Call Centers

There are a number of technology solutions that can reduce overall organizational costs, even if they add slightly to the telecom budget. Call centers provide one such solution.

Call Centers

Although call centers would be an obvious choice for heavy massing of technological firepower, many organizations still rely too heavily on human agents to do work that could be done by computers and telephone systems. Examples include:

• Predictive dialers. Anathema to families that enjoy a quiet dinner together without telemarketer interruption, predictive dialers allow agents to call efficiently. Not only does the predictive dialer actually make the call, but it "uses complex mathematical algorithms that consider, in real-time, the number of available phone lines, the number of available operators, the length of an average conversation and the average time operators need between calls, and constantly adjusts their dialing rates based on these factors." Also, the best predictive dialers screen out calls where there is no answer or those that are answered by an answering machine. Most of the time, the calling agent hears a quiet "zip" in the headphone and a live person is then on the line. While manual dialing may result in 15 to 20 minutes of productive calling time per hour, predictive dialers allow agents to productively talk 40 to 57 minutes per hour. Given that call center agents are paid between $12 and $20 per hour (as well as incentives), any device that makes them more efficient is likely worth the investment. It is interesting to note that, in the eternal war between "push" or outbound call centers and potential customers, technology solutions are found on both sides. Telemarketer "zappers" are now sold that intercept telemarketing calls. In Texas, some 77,000 households have signed up for a blocking service since the law went into effect on January 1, 2001.

• Call center workforce management software. Although scheduling agents via software would seem to be a "nice to have," akin to a deluxe PDA, it strongly affects call center costs. Beyond a certain number of agents, it becomes difficult to mentally juggle schedules, demand, holidays, incentives, shifts, etc. One of the highest expense items is overtime; without an automated system for scheduling and reporting, absenteeism and overtime will climb to unacceptable levels (for mid- to large-sized call centers). Steven J. Cain, Gartner Group's Call Center Benchmarking Practice Research Director, says that, "When you consider that, in some industries, contact center turnover reaches as high as 50 percent, there is significant opportunity to reduce turnover, building an experienced and tenured agent base to deliver the highest quality customer interactions while minimizing the expense of recruiting, training and productivity shortfalls while getting up to speed."

• Interactive Voice Response System (IVR) The familiar "press 1 for account balances, press 2 to transfer funds,…" is the public face of interactive voice response technology. Some call centers shun IVR systems because of the acknowledged public preference for human interaction. This philosophy should be reconsidered in some cases. For example, is it better to staff from 7 a.m. until 10 p.m. and then leave a message for the customer to "call back during business hours" or to have an IVR after-hours that provides the customer with some useful information. Second, as the public becomes more familiar with IVR, there are situations where non-human interaction is faster and preferred. For example, when people call about booking reservations for deluxe resorts, they want to talk to someone and ask multiple questions. However, if they must cancel those reservations, they merely want to cancel — why take the time to explain? In this case, the transaction can be handled without agent contact, saving money for the company and time for the customer.

Digital Subscriber Line (DSL)

DSL (digital subscriber line), cable modem, and other high-speed technologies should be considered in areas where they are available.

DSL services are growing rapidly as local access carriers continue to install DSL access modules ("DSLAMs"). Most service providers break down their DSL services into three main categories: residential, SOHO (small office/home office), and enterprise. ADSL (asymmetric DSL, where up- and downstream speeds differ) appears to be the offering of choice for residential customers, while SDSL (symmetric DSL) is usually marketed to businesses because it has T1 or more speeds both ways.

Depending on the geographic location, installation time for DSL circuits can range anywhere from one week to over ten weeks. Quality of service (QoS) is an issue. Most service providers, because of the multiple risk factors, do not guarantee QoS with DSL service. For example, DSL can potentially be unavailable for a few hours or longer. However, unlike cable, DSL provides consistent bandwidth to the user and does not depend on how many other (unrelated) customers are using the service at any one time.

DSL, more prevalent than cable modem, has a number of potential advantages:

• Internet access for smaller offices.

• Backup Internet connection. Many organizations implement DSL as a fail-over device because it is so inexpensive compared to a T1. Although costs vary by provider, a business typically pays at least twice as much and sometimes three or four times as much every month for a T1 line as it would for DSL. In other words, for the cost of a single T1 1.54 Mbps connection, three 1.1 Mbps DSL connections can be supported.

• Primary connection for the Internet and data services (note: many organizations do not consider DSL sufficiently robust for their primary link, but if cost is the primary consideration, DSL will provide the necessary functionality).

