Advisory Report (Europe)

IP Telephony: Comparing the Different Approaches to Implementation

Dustin Kehoe
Principal Analyst, Telecom Services - Central Europe

IP Telephony implementation means many things to many people. An IP PBX, for example, can be managed by the customer or by a third party (e.g., equipment vendor, service provider, VAR or system integrator). If the customer chooses to have IP PBX services managed by a third party, the communications platform is either a premises-based IP PBX managed on site but owned and maintained by the third-party, or a hosted IP PBX system dedicated to one or more businesses but residing in a service provider’s data centre. If the IP PBX communications platform is hosted from the network, it does not necessarily mean it is IP Centrex (even though this is commonly termed hosted PBX) and service providers use these terms almost interchangeably.

The confusion does not end here. There are other types of IP Telephony deployments, such as VoDSL and Integrated Access to IP, that are becoming more popular. There is also SIP Trunking, which few providers offer as standard, yet MNCs seem to demand. This advisory examines the different approaches for VoIP implementation, explores pros and cons, and offers some insight into customer segmentation. It will also compare what many of the tier-one service providers are offering and identify areas for improvement. One size does not fit all. The best practice approach to IP Telephony implementation is a hybrid solution that ‘mixes and matches’ to meet customer needs.

Premise-based IP PBX

The most common type of a managed IP Telephony service is a premise-based PBX. This is where the business either owns or leases an IP PBX that resides in its corporate offices, but is managed remotely by a service provider (or some other third party). The premise-based solution is ideal for enterprises that either have limited resources or may not want to invest in costly upgrades, but at the same time want to take full advantage of IP telephony.

The benefits of premise-based solutions are the fact they are well established and already have a high penetration in the enterprise, have a low CapEx and OpEx (if the customer chooses to lease the equipment), and are used to support other business applications within the enterprise network environment. The most prominent vendors in Europe that offer premise-based IP PBXs are Alcatel-Lucent, Avaya, Cisco, Nortel and Siemens Enterprise Communications. In fact, these vendors together nearly dominate the European market. Synergy Research, for example, estimates that these vendors have 83% market share of the enterprise telephony ports in EMEA.

A traditional drawback is that customers have long experienced problems with integrating multi-vendor platforms. This is still an impediment, but more carriers are making improvements in this area. While AT&T has achieved standards of interoperability with five vendors (and supports Digium’s Asterisk open source-based platform), Orange Business Services offers its VISIT technical programme to validate interoperability between vendors and currently supports Alcatel-Lucent, Nortel, Cisco, Avaya, and Aastra Matra systems. This is helping customers to avoid being locked into a single vendor, platform, or technology. Now that carriers are showing a new willingness to support multi-vendor platforms, customers are responding positively. The premise-based IP PBX is generally the safe bet for most enterprise customers.

Hosted IP PBX

Hosted IP PBX services are similar to the managed (or premise-based) IP PBX and developed by much the same range of vendors. The main difference is that the service provider locates¬ the IP PBX core infrastructure in their data centres. In the experience of some global service providers, more customers take for the premise-based PBX (over the hosted solution). However, the hosted IP PBX still tends to be the choice of some of the largest customers. Some of the advantages with hosted IP PBX services are transparent per-seat pricing, arguably a richer feature range than what might be possible with some of the premise-based solutions and stronger self-management capabilities for end-users.

There is also the potential for new applications, such as client-based IP soft phones and desktop integration. COLT Telecom, for example, provides a hosted IP PBX solution and offers several hundred features. They have a multi-tenant offer that supports as few as 20 users (using a single blade server solution) and dedicated offer geared for companies with several hundred employees. As with many providers, COLT offers per-seat pricing that includes handsets and features for approximately EUR 20 per month. Dialling plans or usage-based billing is also possible and the minimum contract period is three years.

On the downside, the hosted IP PBX has the potential of locking business customers in with a particular supplier. If a customer, for example, opted for COLT’s IP Telephony solution, Avaya would be the supplier in this case. A pure deployment of hosted IP PBX with one-vendor may also require customers to give up existing premise-based IP PBX equipment (especially if it is from another supplier). While circumstances vary by customers, this scenario could be costly.

Since hosted IP PBX services are deployed centrally from the data centre, there could be some complications in supporting customer sites that are located outside the service providers’ footprint. While the service provider could provision its network to support remote locations, there are cost considerations. There are also customers that are very reluctant to have any services hosted by a provider from a ‘third-country.’ However, most carriers in Europe are flexible and offer ‘hybrid solutions’ combining a premise-based and / or hosted IP PBX solution to the enterprise. They tend to use the same vendors, are more willing to manage the LAN / WAN environment and adhere to stronger SLAs.

Hosted IP Centrex

Voice over DSL

Integrated Access and SIP Trunking

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