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VoIP can cut costs, but capable of much more

A top Nortel exec said an enterprise may save a few pennies switching to VoIP, but the real cost savings will come from integrated communications. However, a Department of Defense manager said the DoD's VoIP move is all about saving money.

LOS ANGELES -- During a keynote presentation Wednesday at the Internet Telephony Conference & Expo, a top Nortel Networks Ltd. executive laid out the enterprise networking vendor's vision for the integration of voice and data networks, and the resulting growth in productivity that he said must drive the industry's advancement.

Phil Edholm, chief technology officer and vice president of network architecture at Brampton, Ontario-based Nortel, said businesses considering VoIP implementations should not only look for cost savings, but they should focus on the VoIP's potential for transforming business processes.

The average daily cost for a business phone is about $1 per user, Edholm said, and the average cost for a PC is $35 a day per user.

"Even if you save money [on voice], you are not going to save a lot," Edholm said. "The big issue is how you change applications and the business benefits."

The real benefit of VoIP, Edholm said, is that it transforms the enterprise communications model from focusing on devices to one on people. By integrating mobile and wire line phone communications with presence-based applications, individuals can communicate in many ways and with more versatility.

For example, users can have multiple lines open for conference calls, and they can effectively route and screen calls, quickly responding to important calls and avoiding unwanted ones.

Edholm said VoIP can also decrease the time it takes for an employee to make a decision. Most of the decision-making process is spent waiting to receive input from others or authorizing an action. With an integrated communications infrastructure based on VoIP, people are easier to contact in the way they want to be contacted, and decisions can be made more rapidly as a result.

In addition, Edholm said wireless technology is helping transform how people communicate. The number of wireless computing devices has already surpassed the number of hard-wired ones, and that trend is only growing. At the same time, the bandwidth available to people in every environment -- the office, the home and on the road -- is also increasing. Soon, no matter where people are, they will be able to sustain the same level of productivity they would in the office.

However, productivity gains are not always the top priority for those looking to implement VoIP. One attendee who is responsible for voice systems at the U.S. Department of Defense -- who asked that his name be withheld -- said his interest in VoIP is driven purely by cost saving.

He said that if he can eliminate his voice network, he will save money by no longer needing to maintain and manage a second network.

"Copper is expensive," he said, "and we're running fiber to these buildings anyway."

Edholm's grand vision of ubiquitous communications did not resonate well. At the DoD, security is a high priority, and the attendee could not imagine implementing wireless soon.

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He said the simple return on investment from merging voice with data is driving the DoD's decision to move to VoIP. "We would take advantage of any new applications," he said. "But that is really a fringe benefit."

But Edholm warned that businesses need to consider the overall impact of changing its voice infrastructure and examine both the savings and the benefits.

"Businesses should not just adopt VoIP," Edholm said. "They need to consider what business problem it is solving."

Nortel is hoping continued interest in VoIP will help it regain its financial footing. The vendor recently confirmed that it will cut 1,400 workers in the U.S. by next June, and is under investigation by both the U.S. and Canadian regulators.

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