• Decreased installation charges. Typically, installation costs for a T1 line are three to four times as much as installation and setup of DSL services. DSL uses traditional telephone lines as opposed to T1, which requires installation of special (conditioned) lines.

• Multiple pricing categories. Depending on needs, more or less bandwidth (line speeds) can be purchased (if available in the area).

• Combined data and voice services over a single connection (for small offices). Although not yet widely deployed, Voice-over-DSL (VoDSL), shown in Exhibit 1, is starting to be implemented in selected locations in the United States, such as Santa Clara, California, and Boston, Massachusetts. By combining multiple voice channels and data on one copper wire, local telecom companies can offer a competitive package to small businesses that need only Internet access and a few voice lines. Jim Greenberg, chief architect at Rhythms NetConnections Inc., estimates small businesses could save about 30 to 40 percent on additional voice lines and get it all from one company.

  Exhibit 1: Voice-over-DSL (VoDSL)

  
  

  
  

• An "always-on" technology, unlike ISDN, which requires a sign-on.

• More secure than cable modem, because the bandwidth is not shared with other users (due to DSL's copper wire to the user legacy ar architecture — dedicated to a single user).

Disadvantages include:

• DSL installation, while generally faster and cheaper than T1 or T3 installation, may experience technical problems. DSL runs over lines designed prior to World War I. It was originally intended to carry only miniscule traffic. For such a scrawny system to shoulder mountains of Internet data is akin to one writer's quip about a dog walking on its hind legs — "It is not done well, but you are surprised to find it done at all." Exhibit 2 shows an analysis of the percent of DSL installations completed versus time required for the install.

  Exhibit 2: DSL Installation History: Percentage of Installs over Time of Order

  
  

  
  
  
  

• Multiple parties are involved. Typically, when a local telephone company, ISP, and possibly a DSL provisioning company are involved at some point in providing the service, the potential for billing errors and increased repair time is greater.

• DSL bandwidth varies considerably. The distance from the POP largely determines the bandwidth that is available to a DSL customer. The distance limitation is usually considered 18,000 feet but "loop extenders" from companies like Symmetricom can extend the distance considerably. Exhibit 3 shows the relationship between bandwidth and distance from the central office.

  Exhibit 3: Distance versus Bandwidth for DSL

  
  

  
  
  
  
  

The Dreadnoughts: Enterprise Class PBXs

As of this writing, the majority of organizations with thousands of employees at one location continue to use traditional, TDM enterprise class PBXs. For the next few years, these mainframe-like machines will continue to dominate the seas of telephony. They have extremely high reliability, more features than any person with a real job would ever use, and a vast flotilla of accessories/applications. The large installations cost millions.

Business needs should dominate technology "coolness." If the organization must have a new telephone system with all the advantages of mature technology, then cost analysis shifts away from technical architecture and toward features, needs, and smart planning. In evaluating competing vendors such as Avaya, Siemens, Nortel, and others that play in the large PBX world, the following should be included in the analysis:

• Has an accurate count of users, stations, and non-voice devices such as modems and faxes been obtained? Organizations often overbuy because the actual number of necessary lines is not known. Analog lines (for faxes and modems) are particularly prone to excess.

• Do voicemail and other proprietary links match the organization's infrastructure? For example, will the PBX vendor's unified messaging offering work with the installed e-mail system?

• What functions are really required for each station? Some organizations buy low-end telephones for lower-level employees and then upgrade as they are promoted. Sometimes, the cost of this transition can exceed the cost of providing a standard, strong feature set telephone for all employees, with only individuals in specialty positions having "more buttons."

• How much expansion room is available? Traditional PBXs scale well but usually in steps rather than on a continuous curve of users versus costs. Once a shelf is filled up, for example, a new shelf and cards must be purchased, at a substantial incremental price. Of course, most of the big PBXs network with one another easily (as long as they are from the same manufacturer).

• How much of the implementation effort is the vendor willing to do? Implementation is a significant human and financial drain, so responsibilities should be drawn early. Assume for example that the firm is converting from Siemens to Avaya technology. Understanding what each user needs to have programmed into the station and how that relates to the new system (station programming) is a big job. The translation is not straight-forward and requires considerable manual effort.

• Do the PBX and related systems support hoteling — a setup that allows employees infrequently in the office to direct the system (usually via a kiosk) to ring their assigned number at the telephone they are using that day?

Having discussed premise equipment or alternatives, we can turn to public network access and related cost reduction.

