EPABX: InevitablY IP

Over the years, EPABX has undergone a gradual transformation, from the good

old days of analog to the digital to hybrid to and now to IP. All of these forms

exist in their own right, but there are all indications that most enterprises

are considering some form of IP implementation at their end. This has resulted

in the traditional frontoffice boxes slowly giving way to state-of-the-art

IP-PBX, thanks to the increasing acceptability of IP by the large and medium

enterprises.

Many enterprises, however, are also taking the safe route of hybrid systems

to protect their existing investment. Tracing the growth of EPABX, Vipen

Malhotra, president, Syntel Telecom says, "The technology behind enterprise

communications has rapidly evolved over the last three decades, to meet the

demand for new forms of communications. In the 1970s, a single, analog network

allowed the business world to communicate by telephone. But today, packet-based

technology allows converged voice, data, and video communication over a single

packet-switched network."

According

to Anurag Kumar, assistant general manager, telecom sales and marketing, HCL

Infinet, the national distributor of Ericsson enterprise equipment, "EPABX

has gone through a major shift in technology, usage patterns and support

applications. It has become more user-friendly with support of multiple end

terminals viz., POTS, digital phone, IP phone, softphone client, mobile phone,

or a fixed-line phone."

IP Comes Calling!



The march has begun, but it is still a long way before mass-market adoption

of IP-PBX becomes a reality. According to a Frost & Sullivan report, there

was an increased inclination towards Internet protocol (IP) telephony from

traditional legacy private branch exchange (PBX). Vendors operating in low-end

time division multiplexing (TDM) PBX segment are graduating to hybrid PBX, while

new models of key telephony systems (KTS) are being launched to cater to the

needs of small- and medium-sized enterprises (SME)/SOHO segment. According to

Phillippe Cros, regional director, South Asia, Alcatel Enterprise Solution

Division, "The shift to IP is on, and we are seeing implementations move

from traditional TDM only to either hybrid IP/TDM or pure IP. Improvements in

quality of service and availability are contributing to this trend."

Malhotra also feels that the rise of IP telephony interface/platform is an

outcome of the use of Internet to streamline voice and data out of the

enterprise into the public networks, resulting in the rise of those who wish to

derive cost benefits for large traffic.

The RoI Debate



With the dynamics of business changing, large and medium enterprises are

toying with the idea of going the IP way but are hesitant due to some misgivings

about the technology, and lack of clarity regarding RoI and interoperability.

Equipment vendors, however, are bullish and dispel any negative notions about

the above issues.

“There is a quantifiable benefit if the customer chooses to deploy across the enterprise.” Karthik Natarajan, country manager, Snom

However, convincing the enterprises to rip out their traditional TDM boxes is

something that has not met with much success. There is still strong skepticism

about the virtues of IP telephony amongst the enterprises. This lack of

favorable IP atmosphere is stronger among the SMEs, who are faced with a

dilemma: whether to retain the existing TDM infrastructure, or go for a hybrid

implementaton, or replace their existing boxes with IP-PBX.

According to Cros, "Customers require open solutions that operate in TDM,

hybrid IP/TDM, and pure-IP environments. This enables customers to migrate to IP

at their own pace." Talking about the pricing of IP solutions, Cros says,

"There is a price premium for IP-based solutions, which could be as much as

20 percent higher than TDM. However, there is tangible RoI in terms of cost

savings, related to reduced telecommunications costs, simplified management,

etc."

"The TCO benefits are easier to see in a new installation, than in a replacement scenario" Anurag Kumar, assistant general manager, telecom sales and marketing, HCL Infinet

Anurag Kumar of HCL Infinet makes almost a similar calculations when he says,

"At present, the cost of IP-PBX is 25—30 percent higher compared to TDM

systems. The cost of IP telephone constitutes a major part in the overall cost

of the system. The TCO benefits are much easier to see in terms of a new

installation, rather than in a replacement scenario." According to Karthik

Natarajan, country manager of Snom, "There is a quantifiable benefit

if the customer chooses to deploy across the enterprise in multiple branch

offices. Our customers have seen an RoI in 6 to 12 months." He also

suggests that upto 60 percent costs can be saved if enterprises invest in

standards-based technologies like SIP. On a per-line comparison between TDM and

IP, Mathew Verghese, principal consultant, Cisco System India says, "The

per line cost of an IP-PBX system would always be higher than the per line cost

of a TDM-EPABX system. This differential could vary anywhere from 15—45

percent, depending on the configuration and applications."

Lack of IP Awareness: Vendors to Blame?



Except for a few vendors, the initiative to educate prospective enterprises

is clearly lacking. BPO companies are an honorable exception, which is more due

to the stringent quality norms stipulated by their clients. Unless there is a

strong business case, it is unlikely that enterprises would opt for the IP-PBXs.

