'IP telephony will increase in India'

Nortel Enterprise Networks president Malcolm Collins is the archetypal global executive who travels constantly from continent to continent, relying on Nortel's internet protocol (IP) telephone system to keep in touch with his head office at Raleigh, North Carolina, in the US, to which he recently relocated from the UK.

Collins acquired an engineering degree from Brunel University in the Uk before spending years in the data communications industry and at Nortel.

On his first visit to India some time ago to gain a first-hand experience of the market, Collins spoke to Business Standard on IP telephony.

Companies like Nortel and Cisco have been trying to sell IP telephony or IP telephony solutions in India. How successful have they been? To how many Indian companies has Nortel sold IP telephony networks or solutions and which ones are these?

IP telephony as a concept is gaining popularity in India. Enterprises are beginning to see value in using IP telephony because of its cost effectiveness, easy deployment and management.

Enterprises have realised that they cut down on expensive STD and ISD calls by using IP telephony. By using IP telephony, some organisations have experienced a 10-15 per cent increase in cost savings, going up to 50 per cent in certain cases.

The return from an IP phone deployment is usually very quick, about six to 12 months. With Indian enterprises being very price sensitive, this is an important factor that is resulting in many enterprises adopting IP telephony here. Some of our key clients in India include Cognizant (4,500 IP phones), Microsoft and Logica.

How big is the IP telephony market in India? What is its potential?

The IP telephony market in India has immense potential. According to an industry research report, the voice market in India is estimated to be worth around Rs 33,000 crore (international long distance and national long distance put together), of which internet telephony is likely to grab a share of 2 to 3 per cent.

IDC expects the IP telephony market to grow at a compound annual growth rate of 119 per cent to touch Rs 13,000 crore by 2005.

Can you explain in simple terms what exactly IP telephony is and how precisely it helps companies to cut costs? By how much are costs cut? IP telephony or Voice-over-IP represents a new method of providing telephone services. Historically, telephone systems used dedicated equipment to provide only voice networks.

Rather than using dedicated equipment, IP telephony uses much of the same infrastructure as a data network. It achieves this by converting sound into small packets of data and transporting them via the regular internet protocol (TCP/IP) between telephone sets.

In a layman's terms this is a telephone system that speaks the same language as a computer, enabling both to integrate easily.

Many submissions usually made through long and tedious programming via pressing buttons on your telephone keypad can be resolved to simply cut and paste windows applications.

The convergence of networks offers opportunities to get the most bandwidth for the company's communications buck. The fastest way to cut down on voice and data costs is to consolidate a company's telecom contracts.

Using the fewest national and regional carriers possible, it decreases management overheads and can increase savings through volume discounts. The Yankee Group says that negotiating contracts each year can translate into 15 per cent savings overall.

Enterprises can reduce their facility-to-facility data transport costs by replacing traditional conduits "� such as dedicated T1, ISDN and frame-relay lines "�with the public internet, leased Ethernet and other high-speed data connections. Such technologies typically increase the bandwidth available by 10 to 40 times at about one third the per-megabyte cost.

IP based telephony reduces administrative, networking and IT support costs while also increasing productivity. Savings may differ from company to company and vary in installation to installation, but it is common for early users to save enough to fund its installation.

The greatest savings come from deploying VoIP in new sites and in full-replacement installations. Most PBXs from the last 10 years support IP interfaces,including those from major providers.

So communications managers can connect new users and facilities via IP while sharing most of the PBX functions such as four-digit dialling and voice-mail access.

In India, you can't use IP telephones over PSTN lines. These can only be used for closed user groups. So company executives have to keep two sets of phones "� IP phones and regular phones. Is this a barrier for the growth of IP telephony?

If you look at the voice communications needs of an enterprise, 80 per cent to 90 per cent of the communication happens within the organisation.

So the major benefit of using VoIP is available to enterprises in India even in the closed user group environment. Also, for VoIP to be successful, bandwidth has to be carefully engineered and provisioned "� which is best done in a closed user group environment.

The state-owned Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd could be wiped out if IP telephony becomes widespread. Please comment on this. Have you approached either or both and made pitches to them on IP telephony?

There is plenty of room for all players in the market today. Perhaps the biggest threat to the telephony market in India comes from the thriving grey market in the international long distance telephony space.

Has Nortel approached the government and pointed out the advantages of IP telephony?

The primary advantage is for enterprises "� and we have been doing a lot of evangelising to them.

How many IP phones has Nortel sold in India (Cisco says it has sold 50,000).

I cannot share the numbers for India. However I will say that the numbers are highly competitive.

Where do you see the IP telephony market in India in 2005 and 2010? How big will it be? Or will IP telephony, in turn, have been overtaken by newer technologies by then?

Enterprises are looking positively at IP telephone deployments in India. Most vendors are hopeful that the adoption of IP telephones will grow in India in the years to come.

With the withdrawal of the TRAI regulation which restricts the use of IP telephones to a closed user group within the organisation, IP telephony adoption is bound to increase tremendously in India.

IP phones will provide users much better voice quality than conventional phones as they use less bandwidth.

hat kind of IP telephony is India seeing "� managed IP telephony (the deployment of IP PBXs managed remotely by service providers)? Hosted network voice services with PBX-like functionality and IP features, provided over carrier networks rather than at IP customer premises?

As the service provider market evolves, this will be the next step. Worldwide service providers have felt the need to go up the value chain and provide a value added communication service rather than commodity bandwidth.