Small Offices and SOHO Markets: Key Systems versus PBX

For many small offices, a PBX is unnecessarily large and complex. Key systems will serve offices with less than 60 telephones; but beyond those numbers, a PBX is required. From a financial perspective, the "key" decision (pun unintended) is whether an office or plant will grow significantly, thus requiring a forklift upgrade to a PBX. Key systems cannot be easily scaled, although the distinctions between PBXs and key systems are less distinct now than in the past. Following are the traditional points of separation between key systems and PBXs:

• Each key system telephone has buttons or keys that are used to directly access external lines ("Harry, pick up line 24"). In a PBX environment, users are not linked to specific external lines, although they may have a second or third "line" on their telephone set. A key system may have 32 telephones and a dozen external phone lines.

• PBXs share trunking lines among a larger number of users. Using a DID (direct inward dial) number, a call is routed from an incoming trunk to the user's telephone. The PBX has the ability to switch rather than depend on a one-to-one user:line connection. This allows a much higher ratio of users to trunks and, with appropriate equipment, permits scaling into the tens of thousands of stations.

• Although key systems continue to offer more features, PBXs still provide considerably more functionality, both from an end user and internal perspective.

• On a per-station basis, key systems can cost as little as $200 to $250; that number easily doubles for PBXs.

• The ability to select trunks can reduce costs in some areas of the country where LECs charge higher rates for pooled access trunks (i.e., those used by PBXs) than for lines that are selected by the user.

• PBXs have a robust ARS (automatic route selection) capability. By looking at part or all of the numbers dialed, the PBX can select the most cost-efficient method of completing the call. For example, assume that a company has a headquarters building in Chicago and a smaller office in Denver. A user in Chicago dials the full ten digits to reach a co-worker in Denver. By looking at all ten digits, the PBX determines that the call should be routed via tie lines (or the IP equivalent if VoIP is in place) rather than the public network. It is important to have a PBX that can look at all ten digits because just looking at the area code and exchange may not be sufficient. For example, the Denver office might only have part of the exchange — the rest belongs to other organizations in the same area code.

• PBXs generally support full networking, including voicemail and a uniform dial plan (a uniform dial plan allows, for example, five-digit dialing across the United States and even worldwide; employees can reach each other with a minimum of dialing).

Key systems increasingly offer robust features that make them more attractive to the smaller office. In addition to their low cost, they offer functions such as:

• Voicemail

• Hunt groups. Incoming calls can be routed to a workgroup. Individuals will receive the calls in a predefined order and the call will be sent to the next available person in the sequence. In these cases, employee 1 on the hunt group list works hardest; employee 5 works least. Some key systems use smarter algorithms to distribute calls more evenly.

• Auto-attendant. Callers are sent to a main receptionist who then distributes the call as required. Computer-based auto-attendants provide the ubiquitous "Press 1 for Sally, 2 for Fred, etc."

The high end of the key system range is now the target of IP telephony vendors. However, the low end, say three to ten stations, continues to be dominated by traditional key system vendors. Because the low-end IP PBXs still require a reasonably robust server, there is a fixed cost that is difficult to overcome at the small end of the spectrum.

An example of the inexpensive (but not low-quality) key system is the Cortelco Aries 308 (see Exhibit 1). It accepts three CO (central office) lines and serves eight digital stations. Options for paging, external music on hold, and remote programming of features are available. If a small office needs only basic services, no inter-office system linking, and there are no rapid expansion plans, such a system may be appropriate.

Exhibit 1: Cortelco Aries 308 Key System

Some key systems include broadband connections. For example, BizFon's 680 KSU (key system unit) has a 16-channel DSL card. Others support standard BRI (basic rate interface) and PRI (primary rate interface) links that allow more channels and potentially a discounted long-distance rate. The discounted rate is due to the ability of PRI trunks to directly connect to the long distance carrier, bypassing the local telephone company (this is sometimes termed "dedicated" access).

The Centrex Alternative

Centrex is "basically normal single line telephone service with 'bells and whistles' added." While this is undoubtedly true for a large percentage of installations that want dial tone and perhaps a few extra services, Centrex is now offering more flexibility and features than in the past. Let us start with the basics. Why would an organization want to lease its entire infrastructure from the local telephone company rather than buy its own PBX? The most important reasons include:

• Low start-up costs. The equipment and software is owned, stored, and kept up-to-date by the carrier. Fees are a direct multiple of the number of stations and therefore highly predictable from year to year.

