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VoIP managerial issues

Viewing 15 posts - 1 through 15 (of 21 total)
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    I am new to this forum. I am a management student and have chosen to analyse Busines challenges in deploying VoIP, as a project topic. I hope it is ok to raise business related queries on this forum.
    To start,
    While Voice over a data network seems logical, simply becuase there is more data than voice these days, why is Voice over IP a logical choice? I read somewhere else on this site that IP was not technically suitable for voice. Were there any other contender protocols?

    Thanks in advance for your answers


    Phone Guy

    Your question is a little difficult to answer, simply due to the number of variables. But here is a simplistic answer.

    One of the “drawbacks” that is often pointed out, is that the IP network has not resend capability. In most data network protocols, there are provisions for resending lost packets of data. When IP was “invented”, it was decided that for simplicity, that would be eliminated. Thus, packets of anything on the web thsat go astray are lost for ever.. Another stated “drawback” is that IP does not used a fixed point to point connection. Packets can be sent in varying paths, which leads to latency (delay) being introduced. Either of these would degarde the voice being sent.

    From a practical viewpoint, in most developed countries the IP networks are being expanded to carry the traffic demands. Having enough network (“pipe”) mitigates or eliminates lost packets and latency. Users are successfully using IP for voice today with very good results. There may occur an occassional network problem, bit those which are obvious to the users are not common.

    There are problems with related systems and especially voice mail. In voice being sent over data networks (IP, Frame Relay or ATM) the voice is compressed from its native 64Kbps bandwidth to something more manageablem typically 16 KBps or less. Similarly woice mail systems compress voice for space reasons. At times this dual compression (the network and then a voice mail system) will degrade the voice to an unintelligible garble.

    The same can be true for multi-nodal networks. If the voice has to be restored to its analog format and then digitized to be sent again, it can introduce degrading of the signal. Fortunately, most newer router are intelligent enough today to send packets destined for other addresses without doing the digital-analog-digital conversion. However, the network folks have to be smart enough (don’t make that assumption) to ensure that the routers are programmed to automatically forward those packets.

    Bottom line, IP of voice can be a very real and viable alternative for businesses. While the voice will not be of the same quality as a digital voice network (due to the compression), many find that its price performance make it a satisfactory alternative. As IP is generally available everywhere (the same cannot be stated for Frame Relay or ATM), it is both accessible and cost effective.

    In the future IP will likely become usage priced, as the traditional telephone companies can rightfully state that their cost/pricing structure is based on random calling patterns and not nailed (full time) connections as used in the IP world. There are other regulatory issues also involved that have been raised to the FCC, but not yet acted upon. We all shall wait to hear what the bureaucrats decide. But the prognosis is the IP will become more expensive if and when it has to account for its usage in the local telephone network.

    Good luck

    Chris Taylor

    Thanks “Phone Guy”. That was a great post.

    Interesting that you mention voice mail. Although I understand what you’re saying, I would have expected voice mail to have worked quite well over IP, because it doesn’t quite have the same real-time demands as voice conversation.

    Phone Guy

    The problem (when it exists) is simply due to the level of compression used, and the number of times the voice message is digitized, converted to analog, digitized gain ad infinitum. PAcket drop rates and latency also affect the overall quality of the signals.

    Way back when, a guy (named Claude Shannon) in Bell Labs developed a theorum (Shannon’s Law)that stated you have to sample a signal at twice the rate of its bandwidth to maintain the integrity (fidelity) of the input. That is why digital (T-1) carriers sample at 8KHz, and the channel bandwidth is 64KHz (8 bits x 8KHz sample rate). Way over simplified, by sampling at that rate you get a piece of each positive and negative sine wave of any signal. Whew,,, Now when the voice gets compressed to say 16KHz something gets lost.(that I believe is known as Blivot’s Law) In most point to point connections, the loss in fidelity is not noticed. But now set up a series of analog to digital to analog conversions (each compressed) and distortion can become noticeable and objectionable.

    Again, there are a lot of variables and I don’t know of any proven guidelines to measure/plan against. It is a bit caveat emptor. I know of networks with voice mail that function quite satisfactorilly. I also know of instances where it has been pretty ugly.

    Hope this helps; or confuses you totally.


    Thanks Phone Guy. As you rightly said, there are a number of variables. But by the same token, I would have thought that corporates would have employed VoIP within their LANs by now. At least the variable of Pricing Structure would go. But I do not see any major deployment so far. What is the problem in this case?

    Phone Guy

    Here we get into the opinion realm,, hasn’t stopped me before however,,

    The most pragmatic problem is historically data has been managed by the IT folks, and voice by a telcom (facilities)manager. There are often parochial turf wars, and rarely any corporate technology road map. Accordingly, both groups pursue their interests with little (no?) joint planning or consultation.

