbers into IP addresses and monitors the bandwidth, etc. Results: lower costs, more control VoIP brings businesses direct benefits, measurable in hard cash, as well as many indirect improvements. Of course, the price reduction is the most important factor, since the high time and distance-dependent charges applied by the various phone companies are largely avoided. Calls between the company’s sites (on-net calls) are usually subject to a flat rate charge irrespective of volume. Telephone calls to third parties (off-net calls) remain variable and, depending on the customer’s requirements, there are various billing models. Major savings can be made, above all in a global context, if a company makes a lot of calls to countries where telecommunications have not yet been liberalised. From projects already carried out with multinational companies we can calculate the following guide values: for calls from Germany to other European countries and the US it is currently possible to save about 30 per cent, but to South America or Asia, savings can be as much as 80 per cent. In that case, the cost savings from voice traffic alone can amortise the entire investment in an MPLS network. The fastest ROI (Return on Investment) will be recorded by companies which are already buying a data service from a provider with an MPLS network. Often, a ROI is achieved as early as the second month; for companies who frequently phone Asia–if, for example, they have set up production plants in China–the ROI might even come during the first month. In addition, other costs are cut. Since in the IP world, all applications–all types of traffic–are transmitted as data packets, a single type of technology will suffice to connect a whole site. Much expensive hardware is superfluous, because it can be emulated by software (Soft PBX). This greatly reduces investment and maintenance costs and the technology risk, the risk of obsolescence, is no longer borne by the user. Extending the network, connecting new sites, is much cheaper. The magnitude of the savings and the time it will take to amortise the investments can easily be calculated in advance. Apart from the costs, improved control and the ability to plan telephone spending are important factors for the financial managers. All the information about calls within the company and the associated costs is centrally available. The company receives only one bill in a single currency, as well as complete call details for every site–summarised as the customer wishes. So, costs can be exactly allocated without extra cost. Budgets become controllable. Market: high growth and innovations At present, many large multinational companies are introducing Voice over IP. A survey at the start of 2003 showed that half the Fortune 500 companies had already implemented VoIP technology in parts of their network or planned to do so within 12 months. In two to three years, this should also be attractive for SMEs. In around five years, VoIP could also influence private telephony. Technologies such as TDSL (Time-division Multiplexed Digital Subscriber Line), which carries broadband data services on conventional copper pair telephone cables are already laying the foundations. A study conducted by the market research firm Ovum states that the value of VoIP-VPN services–which it estimated at about US$3 billion for 2003–will grow to US$10 billion by 2005 and exceeds the US$20 billion mark in 2007. Since voice is now an integral part of an IP environment, it can be combined at will with data applications, which opens the way for many innovations. Telephones with an integrated display can show a picture of the caller. Documents such as contracts or insurance policies that relate to a particular call could be displayed automatically. Another possibility is voice-data-video integration. With this sort of integration, team discussions between employees at various sites are possible and participants not only see and hear each other, but also share access to documents and applications. The first pilot applications with Data Sharing and Life Board Sharing are already under way. These facilities will let everyone, at any time, take part, remotely, in meetings and enable functions that can only be covered today with expensive centralised services.