Is the VoIP bubble about to pop? Despite the hype, deployments are limited and customer frustration is growing

America's Network, June 1, 2004 by Al Senia

To hear proponents tell it, Voice over Internet Protocol appears almost inevitable.

Commercial users will use VoIP to slice their monthly phone bills. Business users will be lured by a host of beneficial services that make their phone calls and phone services much easier to manage. In the not-so-distant future, the promise of ever-expanding bandwidth and the imminent arrival of ultra-smart phones and cool digital devices will make surfing the Web from anywhere a breeze. By decade's end, we'll be downloading video and movies over our smart phones, using them to watch baseball games and movies; video conferencing with friends and family; even managing home appliances from afar.

Or at least, that's the vision.

"VoIP has become mainstream," said Bernd Kuhlin, president of enterprise networks at Siemens, during last March's VON conference in California. Kuhlin prophesied that VoIP is destined to create a "unified user experience" that will leverage the Internet--and ubiquitous wireless bandwidth--to transform our daily lives. In its second generation, VoIP's infrastructure will be invisible to the user, there will be "seamless interaction between different devices and different networks" offering "the same user experience" whatever the entry point.

It's an intriguing, bold vision with just one problem:

It isn't close to happening yet.

In the real world, business users are adopting VoIP, but they are typically using it in very selective, targeted applications such as linking voice services in branch offices to their existing data networks. They are running VoIP over their corporate networks, but don't trust it for external customers. They are concerned about quality and security when calls are routed over the real Internet. They are finding that the cost savings may not really justify the technology. They say a lot of the technology doesn't work as promised.

In short, they're getting frustrated.

And that raises the question: Is VoIP just another over-hyped technology bubble poised to pop?

FUD FACTOR

Certainly, the experiences of IT directors such as Larry Mathews at Swinerton Inc., a San Francisco-based construction company, highlights the fear, uncertainty and doubt that surrounds VoIP deployment in the enterprise. Mathews became involved with VoIP two years ago when Swinerton needed to replace its phone system after moving to a new location in San Francisco. Mathews decided to try an NEC IPS 2000 system that included a server, operator consoles, Cisco switches, management software, and voicemail and NEC IP phones. The company quickly looped in a branch office in Oakland. In all about 250 users were involved. Other branch office locations have been added, and Mathews expects seven offices and 500 stations to be VoIP- enabled by July.

That sounds like a VoIP success story on the surface, but it is far from it. Mathews opted for the VoIP solution because he figured he could leverage an existing, reliable corporate data network for voice and he liked the flexibility and management capability that the NEC system offered. "It provided a way for us to manage all our phones from one central location without having to be at every site," Mathews explains.

INTERNAL DEPLOYMENT

VoIP is only used on the internal corporate network because the quality, security and reliability simply aren't good enough for outside customers. Even so, problems cropped up almost immediately. There were echoes on some phone calls. Other calls were hard to hear. Some of the phones simply stopped working. Voice mail inexplicably failed for users.

"Your network infrastructure really has to be in place to make this work," notes Mathews." You are only as reliable as your data network--you basically just have another data server that you have added out there. You can run into problems with the reliability of the servers."

The voice quality issues took a few weeks to get to an acceptable level," but the voicemail glitches lasted for months and became a major irritant. "A lot of it was software incompatibility," recalls Mathews. "The vendor would patch the PBX, and the voicemail wouldn't talk to it. Then you would do a software upgrade and you would have to reprogram all the phones. Five or six would get left out, and they wouldn't work."

It took a few months for technicians to grasp that each phone had to be treated as a separate node on the network server, and that generally applied software fixes just wouldn't take on the entire VoIP network.

Another difficulty was the unexpectedly high failure rate with the IP phone hardware. "The IP phones they sent us just quit working. For awhile there, there was an unbelievable failure rate," says Mathews. "I thought maybe we had just gotten a bad batch of phones." More than 10% of the phones had to be replaced, a failure rate Mathews never experienced with conventional equipment.

To be fair, Mathews notes that most of the problems occurred with the initial implementation. As the VoIP system expands to new offices, duplicating the experience without the bugs has become easier. And he likes the management capabilities the system provides.