    Next, the advent of “IP” phone systems has been bally hoo’ed for quite a few years, but only recently has there been legitimate systems introduced into the market. To some extent this has been a technology factor, as voice systems require immediate action (interrupt state driven) and the processors (in the pc world)have lacked the through-put (horsepower) to handle a real telephone application.

    Combined with this, circuit switched (traditional) telephone systems are inexpensive. Any of them can be hooked up to an IP connection with standard analog or ISDN trunks. This has slowed the market perception of IP based systems as being a true technology revolution.

    The real savings on circuits are when there is distance involved. If there are toll (long distrnace) charges incurred, then there is an economic decision that can be made. In the local network or enterprise network, the savings are nil. The local calling area is often essentially free and within the enterprise the cabling and wiring is in place. So making a change over in that environment is more difficult to justify.

    Now the absolute greatest cost savings exist for multi-national companies. But in that realm, many countries are arbitrarilly preventing IP as a voice alternative. In many of those cases, the local telephone company (PT&T) is government owned, so they stand to loose a m,aajor revenue source if they are bypassed. This is changing, but at a slower (methinks) rate than here in the good old US of A. This is where I think IP transmission may first become viewed as a legitimate alternative.

    Penultimately, there is the issue of station sets and conveniences. Over the past twenty years traditional switched circuit system station sets have evolved to offer a plethora of features (bells and whistles) that the users would sorely miss. Even the new IP systems have yet to match the conveniences (and status symbols) that they currently enjoy. Unless the new technology can match or beat what they already have, they will drag their feet in supporting any radical changes.

    Almost last, the competition between the carriers has resulted in customers being coerced into signing multi-year facilities contracts to get major savings. Here is the Great Southwest, US West (Qwest) has signed business customers to ten year contracts for T-1 access, to freeze out the CLEC competition. To get any significant price break, most carriers get at minimum a 36 month contract. This has occurred at the same time as the IP technology has really become attractive due to the equipment (systems) changes. True one could cut over, but they would still be liable for the unused part of their facilities for the duration of the contract.

    And in summary, I think the market itself has not yet been convinced of the merits of IP networking. I think that it is still viewed (to some extent) as a nerds-ville solution, and major communications managers are not going to put their (expletive deleted) on the line and do something radically different until it is well accepted. It is a little like the cliche that “no one ever got fired for buying IBM” and there is a bit of cynical truth in that statement.

    Don’t know if this off the cuff rambling addresses all of your questions, but it sure fills up the space..

    VoIP Rookie

    Phone Guy, thank you for the great postings and thank you Krishna for starting the dialogue. This is great info!

    I’m currently in the early stage of gathering info about VoIP and its place in this technology world that we live in. Specifically, I’m interviewing with a VoIP company in a few days and I need to be able to speak confidently of VoIP. The position I’m seeking is that of a Business Development Manager responsible for building interest and partnerships with major CRM companies. The VoIP company is aiming at leveraging the sales force of said CRM companies and at the same time, fill the perceived need of a “talk live over your computer” feature.

    Phone Guy, what questions/comments should I pose in my interview that will not only make me look good from a business development perspective but also from learning truly what CRM companies are looking for in such a partnership with a VoIP company?

    Thanks! Feel free to email me also at

    VoIP Rookie

    Also, can you name some of the bigger players in the VoIP industry and what do you think makes their product stand out above the rest?

    Phone Guy

    Depending on how you define the market, almost everyone is playing there in one form or another. If I had to pick one, it would be the ubiquitous CISCO, but Lucent and Nortel are also strong players in the network and router components.

    The CRM market is just beginning to be tapped. To be truthful (for the one and only time) that is an area where I have only tangential knowledge.

    I can address it from the traditional call center vantage point. First (and perhaps foremost) call centers are established to centralize resources and gain some economy to scale. Historically they were measured statistically on how well (quickly) they handled the calls and how few calls were lost (abandoned) due to wait time. More recently (in this kindler and gentler world) there has been a push to improve customer satisfaction with the process and the results (ergo a new buzz word, customer relationship management. One only has to attempt to call some of the larger operations (just try Microsoft) to see how long and ineffectual call centers can be. Enter the web to add another door (portal) into the call center for customers to gain information. Fed Ex and UPS for example have done a good job of off loading tracking of shipments to their customers (outsource your work to those who pay you to do it, PT Barnum would be proud!)with web tools. Adding a link to now allow the web browser to opt out for real time agent handling is where we are now, and where you are heading. I like the concept, as it impersonalizes the process. The bigger call center systems (Lucent{}, Rockwell{} and Aspect [www.aspect] would be good references as well.

