IP Telephony Roundup:
Overview of Leading Products and Vision

Dustin Kehoe

| Apr 10, 2008 | Business Telecom Services - Europe | Advisory Report

| Analyst: Dustin Kehoe

Summary

Current Analysis recently completed a roundup on the market leaders for IP telephony in Europe. The operators tracked include AT&T, BT Global Services, Orange Business Services, T-Systems and Verizon Business. This advisory looks at how these carriers have improved their IP telephony products over the past six months and considers the various product roadmaps and general direction of IP telephony in Europe.

For detailed carrier-specific information, buying criteria definitions and individual product metrics, please refer to the IP Telephony (Europe) Product Assessments.
| Client access | More information |

Current Perspective

Global Reach Does Not Mean Global Managed Services

Many operators tend to have claims on global reach and coverage whether they do it themselves across their own network or via external partners and MPLS interconnects. Some carriers can offer IP telephony as a managed service in over 100 countries. In more cases, this product would be managed in between 50 and 60 countries. In one case, the provider could only offer such a service in fewer than 30 countries (using their own infrastructure) with a more narrow sales focus.

While most operators are keen to drum up coverage, most customer deployments are concentrated in a few key countries or regions. Making sure to match coverage on paper with local resources (internal and external) is still a major challenge. There have been some cases of operators relying on external partners (and even on each other) to support global customers. However, the carriers that have been offering IP telephony for several years and have developed a large installed base of MNC customers appear to be in the strongest position to offer IP telephony as a global managed service, particularly over operators that have only launched in the past one or two years and are building up their capabilities just now.

Unified Communications, Mobile Integration and SIP Trunking Are Coming

Over the past six months, two operators have taken significant steps in offering the IP telephony service with mobile integration: Orange Business Services and BT. Both have launched software-based products that are embedded in smartphones to allow their customers to divert international mobile calls (made from their home markets) to an IP network (via a local in-country PoP) automatically to reduce toll charges and without any noticeable changes to user experience. The services work with any mobile network operator and they can also be sold standalone; furthermore, the operators will extend the offers to incorporate more countries and mobile OSs in due course.

All carriers are also developing their roadmap for unified communications (UC), typically working in partnership with IBM, Microsoft and major equipment vendors (e.g., Cisco, Nortel, Avaya and BroadSoft). Outside of a few point products, there are no real international deployments of UC offers on the market today. However, this situation will change over the next six months.

One provider has an ambitious product roadmap for Q2 2008 across Europe with local language support. The fact that most providers do not offer SIP trunking is also a setback for UC, which is unlikely to change until H2 2008. However, most are beginning to invest in new session border controllers, network-based firewalls and NAT transversals to avoid the need for new investments for SIP-aware appliances on the customer premises. One carrier is using H.323 trunking to encapsulate SIP traffic in what appears to be a stopgap measure until SIP trunking is released later in the year.

IP Centrex Is Making a Comeback

Bucking the trend of having IP Centrex positioned as a national offer, there are some carriers that either launched, or are planning to launch, an international hosted IP Centrex offer to give customers another major flavour of IP telephony. In one case, a carrier is building a multi-country solution to support more than 15,000 users, and another provider plans to roll out a service across eight countries in 2008. Hosted IP Centrex is ideal for greenfield locations that do not want to invest in new IP PBX equipment, branch sites that do not need or want all of the features of a managed IP PBX that might sit at corporate headquarters and customers looking for per-seat pricing, or not wanting to manage equipment on-site. IP Centrex is also looking like an attractive option for deploying UC services.

While IP Centrex is making a comeback, most IP telephony deployments are managed IP PBX solutions that are hosted by the provider on the customer premises. While Cisco is the default equipment supplier for each of the five carriers, most offer support for other major suppliers. The most advanced have set up special programmes to ensure standards of interoperability can be achieved across multi-vendor platforms. The least advanced offers tend to have a single-vendor solution and/or fewer options available for supporting mixed VoIP estates.

Service Level Agreement

There are considerable differences in how service providers deliver SLAs and what they measure. While one provider may support R-factor, another will support mean opinion score. They are both very acceptable standards, yet they can be confusing and measure QoS differently. Equally, others may look at more traditional network-based metrics such as latency, availability and jitter. Two carriers offer standard global SLAs, while most others will leave in some variations based on location of customer sites. Outside of remote pinging and diagnostics, most carriers do not provide proactive SLAs (i.e., automatically giving customers service credit whether or not the customer notices the fault). However, AT&T tends to have the most advanced online management and monitoring platform among the carriers profiled. This is the BusinessDirect portal based on the iGEMS platform.

Future Direction of IP Telephony

From an end user perspective, IP telephony is moving from a service based on tactical cost-savings arguments to one that embraces a strategic roadmap that includes unified communications. While very few companies have achieved any consensus on the type of UC deployment they will consider (e.g., software or hardware-based), large enterprises are buying into a ‘strategic vision.’ Carriers are reacting by showing that they have the right partnerships in place and can support UC, however customers intend to deploy it. The launch of Microsoft OCS late in 2007 has confused as much as it has excited the market. There is a lot of awareness and commitment to invest, but a general uncertainty on how to build the business case.

Equally, IP telephony is becoming a professional services engagement for carriers. Some customers will need support on pre-deployment (e.g., initial design, network assessment, surveys, etc.), building (e.g., installation and configuration) or managing the service (e.g., monitoring, remote troubleshooting and on-site support, etc.). This will become more important as customers embrace UC and begin deploying IM, presence-based services and advanced IP services.

Customers should also anticipate more carriers to begin extending IP telephony into local voice markets as a form of TDM substitution. Orange Business Services has launched voice services in six European markets, and it will bring that figure up to nine countries in Q2 and 14 by the end of the year. Verizon Business and BT also have a large local voice presence and strong TDM and IP competencies. The introduction of local voice services is likely to cause large customers to consider consolidating suppliers in remote locations. There will be less need to procure services from a local incumbent and employ additional support staff. There are other benefits, such as the ability to manage fewer suppliers and cost-savings with voice and data (local and long-distance calls) deployed across a single circuit.

Recommended End User/Customer Actions

• Enterprise customers should consider outsourcing all of the components to a single service provider as a managed service with full LAN and WAN integration. In doing so, they should look for benefits in security, QoS, monitoring and accountability. They should also look to the service provider to take over additional functions as IP telephony moves closer to being a platform for supporting UC services.

• Enterprise customers are correct to take a gradual or piloted approach on UC. For one thing, it is far from certain how the different equipment vendors and software providers are willing to work together. There are also other issues such as a general lack of SIP trunking and obligations for the end user to either invest in new SIP-aware appliances or wait for carriers to make the necessary investments from the network. Verizon Business is ahead of any global operator in Europe with SIP trunking.

• MNCs should continue to pressure their suppliers for more products that support stronger mobile integration, as well as for new solutions in mobile device management and telecom expense management to get a handle on mobile tariffs that still appear to be spiralling out of control.

IP Telephony (Europe) | Client access | More information |

CLIENTS ONLY

Recommended Vendor Actions

| Client access - Full report in Business Telecom Services - Europe | More information

Top