Saving a bundle on communication

Companies stand to make significant savings on their telephony costs by using Voice over Internet Protocol (VoIP) technology. Some experts place cost savings on international calls at between 30% and 50%, on calls to cellphones at 50% and on national and local calls at 10% .

“There are massive cost savings to be had,” said Jacques du Toit, managing director of Orion Telecoms.

For SA businesses, the number of telecom s options available are opening up gradually. Voice calls can be routed over data networks using VoIP, over the cellular networks and over Telkom and Neotel’s fixed-line networks.

“For example, a company using its own data network to route voice traffic between several branches would pay just 17c a minute using VoIP as opposed to 63c a minute using the usual fixed- line network,” said Du Toit.

But, said Brendan van Staaden, chief executive of Interactive Technologies, there are costs involved in setting up VoIP networks.

“I’m not convinced that VoIP networks are that much cheaper than fixed line options initially because there is a substantial cost to setting up network infrastructure. That said, over the long- term, there is no doubt that VoIP is more cost effective,” he said.

“There are other advantages too. VoIP networks are easy to maintain because there’s no separation of data and voice infrastructure. You don’t need to double-up on the skills needed to keep them running efficiently.

“Some of the most important benefits of VoIP are the reporting tools that are available — important in the call centre environment, for example. Management has access to detailed performance data and can track the performance of the network,” said Van Staaden.

In developed economies, VoIP service providers can choose to buy their bandwidth from several networks which tends to drive down costs.

Orion Telecom’s Du Toit said bandwidth still had to be purchased from Telkom until 2011. “The only other way to bypass Telkom’s network is to make use of WiMAX wireless networks that Internet service providers [ISPs] are rolling out. We believe that this will gain critical mass over time.”

Tim Wyatt-Gunning, joint chief executive of Storm Voice and Data, an ISP, said VoIP technology is now bedded down and a growing number of businesses and consumers are using it to route voice calls.

“Even bigger companies are starting to tap into the technology that has so far been mainly the preserve of smaller businesses,” he said.

“Many smaller companies don’t have the financial muscle to install their own VoIP infrastructure so they outsource these services to third party organisations which already have and manage VoIP networks.”

On closed networks, such as Storm’s, voice traffic that remains on their network between customers is free.

“That’s a pretty compelling model for many companies looking to reduce their telecommunications bill,” said Wyatt-Gunning.

“For big companies the savings can run into the millions.”

However, there is a threshold to making VoIP cost-effective. A data line needed to run a VoIP network costs about R9000 a month so economies of scale are important.

One of the great VoIP success stories is Skype which consumers enjoy because they can effectively make free calls to other Skype users providing they have a broadband connection like ADSL.

But call quality varies because ADSL is what’s known as a contended, or shared, service — the more people who use it, the less reliable it is.

“Sometimes it’s great, sometimes it’s not. That’s fine if you’re chatting to family and friends all over the country or the world, but for business, a more reliable, dedicated VoIP service is the way to go,” said Wyatt-Gunning.

He added that about 10% of calls originate on VoIP networks and that the rate is growing quickly.

One of the problems that has plagued data networks has been security and VoIP is also prone to risk.

Said Ollie Whitehouse, a security expert at Symantec: “While early incarnations of VoIP were plagued by intermittent service, muddled and dropped calls, over the past few years VoIP services have improved enough to make them sufficiently reliable and stable for business use.”

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