    For alls of youse guys just getting started in this “wild and crazy world”, here are two reference forums that are good for getting information. The first is (or that has a tutorial section on a lot of these applications. These are only semi-techncial and are perfect for marketing purposes, or old dogs like me. The tutorials are posted by companies in the business (and therefore tooting their own horns) but offer a lot of good basic information. The second is that has a look up with abbreviated tutorials and links to other information sources.

    And finally trivia for the masses, why are man hole covers round? The real answer is, that is the only geometric shape that can not be (accidentally) dropped into the hole (and atop a coworker)

    Professor Dial Tone


    Rookie – wish you good luck in your interviews. But more seriously, wish you very very good luck if you land the job.

    VoIP for CRM! Pardon me, but I do not think that computer telephony is not there yet, even with the higher bandwidth compression yet! Hope Phone guy or some one else can correct me on this.

    I tried a long distance telephone call on Dialpad, Net2Phone – it is good for saving money on gossip, but I do not think a customer calling up with a problem wants to repeat what he has said. As it is I find it difficult to get my name correct across the copper 🙂
    Agreed, if the customer is looking into screen on which the call center guy wants to push someting into, while explaining what is in it – push to talk may be useful. But, I have tried Microsofts Netmeeting and I always end up holding a phone in my hand. Is this VoIP company boasting of any miracle technology?
    Otherwise, what is the advantage. On the one end, the customer is going to be on the POTS and the other the call center on a data network?

    What is the business model under which one is going to justify the IT investment cost of VoIP system for doing CRM?



    Phone Guy,

    Thanks for your pointer to I went to and I must say that there is a wealth of informantion there.

    Thanks again


    I just got in the forum and this conversation is great. I am looking to deploy VoIP in my company. What I think you need to look at Krishna, as well as myself is Cost of deployment, Return on Investment, and most importantly communication delivery. These are the major challenges when bringing this solution to the table for review. My business has many Merdian switches, but we also have NEC and Rolm. When I am looking for a VoIP solution my first concern is are all switches compatible. Second will I be using external equipment for delivery or can I use Technology provided by the switch. In most cases the secondary concern is what costs the most, and hence discourages investors from seeing a feasible duration of Return of Investment. External equipment for VoIP (i.e. cisco) can become quite expensive. Not only that the cisco just directs the call, and usually does not provide caller ID and Extension. Two very important keys when using VoIP for interoffice connectivity. If this is not your concern then routing traffic through local switches is great. An example would be an Office in New York and one in Los Angeles. Anytime anyone in LA calls anywhere to NY route the traffic through NY’s Switch and vice versa. these are all calculations needed when pitching the VoIP solution to your company. I wont mention communication delivery since it looks like everyone has already covered it.


    Thank you Telco for your practical view point. As a student I am gaining a lot from this discussion thread and I hope my questions are relevant.
    Let us look at cost. From what you describe for VoIP deployment in-house there is a big element in fixed cost.
    I see three
    – switches and other equipment
    – Upgradeable software (As LAN/WAN technologies change?)
    – Staffing (isn’t it more work done in-house?)

    The variable cost – the per-minute calling costs I assume are lower in the case of IP telephony.
    Whereas, in a traditional telco provided voice connectivity almost all costs are variable.
    Therefore, if the fixed costs are reasonably high and the maturity of the technolgy is low
    (that means technolgy will change in near time) it sure is not obvious that VoIP is beneficial.

    Just to get some numbers, can someone give me an idea of what kind of costs are we talking about?


    phone guy

    Telco, don’t be confused by the different types of switches. All of those are PCM (time division multiplexed) formats. An external router can connect either a BRI or PRI (ISDN) or T-1 to the switch. The router then provides the path through the cloud (probably T-1, frame relay has too many QOS guarantee problems)to the ISP (www connection).

    Attempting to upgrade legacy switches is likely a time consuming and capital consuming exercise. Anyway,in the future they will become scrap iron anyway.

    Better (methinks) to add external boxes to gain network interface. Cisco and Lucent (Ascend) both make boxes that will serve the purpose.


    What was meant by switches is Phone Switch. Cards can now be inserted into the switch pluged into an ethernet port and Voice then carried over IP. The data router just send the traffic. This eliminates the need for a VIC card. Sorry for the confusion. As for Krishna, cost for deployment. $6,000 per card for the PBX. As far as programming ahve the vendor include it with the install. This(VoIP) is still so new the vendors are excited about deploying the product. Fixed cost to me are monthly charges that remain somewhat constant. Software upgrades should be included in the Return on investment and should actually be included in the initial VoIP deployment.

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