the evolution and impact of business voip: a carrier’s view mark fishler vice president –...
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The Evolution and Impact of Business VoIP: A Carrier’s View
Mark Fishler
Vice President – Product Management, Voice and Data Business Services
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“Although the consumer market has attracted the most attention from the press, the fastest growing VoIP market is hosted IP voice services for business customers.”
– IDC, September 2004
Source: IDC U.S. Hosted IP Voice Services 2004-2008 Forecast, September 2004
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39% of Respondents are Current IPT Users
Source: The Yankee Group 2004 IP Telephony Deployment Strategies Survey
Which best describes your current use of IPT?
PartiallyDeployed
25%
FullyDeployed
5%
CurrentlyTesting
9%
Future Users61%
Current Users39%
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22% of “Future Users” Plan to Deploy Soon
Source: The Yankee Group 2004 IP Telephony Deployment Strategies Survey
Future Users: What are your future plans?
Budgetedw/ in
12 mos22%
Test/Planw/ in
24 mos24%
Test in 12 mos
15%
Future Users61%
Current Users39%
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Source: Yankee Group
RevenuesProductivity
Mobility
Cost and Network
Complexity
• Unified Communications• Real-Time Customer Info• Enterprise-Wide Networking
• Reduced Toll Charges• Integrated Wiring and Maintenance• More Operational Efficiencies • New Multimedia Offerings
• Broadened Delivery Systems• Increased Customer Contacts
• Anywhere, Anytime Accessibility• Increased Employee Flexibility• More Collaboration Options
Maximize Operational Excellence and
Innovation
IP Services Present a Significant Value Proposition
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Evaluating Critical Networking Needs
Business Imperatives
IT Application
s
LAN/WANImplications
one. two. three.
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IP Telephony Deployment Questions
• What technology platform should I implement?
• Will I need to throw out my existing investment?
• Will I save money over my existing TDM solution?
• Can I operate in a hybrid environment?
• Do I have the staff to operate a VoIP network?
• When will my new VoIP investment become obsolete?
• Will my selected platform be able to support new applications?
• Do converged networks really work?
• Will my business really recognize the promise of VoIP?
• Can my LAN/WAN support VoIP today?
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Hosted vs. IP PBX Preference Determinants
Factors Favorable to Hosted
• Requires little in-house management expertise
• Multiple sites
• High percent on-net calling
• Longer VoIP migration period
• Mixed existing telecom platforms
• Limited capital
Factors Favorable to IP PBX
• Available in-house management expertise
• Fewer sites
• Low volume of on-net calling
• Ability to perform a flash cut
• Available capital
• Existing WAN bandwidth
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Customers Have Multiple VoIP Options
Economies for Customer
Reliance on Managed-
ServiceProvider
Low
Low
High
High
Primarily VoIP PBX Option Primarily Network Softswitch Option
OwnedOwned
ManagedManaged
OutsourcedOutsourced
HostedHostedHostedHosted
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IDC Hosted VoIP Cost Analysis
• Hosted voice services are less expensive than PBX equipment and have a fundamentally different economic structure from PBXs because:
– Capital expense is reduced
– Maintenance and equipment costs are greatly reduced
– There is a wider opportunity to reduce long distance charges
Source: IDC U.S. Hosted IP Voice Services 2004-2008 Forecast, September 2004
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U.S. Business Hosted IP Voice Forecast
2004 2005 2006 2007 2008
Sites (000) 5 15 50 200 400
Growth % NA 200 233.3 300 100
Users (000) 75 300 1,250 6,000 12,000
Growth % NA 300 316.7 380 100
Users Per Site 15 20 25 30 30
Monthly Revenue 65 62 59 56 53Per User
Total Revenue 58.5 222.3 879.9 4012.5 7647.9
Growth % NA 280.0 295.8 356.0 90.6
Source: IDC U.S. Hosted IP Voice Services 2004-2008 Forecast, September 2004
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Growth Factors for VoIP
• Increased broadband penetration
• Improved voice quality
• Not subject to traditional telephony regulation
• Security
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Core Network Evolution
FR/ATM
IP Backbone
Ethernet
FR/ATM
IP
Ethernet
FR/ATM
IP
Single Common Core NetworkTo Carry All
Layers of Services
Compressingthe Existing
Core Networks
Other Protocols Other ProtocolsOther Protocols Other Protocols
DWDMCore
Ethernet
FR/ATM
IP
Ethernet
FR/ATM
IP
IP MPLS Backbone
Other Protocols Other Protocols
DWDMCore
Ethernet
FR/ATM
IP
Ethernet
FR/ATM
IP
IP MPLS Backbone
Other Protocols Other Protocols
DWDMCore
Ethernet
FR/ATM
IP
Ethernet
FR/ATM
IP
IP MPLS Backbone
Other Protocols Other Protocols
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Anytime, Anywhere Access: Integration Makes it Possible, Simple for Customers
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Access from Any Place, Any Device
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The Evolution and Impact of Business VoIP: A Carrier’s View
Mark Fishler
Vice President – Product Management, Voice and Data Business Services