The internet’s potential to reduce phone bills has been a hot topic for web enthusiasts for some years now, but most mainstream media attention has focused on domestic telephones. Meanwhile the business communications market has been quickly, quietly embracing the technology known as "voice over internet protocol", or IP telephony, which can reduce costs and provide businesses with new features by making use of the broadband network to carry voice calls.
For home users, web-based phone companies such as Skype and Vonage remain small-time players, but in the corporate market IP telephony specialists such as Nortel, Cisco and a host of smaller companies are taking an increasing amount of business from the traditional networks.
"We think that by the end of 2007, half of new phones shipped in Western Europe will be IP," says Tim Stone, Cisco’s marketing manager for IP commerce in Europe, the Middle East and Africa. "In the US it will probably happen a year or 18 months earlier." Cisco has recently won contracts to supply Boeing with 150,000 IP phones, Bank of America with 180,000 and Ford with 50,000.
At the other end of the scale is Zultys, a small, California-based IP phone company that employs just five people in the UK but has a growing presence in the market, with customers including St John’s Ambulance and the Conran restaurants. Its founder and president, Iain Milnes, agrees that the days of the traditional telephone network, known as the PBX, are numbered.
"A guy would be nuts to employ a legacy PBX on his premises today," Mr Milnes says. "Putting in something that just lets you make and receive phone calls is crazy." He, like the other IP telephony companies, is convinced that customers will soon be demanding much, much more from their telephones. The buzzwords of the industry are integration and virtualisation, illustrating the idea is that the IP phone becomes an extension of the PC rather than existing as an entirely separate network. This, supporters suggest, allows information to move from one medium to another with much greater efficiency.
For example, when a worker logs on to an IP phone, it will adopt the contact number of that particular employee and recall his or her address book, stored settings and speed dial numbers. That may not sound like a revolution, but it means that employees can work from different departments within the company, or from home, or from hotels and airport lounges around the world, while remaining on the company phone network and keeping the same contact number.
At the Cisco demonstration centre near Heathrow Airport, the company shows off some of the features incorporated in the latest IP phones. One of the benefits of integrating the technologies is that barriers between phone calls, voicemail and e-mail are broken down. So if you try to call a colleague who cannot answer, you can leave a voice message that the IP phone will automatically forward to that person’s e-mail inbox as a sound file. This file can then be forwarded to any other e-mail address, or sent to other IP phones. Alternatively, an employee can access e-mail using the phone, dialling in to his or her account to hear the messages read out by an automated voice. Other features available with some phones and software packages include video conferencing and document collaboration, which allows people in different parts of the world to work on the same Microsoft Office document simultaneously.
These features are available both on ‘soft phones’, which must be used in conjunction with the computer that provides the internet access, and desk-based IP phones, which work entirely independently of PCs. These phones connect directly to the company ethernet, which, like the traditional phone network, supplies electrical power so that the phones do not need to be plugged into the mains and will continue to work during a power cut.
At Cisco, Mr Stone said that while reducing the cost of phone bills had been the initial incentive for companies to switch to IP phones, the additional features are now proving to be the primary attraction. He tells the story of the car financing arm of Credit Suisse, which has installed IP video phones in about 50 car dealerships in Switzerland. This allows it to service all the dealerships with fewer than ten agents, while still giving customers the benefits of a face-to-face consultation. Some British banks are considering installing a similar service for mortgage advisers in rural branches where demand does not justify employing a permanent mortgage specialist.
For those with more limited ambitions, Zultys has recently launched the MX30, an IP exchange designed for companies with up to 30 employees, demonstrating Mr Milnes’ belief that IP telephony is not just for big corporations. One of the technology’s key selling points is its flexibility, which particularly suits growing businesses. The next step up is the MX250, which caters for up to 250 lines and can be connected wirelessly to other units to support a maximum of 10,000 phone lines.
"When a customer buys an MX250 they never need to come back to us for any more hardware as they expand the unit to its maximum number of users," Mr Milnes explained. "It’s expanded using software licensing, which we actually send out as an e-mail."
