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More Businesses Investing in VoIP Technology

Bank of America and Ford Motor Co. made the switch. So have Parish National Bank and the city of New Orleans.

Voice over Internet Protocol is still in its office technology infancy, but some CEOs already swear by it. VoIP cuts costs by running telephone and data service over one centralized network, which allows employees to take their telephone numbers with them and do business on the road via laptop computer or handheld device.

Companies investing in new upgrades are buying VoIP, and if they're not, then they're wasting money, said Stuart Palermo, account manager with Lafayette-based Global Data Systems, which has more than 50 VoIP customers, including the city of New Orleans. VoIP has become the de facto or the standard. If you don't invest in it when you upgrade, it's like buying a phone without the caller ID application.

VoIP allows users to make telephone calls through a broadband Internet connection or data network by converting the voice signal from the telephone into a digital signal, which are converted into data packets sent from one online address to another.

According to the ITFacts.biz Web site, 10 percent of U.S. business lines are already using VoIP. After generating $1.3 billion in 2004, the VoIP industry projects to be a $20 billion industry by 2009.

In-Stat, a Scottsdale, Ariz.-based provider of communications equipment and services research, surveyed more than 300 businesses about VoIP service. Twenty-three percent had already deployed wireless VoIP in some manner, and another 30 percent are evaluating using the technology within a year.

Key reasons businesses cite for the conversion is the ability to make telephone calls from laptop computers, personal digital assistants and access to e-mail messages from voice mailboxes. Last fall, San Jose, Calif.-based Cisco Systems signed a contract with Bank of America to deploy 180,000 IP telephones across 5,800 banking centers in 29 states and the District of Columbia.

After signing British Airways in May, Cisco has now sold more than 5 million IP telephones. Ford Motor Co. spent $100 million and signed a contract with San Antonio-based SBC Communications to manage a network of 50,000 VoIP telephones.

The city of New Orleans, according to chief information officer Greg Meffert, will save about $1 million a year after spending $4 million for VoIP on 4,000 telephones through Cisco and Global Data Systems. When Meffert entered office three years ago, the city was spending $3 million a year on data and telephone networks, including $1 million on line change services for employee moves and transfers.

Every time somebody moved from this office to that office, we had to get the BellSouth guys to service that change, and these guys cost $180 an hour, he said. The move was strictly cost savings, cost savings, cost savings. Now if employees move from one end to another, you don't change their number; it all connects to the network.

Meffert said the city flipped the entire data network, not just the telephone service, and created a networkwide, built-in telephone directory with all agency prefixes beginning with 658. The system also employs Enhanced 911, which pinpoints a caller's location to comply with federal legislation requiring Internet phone service providers to connect customers to 911. Vonage, the top residential VoIP service company, recently agreed to purchase access to Enhanced 911 from SBC Communications and BellSouth Corp.

The legislation means all VoIP providers will have to go through large 911 wholesalers and buy a service from them to provide 911 hookups, said Rob Malnati, director of product and business development for US LEC of Charlotte, N.C. US LEC, a telecommunications carrier providing services to more than 23,000 business customers, launched VoIP in January and services about 10 VoIP customers a month.

Malnati said US LEC offers VoIP over private networks as opposed to public to allow traditional 911 features. We service every kind of company from doctors offices to telecom companies to churches and even an Internet design company, he said. The benefit from IP phones over one network is you can unplug a phone, fly two states away, plug that phone in a new office and still have the same number. You can move your office across the hall or across countries, and your number follows you.

Court Richardson, president of CyberComm in Mandeville, La., said VoIP helped his business install six of the services in the last nine months with six more in the works. We have modified our company plan a bit because of VoIP . . . the service is emerging so fast, Richardson said. It's really the way of the future for us.

Richardson said businesses should look at applications like remote work force, traveling salespeople and services connecting companies across states and countries before switching service from traditional phone lines.

We sold the service to a collection agency primarily so remote users in other markets can be tied into an internal communications system, Richardson said. In the collection agency industry, it's all about monitoring productivity. Now they can do that.