A Tectonic Shift

FY 2007-08 saw IP telephony deployment growing rapidly, and outgrowing TDM-based
voice telephony in India. Today, IP-based voice is regarded as the future of
telecommunications. Data previously went over voice networks, as it was a small
constituent of the overall telecommunications traffic. The existing
circuit-switched networks are not optimized for data, and are not efficient.

Some key industries that have adopted unified communications include the ITeS/BPO
sector, banking and finance, retail, government and manufacturing. As unified
communications applications become more prevalent in the workplace,
organizations are realizing the benefits associated with it. Unified
communications applications deliver a multitude of benefits, both in terms of
employee time saving and financial saving. Unified communications not only
facilitate productivity improvements for mobile employees, they also enhance the
way employees communicate. For others, the savings may simply come from having
reduced hardware requirements and operating expenses.

And in today's dynamic business environment, perhaps the most important
benefit comes from having a phone system that can change and grow at a moment's
notice, enabling new capabilities for more effective communications,
streamlining business processes, and improving profitability.

The Players

The voice solution market grew 22.1% to touch Rs 1,725 crore in 2007-08 from
Rs 1,413 crore in 2006-07. According to V&D estimates, Avaya GlobalConnect
emerged as the top voice solution vendor with 24.73% market share, with revenues
worth Rs 440 crore. At the second spot was Cisco with revenues worth Rs 355
crore followed by Siemens with Rs 280 crore.

The IT/ITeS vertical invested the highest amount in voice solutions,
especially IP-PBX. This is because, being a people-intensive segment, it focuses
on technologies to enable increased productivity of workers. The second vertical
that contributed to the growth of the segment was BFSI. Apart from private
sector banks, PSU banks have also been moving toward deploying advanced voice
solutions.

Although, Avaya Globalconnect sold over 200 IP phones, a major share of its
revenue came from converged IP voice and data solutions provided to Reliance,
Max Hospital, and Le Meridian. Other segments included BSFI, IT, and
manufacturing.

Cisco shipped over 300,000 IP phones in India as of December 2007. To
strengthen its product portfolio, Cisco has introduced Version 6.0 of Cisco
Unified Communications Manager with features that benefit enterprise-sized
business customers as well as smaller businesses. It also launched Cisco Unified
Communications 500 Series for small business, a critical part of the Cisco Smart
Business Communications System, which is a solution for small businesses and
provides voice, data, voicemail, automated attendant, video, security, and
wireless capabilities while integrating with existing desktop applications.

Alcatel-Lucent, with Rs 150 crore revenue, received a major order from BSNL
and MTNL for their maintenance and expansion plans.

Coral Telecom bagged major orders from BHEL and Apollo Hospital for providing
voice and data solution. Apart from orders from the Army and the Railways, it
also provided voice and data solution for twelve offices of Mecom.

Roadblocks

IP telephony and voice solutions face certain challenges that impede its
growth, which will also reflect on the growth of IP PBX. In India, the biggest
of these were regulatory restrictions imposed by the Indian government and
interoperability issues resulting from a lack of standardization.

Till recently, single infrastructure was not allowed in India. However, with
Telecom Regulatory Authority of India notifying approval for “logical
partitioning” of public switched telephone network (PSTN) and closed user group
(CUG) networks, enterprises, service providers, application software developers
as well as Internet telephony vendors have lots of reasons to rejoice. Corporate
users can now slash down the investment that goes into setting up networks, as
they would not have to manage the expense of two separate PSTN and CUG networks.
Interoperability is a major concern due to lack of standardization. However,
with the adoption of standard protocol such as 'SIP' in the call control engine,
organizations can integrate their legacy or hybrid systems, thereby preserving
their investment. However, full convergence can further reduce cost and improve
RoI for customers implementing IP telephony. But it would take more time.

Another challenge is the availability of the Centrex functionality from
leading operators. Although this is hitting pure play PBX players, it is also
contributing toward growing and further evolving the PBX market.

Marching Ahead

The PBX industry is witnessing an evolutionary process with radical changes
on the technology front. The maturing of IP-based voice transport has seen the
world of telecommunication undergoing a major shift. IP-based voice is today
universally regarded as the future of telecommunications. With technologies such
as IP telephony being introduced, the definition of enterprise communication has
changed. Hence, continuous enhancement of a product mix is an absolute necessity
to not only meet technical challenges head on but to also lead the market.

The adoption of VoIP has been thick and fast in many countries. Its adoption
has been phenomenal in the recent years, in most parts of the world. Over 50% of
telephony revenues were accounted for by IP in countries such as India, the
Philippines, and Indonesia in 2007.

VoIP is seeing tremendous innovation and investment interest within the
communications and networking industry. Many factors are driving this trend: the
growing consumer adoption of low-cost broadband; the emergence of cost-effective
VoIP technology based on technical standards for interoperability, and the fact
that consumers can readily understand the value of VoIP. Positive user
experiences and heavy promotion by leading carriers and service providers will
help fuel the demand for affordable and reliable home and small-to-medium
business VoIP solutions.

As we look at the VoIP landscape today, we see an environment that reminds us
of the wireless local area network (WLAN) market segment of two years ago. VoIP
has quickly evolved from a novelty for “computer geeks” and hobbyists to a
mainstream technology that represents the next major inflection in network
technology.

To penetrate cost-effective broadband into millions of homes, small
businesses have established a large new market segment that is extremely
receptive to the delivery of rich, IP-based information and entertainment
services. These services include VoIP telephony, digital audio and video,
multimedia instant messaging and applications that enable resource
virtualization and collaboration.

Today, enterprises are looking for real-time communication that is integrated
with their IT infrastructure and business support systems. The trend is also
shifting toward adding mobility features like GSM gateways and information
mobility on the basic PBX platform.

Apart from technologies such as CTI support and ADSL capabilities, most PBX
systems in the future will have integrated soft switching capabilities which
will become a standard feature so that some of the extension users could be
sitting at remote locations connected to office PBX over the IP cloud and SIP
phones connected to DSL connections will behave as office intercoms.

In the coming years, IP-based solutions are likely to enable companies to
deploy key services such as real presence solutions, unified communication,
video collaboration solutions, and other value-added options such as directory
and XML integration applications that prioritize the incoming calls and
extension mobility. It will also help in running various business productivity
IP applications like directory assistance, live updates on inventory, orders,
sales figures, stock market and also general information on market, weather
alerts, etc.

Communication enabled Business Process (CeBP) that connects the customer's
business processes to IP telephony communication and helps accelerate the
customer's business processes will also be in demand.

The VoIP market is evolving in India and apart from a growing demand in the
enterprise space, the home user segment is also adopting VoIP solutions.

Sandeep Budki

sandeepb@cybermedia.co.in