In the last few months, there has been a lot of noise about VoIP and the benefits that enterprises can accrue out of the technology. VoIP solution vendors have been aggressively telling enterprises how they can bring down their communication costs considerably. What vendors have been saying is true. Take for example, the expenses on long distance calls of an organization. It is often the case that in an organization, 60 to 70 percent of the long distance calls are intra-office. So if an organization spends Rs 5 lakh on long distance calls every month, Rs 3 to 3.5 lakh would be on intra-office calls. If an organization bargains it right with its connectivity provider, VoIP can bring down this expenditure (on intra-office calls) somewhere around Rs 1 lakh or even less, per month, in such a case. Besides this, using VoIP would mean that an organization could run many new applications. And since it is about integrating voice and data on one network, organizations can also save on future cable deployments.

Now, which organization in India or even in the world would not like to have that kind of savings or run new applications?  Probably, every one. The problem, however, is that since most of them would not have any other significant application except for voice to run, the amount of investment that an organization would need to deploy VoIP appears to be too much. Notwithstanding the attractive savings that VoIP promises to deliver even if one just uses it for voice, the fact remains that deploying it is still too costly. A very basic VoIP deployment for such organizations for intra-office communications would cost nothing less than Rs 55 to 60 lakh for an organization with 100 or more users. This does not include the cost of leasing the inter-city IP connectivity link from a service provider.

Considering the savings scenario mentioned above, it can be seen that it will take several years for an organization to recover the investment. Practically, very few organizations can afford to invest that kind of money in a voice switch. Moreover, since the technology is new and sophisticated, costly manpower will be required to monitor the network. At present, in a majority of Indian enterprises, especially the SMEs, telecom is being taken care of by the administration guys, who also look after many other functions.

End-user Equipment Will Cost too
VoIP vendors usually talk about two strategies that an enterprise can take for migrating to VoIP—first, setting up a VoIP network on the top of existing LAN and voice network, and second, deploying a pure-IP network that would junk the existing voice network. In both the cases, there are two aspects of investments that an organization would need to make for deploying VoIP. One is on connectivity links and the other is on devices. Inter-city leased line or VPN (many service providers are trying to offer voice VPN services) links are quite affordable these days, and with competition among various service providers, organizations can expect to strike a favorable bargain. Technically, a 64-kbps link can support four voice channels. So what capacity link an organization would need will depend on the number of voice channels it wants to support?

While connectivity comes at a considerably cheaper price, equipment that an organization would need to set up a VoIP network, even without junking the existing voice switch, does not. Indian businesses have offices in at least four cities across the country. These are usually Chennai, Delhi, Kolkata and Mumbai. If an organization wants to link these four locations through a VoIP network, it would need a voice gateway at each of these locations. One voice gateway, which can support up to ten phones, costs around Rs 11 lakh. At this price, four gateways would cost Rs 44 lakh. That surely is not a cheap affair. An organization would have to go for higher-end gateways if it wants them to support more than ten phones, and that would again cost more. Then there would be additional expenses on devices like IP phones (they cost anywhere between Rs 10,000 to Rs 40,000, depending on the features and make) and power-enabled switches or power adapters (each IP phone needs power source, as power does not come over the Ethernet). A cheaper alternative to buying IP phones would be analog adapters (priced at Rs 5,000 to 15,000) that can interface analog phones with the IP network.

All this could be roughly the minimum investment if an organization wants to migrate to IP, using its existing LAN infrastructure and PBX. It is true that this cost can come down considerably if an enterprise goes for low-end devices like those made in Taiwan. Taiwanese-made voice gateways are said to be available at one-sixth the price of the gateways mentioned above. However, those gateways may not be enough to meet an enterprises’ needs and could be unreliable, and often won’t come with after-sales support.

Forklift not justifiable
If migration to VoIP using the existing network could cost Rs 55–60 lakh, one can easily guess what it would cost to deploy an all-IP network by junking the old system.

For deploying a pure-IP network, an enterprise would need to invest in voice gateways, call processing software (IP PBX), IP phones, and telephony applications like voicemail, auto-attendant, unified messaging solutions, personal assistant, etc.

An IP-PBX costs around Rs 3 lakh and the cost of telephony applications can be in the region of Rs 10-12 lakh, depending on the configuration and functionality. All this could run on the existing LAN only if the solution deployed is capable of integrating into the existing infrastructure. As Swapan Johri of HCL Comnet points out, "There are still issues in terms of standards. Hence, it is recommended to go with the solution supported on the same LAN—Cisco LAN means Cisco AVVID, for Enterasys LAN use Siemens HiPath, for 3Com LAN use 3Com". However, Jayesh Chaitania of Cisco India says that an organization can reuse its existing LAN switch and Cat 5 cabling even if deploying IP telephony completely. "Additionally, it will need to invest in voice gateway (to interconnect with PSTN and to an existing PABX system), application software that provides controls to set up VoIP calls, and features required for enterprise communications and IP phones," he adds.

Stating that any new technology should do either of the two things—more things for less money or the same thing for less money, Ravi Chauhan of Nortel Networks, observes that while IP is uneconomical in the LAN environment, one needs to invest in IP WAN sensibly. "There is no need to go for an all-IP network because you would still need a separate voice and data network," he adds. Anil Jain of Siemens also suggests that if an organization is moving from the traditional PBX to IP, it is better to take the migration approach instead of forklift. "For IP infrastructure, none of the components of the existing TDM network can be used and then it becomes difficult for an enterprise to justify such investments," Jain says.

Convergence Benefit too Is Far off
The other significant benefit that can accrue to an enterprise deploying VoIP is that it can allow it to have a single network for all its voice and data applications instead of having two different networks. However, in India, this is not possible, as existing regulations do not favor integration of voice and data networks. Organizations deploying VoIP network will not be allowed to connect that network to the PBX that is connected to the PSTN. This by implication means that the organization will have to deploy a PBX for its VoIP network for carrying both voice and data, and at the same time continue with the PBX connected to the PSTN for outside closed user group (CUG) voice calls. In other words, the cost advantage that an enterprise would have enjoyed because of a converged network can be achieved at the cost of having a separate PBX for PSTN connectivity and a separate one for VoIP.

The Bottom Line
There’s no doubt that VoIP is capable of reducing business communications costs considerably. No one can doubt VoIP’s functional capabilities. However, the bottomline is that it is still too costly even though its cost-saving abilities could seem too tempting for organizations. Besides, there are other practical hurdles that negate VoIP’s cost advantages, here in India. True, convergence still faces legal hurdles. And whatever service providers may claim, it is a fact that leased lines are often down, and lack of a proper SLA culture means that service providers often play the blaming game. What enterprises can do is to look for network-based services where service providers host the VoIP infrastructure and applications, and the enterprises have the CPEs and the internal network in place to access and use the services. "This approach could save them from making huge investments in technology and also save in costly replacements and upgrades," Himanshu Goel of CommWorks points out. And this could also help an enterprise in becoming technology agnostic. Perhaps, an enterprise could leave everything on the service provider, provided it gets a good SLA.

Ravi Shekhar Pandey