However, Karthik Natarajan of Snom believes that things are moving in the right

direction on the IP front. He says, "TDM has evolved over 100 years, IP is

just maturing, and is about a decade-old technology. Enterprises already see the

benefits of IP, however, investments already made in TDM are forcing enterprises

to look at a hybrid model, before migration fully to IP." Anil Jain,

general manager, marketing communications, enterprise network, Siemens provides

a solution. He says, "The way forward in such a scenario is to offer

comprehensive solutions catering to different market segments like SOHO, SME,

and large enterprises. Extensive customer reach backed up by high-quality

service support will be a differentiating factor."

Large, Small, or Medium?



Medium and large enterprises are adopting IP faster as compared to small

enterprises. The main reason behind the better level of adoption is that the

medium and large enterprises have dedicated IT departments, whose main role is

to work towards creating and maintaining an effective communications

infrastructure for their company. The small enterprises have, so far, almost

stayed away from deploying IP systems in their offices.

The absence of an IT department in these small companies leaves the decision

making functions to the purchase department, who are clueless about the new

technologies including IP. According to Cros "Large enterprises are the

early adopters with more complex, multisite, and campus implementations.

Medium-sized enterprises and smaller company adoption follows, with this segment

requiring less complex 'solution bundles' that combine platforms, devices

and applications."

Amongst the large enterprises, it is primarily the large BPO companies who

have installing IP systems. Early movers include Vcustomer, which has one of the

largest deployment of IP systems. Non-BPO companies who have gone for IP systems

include large multinational corporations. Premier technology institutes like

IITs have been the front-runners in the adoption of IP. Some of the examples of

hybrid deployment (both analog and IP) include Ericsson's (through HCL Infinet)

deployment at IIT Kharagpur, which is believed to be one of the largest

installations of such systems in India.

According to Anil Jain of Siemens, "The existing PBX users are looking

for easy steps for IP migration without disrupting the existing investment. Here

the converged IP systems are very well positioned to offer the legacy

connectivity and feature richness of IP. Pure IP deployment is particularly

popular for the green-field projects, small overseas call centers etc."

However, he feels that on the SOHO market front, customers are still going for

the regular EPABX/KTS systems but they are looking for IP ready and Broadband

ready systems. According to Varghese, "One of the key reasons for this late

adoption by SMEs was the non-availability of a low cost IP PBX platform suiting

their needs." But he adds, "Vendors are realizing the need of the

organizations in this segment and our Business Communication Solution IP

Communications platform is specifically designed for the SME segment."

Hybrid or Pure IP?

This question is on the top of the minds of the enterprises that are looking

at investing in new systems. Anurag Kumar of HCL Infinet has the answer. He

says, "Hybrid PBXs, which support both circuit switched and IP Telephony on

the same platform, are a better choice. This allows the customer to avail the

benefits of both technologies. Customers are often taking a hybrid approach and

adopting IP Telephony with their existing platforms to cut costs by running

intra-site traffic over the IP network or for the consolidation of branch

offices sites, while keeping investments to a minimum."

Operator Push



In a major development, which is good news for both enterprises and vendors

alike, BSNL decided to go for a leasing model for EPABX. According to the model,

enterprises do not need to invest on buying these PBXs. All they need to do is

to pay a nominal amount per month to BSNL who will own the equipment. It is

believed that this alternative model can be a boon for small enterprises. These

are primarily entry level PBXs with the option to integrate IP cards. According

to Rajesh Tuli, managing director of Coral Telecom, "These bundling schemes

are a roaring success in the western world and I foresee a large business

opportunity in the year ahead."

Interoperability Is a Must

Most vendors claim their commitment to open standards, such as H.323, SIP,

and XML, to simplify the integration with existing environments to help ease

migration enterprises. According to Malhotra "There are interoperability

issues depending on the equipment make and compatibility, as these do not have

open protocol support for heterogeneous networks. Also, the other issue lies in

providing adequate bandwidth and speed to cater to speech in real time, as

speech is intolerant to delays whereas data is delay-tolerant." It is also

felt that some IP-PBX products prohibit interoperability with most third-party

applications. According to Karthik Natarajan of Snom, "Enterprises

using legacy equipment will have interoperability issues due to

non standards based system of the older PBX equipment and due to legal

requirements of keeping CUG and PSTN calling separate. Once legalized, all

PBX environments can be made partial IP and migrated slowly to full

IP." 

Outlook: Strong Trends Towards IP Telephony Adoption



According to the latest Voice&Data-IDC survey (published in this issue)

on telecom spend amongst enterprises, the capital expenditure on IP equipment

will double in the next year. Currently about 25 percent of 100 plus large and

medium enterprises surveyed use VoIP or IP telephony in some form or the other.

21 percent felt they would use IP telephony next year.

According to Frost and Sullivan, the size of the total IP telephony market in

India was $54 million in 2005, out of which the enterprise IP Telephony (IPT)

applications accounted for $2 million in 2004. The IPT applications, according

to the research firm, are expected to grow strongly at a CAGR of 52.3 percent

between 2004 and 2011. This market is forecast to grow to $38.8 million by 2011.

The uptake of IP telephony by enterprises will certainly gain momentum in the

coming year. The withdrawal by Department of Telecom's directive on physical

partitioning will also go a long way in promoting the growth of IP adoption by

enterprises.

Sudesh Prasad