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Minnesota Technology Magazine - Winter 2007

Voice Choice

The telecom landscape is changing every day. Here are three ways to keep on top of the situation.

BY WILLIAM GURSTELLE
William Gurstelle is a Minneapolis-based freelance writer and frequent contributor to Minnesota Technology.

Image of tower Few industries have changed as much in the recent past as telecommunications. What was once the purview of a few large domestic landline giants has mushroomed into hundreds, if not thousands, of aggressive companies, all eager for a share of a burgeoning market. The causes are numerous and interconnected, resulting in a business landscape that changes faster than the Shanghai skyline.

Even a high-level overview of the telecom market shows a maelstrom of changes occurring at breathtaking speed. Mergers, consolidations, and fundamental market forces have brought the once high-flying Qwest and the old AT&T lower, and raised the profiles of other companies such as Verizon and the new AT&T (formerly SBC Communications) to dizzying heights. Fundamental changes in telecommunications usage are at the root of the turmoil. Milda Hedblom, director of the University of Minnesota’s Telecommunications and Information Society Policy Forum, says that statistics reveal that “a growing number of residential customers are canceling their landlines in favor of wireless phones, while more businesses are leaving their traditional analog phone service for alternatives based on digital services.”

Adding to the churning waters, cable television companies such as Comcast and Charter have been entering the telecom marketplace. In response, traditional wireline telephone companies such as Qwest and Frontier are earnestly trying to expand their scope, moving into services such as television delivered over telephone lines, despite the unproven potential of that market. All of this makes for a difficult calculus, befuddling for even the most astute telecom observer.

In Minnesota, wireless access to the Internet is making inroads against traditional access methods. Hedblom says that when Minneapolis’ municipal Wi-Fi system goes online this summer, ubiquitous high-speed, wireless Internet connections to a high percentage of homes and businesses will be available at prices that are either competitive with or lower than what Qwest or Comcast can offer using wired lines.

Concurrently, she adds, early adopters are moving away completely from traditional wired telephone lines for their businesses. A growing number of providers—including such companies as Comcast, TDS Telecom, Vonage, NT Group, and Qwest, along with Web technology startups such as Skype and Lingo—now offer VoIP services.

How can you stay on top of the ever-changing situation? Here are three tips.

TIP #1: GET SMART ON INTERNET TELEPHONY

While many businesses are looking hard at VoIP, plenty of others are still hedging their bets. Given the importance of reliable phone service, a lot of companies still aren’t willing to commit to VoIP until all reliability and compatibility/interoperability issues are worked out. Right now, VoIP adoption varies widely based on industry type and company size. Currently, larger organizations with multilocation operations have the most installations. “It appears that much of the traditional PBX business is declining because everything seems to be moving towards Internet-protocol telephony,” says Hedblom. “For many companies, PBXs need not even be part of a company’s telecommunications services.”

But IP telephony is not without its vulnerabilities. Bill Popp, president of Minneapolis-based Popp Telecom, offers an example. “When your data lines go down, your whole telecommunications system goes down,” he notes. “I’m not negative on IP telephony, but it’s not for everybody, all the time, and in every location.”

So is VoIP right for your company? While vendors claim it can slash communications and management costs, managers should ask some pointed questions.

How much data network bandwidth will be required?

VoIP phone service requires voice calls to travel over a highspeed Internet connection. A VoIP phone (sometimes referred to as a broadband or Internet phone) converts voice conversations to digital data streams and sends the data over a highspeed Internet connection to the distant end, where the data is reconverted back to voice. Technically speaking, sending digitally encoded voice over a data network requires bandwidth— and for most companies, a lot of it.

Is VoIP reliable enough?

Compared to an Internet-based broadband phone network, the standard home voice telephone network is extremely reliable. As Popp points out, calls cannot be made on broadband phones when your data service is down. Additional failures within the broadband phone service itself will add to downtime caused by the Internet connection.

Will you need to change phone numbers?

An important consideration associated with broadband phones is number portability. Most often, your company will be able to keep the telephone number you had before subscribing to an Internet-based plan. However, depending on your number and the local broadband phone company involved, this feature may not be available.

How does it sound?

In years past, the sound quality supported by broadband phone service was significantly less than that of traditional telephone service. Though it varies by provider and location, in general, sound quality is improving. The quality of broadband phone audio is typically quite good. Users may notice a small delay between the moment they speak and when the other party hears their voice.

TIP #2: CONSIDER SINGLE-SOURCING TELECOM SERVICES

Most small- and medium-sized businesses with 10 to 999 employees obtain telecommunications services from more than one vendor. Typically, a company will contract with a vendor for local voice and data services, another for long distance, a third for wireless, and so on. But dealing with so many vendors for different shades of basically the same thing is complex, time consuming, and expensive. According to a 2006 study by Forrester Research, most small and medium businesses say that for accountability and cost reduction, they would prefer a single provider. But most also report that they don’t use a single provider today because they are unable to cost-effectively get these services through a single carrier.

“That’s often true,” says Jeff Parris, regional manager for TDS Telecom, a national provider based in Madison, Wis. “Many medium-sized enterprises are looking for a single vendor to provide bundled telecom services. A lot of it comes down to having one neck to grab when there’s a problem. There’s less finger pointing, a single bill to deal with, and you can more efficiently isolate service issues. There should be some cost advantages as well. Vendors will often accept a lower margin if they’re providing an entire suite of services.”

TIP #3: INVEST WISELY

Buying or replacing a telephone system is more complex than many managers realize. All phone systems, whether traditional or IP-based, must satisfy certain basic functions when it comes to placing, answering, and moving voice calls around a company. But there are thousands of variations on these basic themes and figuring out the best options when purchasing a new or upgraded telephone system is complex and time consuming. Beyond that, many companies require sophisticated features such as voicemail, automated attendants, and automatic call distributors.

Popular telephone systems range from small-capacity key telephone systems made by companies such as Panasonic and Toshiba to extremely large, feature-rich systems from Siemens and Avaya. With so many details to consider, selecting a telephone system can be daunting. Here are five tactics to help cut through the clutter:

A. Get a handle on your company’s growth prospects

Carefully estimate the greatest number of phones your company will require in the next 10 years. Expandability varies by system. Most systems have a maximum number of telephones they can support. Remember to include all desk phones, fax lines, credit card terminals, and so forth in the count.

If your company’s personnel growth exceeds a system’s ability to supply telephone sets, then the only option is the dreaded “forklift upgrade,” which entails purchasing and installing an entirely new phone system. Make sure your system has room to expand to fit your needs for the foreseeable future.

B. Consider used or rented systems

Companies trade in phone systems for myriad reasons, and your company might be able to benefit from some bargains in the used equipment market. Talking to firms that specialize in selling refurbished equipment may yield a deal.

C. Investigate a VoIP-based system

A growing number of manufacturers produce VoIP phone systems. For companies with many branch offices and considerable interoffice traffic, VoIP might be the best solution. Calls can be transferred easily without redialing and one operator can manage all offices.

D. Find a trustworthy vendor and cultivate that association

If your system goes down, it’s important to have a good relationship with a company that will be around when you need it most.

E. Time your purchase

Try to buy at the end of your vendor’s fiscal quarter. That’s when sales reps may be most willing to negotiate in order to meet sales quotas.

The world of telecommunications is much more complicated than it used to be. But with some investigation and planning, companies are finding solutions that are more versatile and cost effective than ever before.