Zultys and IP Telephony

Monday Aug 11th 2003 by Gerry Blackwell
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Don't touch that dial — small business owners have a lot to learn about the benefits of voice over IP technologies. New IP PBXs or VoIP systems give even small companies the ability to acquire enterprise-class telephone services and features at affordable prices.

Many small companies that lack technology skills may be blithely unaware that a revolution is underway in the world of business telephone systems.

Why should you care particularly? Because new IP PBXs or voice over IP (VoIP) systems give even small companies the ability to acquire enterprise-class telephone services and features at affordable prices. And they let larger companies inexpensively provide branch offices and remote users with the same services headquarters staff already have.

A new product from Zultys Technologies, the MX250 "enterprise media exchange," which can support from 5 to 250 users, makes acquiring an IP telephone system with advanced features even easier, the company says.

Because the MX250 offers a broad range of software-based features in a single, compact and self-contained hardware unit, it is easier to install, configure and manage than either conventional or first-generation IP phone systems, Zultys says.

Features include Public Switched Telephone Network (PSTN) gateways, voice mail, automated attendants, Automatic Call Distribution (ACD) groups, firewall and support for Virtual Private Networks (VPNs) for secure communications over the Internet.

The Internet? Yep, the telephone systems revolution we're talking about is Internet related — but isn't everything nowadays?

What's happening is a shift from conventional analog and digital telephone systems that require their own dedicated wiring in the office, to IP telephone systems that use the same wiring as your Ethernet local area network (LAN).

Previous digital telephone systems — which largely replaced even older analog systems — use proprietary technologies for digitizing audio and transmitting it over telephone wires. VoIP systems use standard Internet protocol (IP) technology — the same scheme used to move Internet data around.

This means that IP phone systems can not only route calls over internal Ethernet wiring (usually Cat-5 or category 5 wiring), they can also send them over the public Internet or a managed long-haul IP network.

This opens up the possibility of savings through long distance toll bypass — i.e. sending calls in IP format over the Internet or a private network link to a branch office, or even through a gateway at the branch office and out onto the public switched telephone network to an external phone. Since no long distance telephone company carries the call you pay no long distance charges.

Perceptions of VoIP
Why isn't everybody using IP phone systems? Most analysts and even big phone system vendors such as Lucent and Nortel agree IP telephony will eventually become the norm, but big systems vendors have an enormous vested interest in hanging on to the market for their proprietary systems.

Most have been marketing hybrid systems that can function both as conventional digital Private Branch eXchanges (PBXs) or as IP PBXs and thus provide an upgrade path. But hybrid systems, even when used as IP PBXs, don't offer many of the benefits IP can deliver, says Zultys president Iain Milnes.

"There is a perception that VoIP is new and unreliable or unpredictable," Milnes says. "That perception is perpetuated by vendors of legacy equipment. In fact, IP systems like ours are actually very feature-rich and reliable, whereas theirs are often neither feature-rich nor reliable."

This means companies like Zultys that are totally committed to IP telephony sometimes have to do more customer education to overcome resistance than should really be necessary. This is frustrating, Milnes says, because Zultys would prefer not to be seen as just a vendor of IP systems.

"We're not really trying to sell VoIP as such," he says. "We're trying to sell a solution. What we're selling is something very compact, easy to manage and easy to set up. We would stand this product up against any other phone system solution on cost and features."

Comparable Costs
An MX250-based phone system would not be the least expensive to purchase, but Zultys claims it would provide the best value — competitively priced with superior functionality — and also very low cost of ownership.

Capital costs start with $5,000 for the MX250 unit itself, plus software licenses which are sold per user or block of users — another $5,000 for 25 users, for example.

A PSTN gateway card that supports eight outside phone circuits adds another $800. If you're using the system to link remote users over the Internet, you'll need a VPN appliance or VPN software at a minimum of $125 per location.

Then you have to add $140 or $400 per IP phone set. Some businesses do use the simple $140 Zip 2 IP telephone, but the $400 Zip 4X4 has more business features. Other vendors' IP phones will also work on the Zultys system.

A system for 25 users in a single office, including phones, would cost between $15,000 and $22,000.

Few if any systems at that price offer anything approaching the feature set, though, Zultys claims. To get the same functionality even in products from other all-IP competitors such as Cisco and Pingtel, you would need to purchase a phone system plus separate voice mail/automated attendant, ACD and other servers — with the additional hardware costs this entails, and the additional long-term management and maintenance costs.

ACD systems let you automatically distribute calls to a group of incoming or outgoing call center agents according to a set of programmed parameters. An automated attendant answers the phone with a recorded voice and automatically routes incoming calls according to the buttons the caller pushes.

The MX250 also lets users do video conference calls internally or long distance over the Internet or a managed IP network link. It also provides an internal Internet-style chat function. The presence management feature lets an operator or receptionist see which employees are logged in or out, or are on the phone, allowing them to route callers more efficiently and professionally.

The real strength of the Zultys equipment, though, is its ability to link remote offices and users, says Zultys dealer Greg Still, managing partner of Xiologix, a Portland, Ore.-based systems integrator. "Very few of our customers [that are doing or interested in doing IP telephony] do not have a remote location," Still says.

Time for a Phone Swap?
Many small and medium-size companies are not ready to swap out their old telephone system and replace it with a Zultys IP system, he notes. Most hang on to a system for about eight years. But many do have a need to expand their phone system internally or to remote offices and users.

They can do it with an MX250 at minimal cost and extend head-office features such as voice mail, call hold, forward and so on that older phone systems designed for small offices could not provide.

By connecting the MX250 to an existing system at the main office, they can route incoming or outgoing calls over a long distance IP link or even the public Internet to the remote location. At the branch office, all they need is an IP phone — such as one of the Zultys Zip models — and a VPN appliance that encrypts voice data from end to end to prevent Internet hackers intercepting it.

"This is very compelling to an organization that is geographically focused in Oregon, but would like to do some market expansion into say Idaho," Still says.

There is also a powerful return on investment case for companies that already have several remote offices each with its own receptionist/operator. All calls can now come through the main office where an operator routes them through the MX250 to the remote locations as if to a local extension.

"By reducing the number of operators at remote locations — assuming that a person doing that job will cost $30,000 to $40,000 a year — you can almost pay for the system within 12 months," Still says.

He insists that even over the public Internet, which is subject to congestion and slow-downs that can impair voice connections, the quality of the link is good enough for most businesses for transmitting IP voice calls.

They can even use the MX250 to connect remote mobile employees equipped with "soft phones," software such as Microsoft's NetMeeting that turns a laptop equipped with a telephone headset into an IP telephone.

Milne concedes that small companies won't buy an MX250-based system just because it's "cool" technology, but there are clear returns on an investment with IP telephony, he insists.

Toll bypass and phone system consolidation are two already mentioned. In the longer term, IP phone systems are also easier and therefore less expensive to manage.

Using the system's intuitive browser-like interface, a small business IT person or even a non-IT professional can easily do adds, moves and changes, set up voice mail and program ACD and auto attendants. That eliminates the need to call in an outside phone system technician, and saves money.

"If we can demonstrate that there are real productivity improvements, that this is not just a black box, then people are going to be willing to pay for it," Milne says.

He is confident the small business market, which he guesstimates at "several billion" dollars worldwide in 2003, will switch in fairly quick order to IP. Zultys believes Sixty percent of phone system shipments will be IP based by 2004, he says, and in 5 years time it will be 99 percent.

"There is no denying that it's coming," Milne says. "The advantages are just too overwhelming — and we feel we have a three-year head start on our competitors."

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