C&W claims big VoIP savings

The UK's first enterprise-class IP telephony product could save British businesses millions of pounds

Cable&Wireless launched an IP telephony product on Monday that it says will allow large and medium-sized companies to dramatically cut communication costs.

Cable&Wireless IP Voice is designed to let firms combine their voice and data networks onto a single infrastructure rather than running a separate PBX-based network for voice calls.

Unlike consumer voice over IP (VoIP) services such as Skype, which run across the public Internet, C&W's IP Voice product uses the telco's own network.

This should mean higher service quality -- if C&W can achieve sufficiently low latency and keep the voice packets flowing quickly.

"We are the first operator to come to market with a managed voice over IP service," said Gareth James, C&W's managing director for corporate markets.

Cable&Wireless is targeting companies with 250 employees or more with IP Voice and cites research showing that the service will cut 25 percent off telephony costs.

"If every eligible company took this up, UK Plc would save £800m per year," James claimed, adding that companies won't need to invest in new hardware if they take up IP Voice.

While voice over IP has attracted plenty of attention over the past few years, businesses have taken a largely cautious approach. This has partly been due to a reluctance to trust IP and the Internet to handle voice traffic, and also due to a reluctance to write off the investment made in legacy telephony systems.

Analysts say that this position is shifting. "I believe we will see strong growth in enterprise VoIP in 2004 and 2005," said Peter Hall, Ovum research director. "Awareness is very much higher. IT managers and network managers are much more aware of what's available and are now prepared to consider the business case. This wasn't the case a year ago."

It's not yet clear whether other UK telcos will launch similar services to C&W. BT's 21st Century network project, which will see its network upgraded to support IP, will mean that some consumers will be using VoIP by 2006.

C&W's James claimed that the 21st Century initiative is more about BT cutting internal costs rather than launching a slew of innovative services to consumers.

BT has already told investors that it hopes to eventually realise savings of £1bn per year through the upgrade.