• Ease of physical movement. If employees move to new offices, the "virtual" telephone system easily moves with them. The risk of moves is diminished.

• Cafeteria-style features. Features are available on an ad hoc basis; users pay only for those they use.

• High uptime. Centrex service runs off central office-class PBXs (or soft-switches) and therefore is unlikely to fail. Of course, the risk from cable cuts or other external factors is unchanged.

There are some disadvantages:

• Higher costs for volatile environments. Costs could easily escalate beyond an in-house PBX if users frequently move offices, require special services, or require special technology (e.g., computer telephony integration applications, such as screen pops).

• Potential loss of service flexibility. If the culture of the organization is "do it now," there could potentially be a conflict with operating under the provider's set schedule for moves, additions, etc. This disadvantage is somewhat lessened if the service provider offers IP telephones that can be logically moved by software.

• May not scale. While Centrex can certainly scale physically, it may not scale economically. As the number of users goes into the hundreds and thousands, the law of large numbers comes into play. Trunk lines can be reduced on a per-person basis, technologies and expertise can be spread over many more phones, and generally per-unit cost can be driven down.

• Feature availability. While Centrex offerings usually have the standard telephony features such as call forwarding, speed dial, park, etc., certain special features may not be available. If the organization wants something specific that is not a product offered, bringing telephony in-house may be required.

Voice-over-IP: Premises Equipment

Voice-over-IP (VoIP) has two components: (1) premises equipment, such as IP telephones and switches, and (2) wide area network facilities and equipment, such as gateways and VoIP cards in routers. Popular publications sometimes confuse the subject by not distinguishing between the two. In some cases, an IP-based PBX is cost-effective when VoIP over a wide area network is not, and vice versa.

A premises-based IP PBX has the following advantages over the traditional, proprietary PBX:

• There is the potential to use a single wiring network for both data and voice rather than separate, parallel wiring systems now used.

• Ease of move, add, change (MAC) within a building. Instead of extensive administrative changes via a proprietary interface, the user's telephone is simply moved from one office to another. Because each telephone set has its own IP address, it rings at the right place as long as it is on the organization's IP network. Some organizations spend thousands of dollars a month on moves within a single building.

• Newer applications, such as unified messaging, are easier to implement on IP-based systems.

• Capacity can be added in much smaller increments than with traditional PBXs, which may require a new shelf, node, or even a complete forklift upgrade.

• IP-based PBXs are generally more open and standards based, holding out the promise of less costly hardware and software enhancements.

• Web-based applications can be easily linked with the IP telephony world. For example, it is far less expensive to install "screen pops" in an IP telephony environment than in traditional PBX systems. Sales personnel and others who need information on the caller can benefit from such features. Another example: an employee has a question about a 401K feature. He finds the information in the organization's intranet Web page. He clicks on a "click to talk" button and the appropriate party is dialed as he picks up his telephone to talk.

Despite these advantages, the IP PBX has a few limitations (at least for the moment):

• IP PBXs have not yet scaled to thousands of users. Nonetheless, each year the number of ports available on a single unit (such as the 3COM NBX 100) continues to increase.

• The "tank-like" reliability of traditional vendors such as Avaya, Nortel, and Siemens has not been achieved — at least in public perception. Like PCs in the early days of the mainframe world, IP PBXs have to evolve bullet-proof armor before Fortune 500 firms will trust their corporate headquarters' voice system to a new technology.

• The huge installed base of legacy, proprietary PBX software will need to be ported or developed for the IP world. That process is occurring rapidly.

• Organizations with unreliable wiring or whose current bandwidth is nearly occluded with data communications traffic (e.g., large file transfers) may not have the building infrastructure to support voice over data.

Exhibit 1 displays a simplified diagram of an IP-based PBX. Note that multiple links are enabled — traditional circuit switched (TDM) telephony, IP telephony via the LAN, and links to the Internet.

Exhibit 1: Example IP (LAN)-Based Telephone System (Courtesy of AltiGen Communications.)

Although it is difficult to quantify the net economic effect, some of the features provided by LAN telephony contribute to greater employee productivity. Many of these features are available in traditional TDM telephony systems, but at a higher cost. Examples include:

• Easy screen pops. When a customer calls, a link is established between the incoming caller ID and a contact package such as ACT!, Outlook, or Goldmine. Information from the contact database is displayed immediately as the call comes in.

• Call handling. When an employee is on the line and another call comes in, a graphical interface simplifies decision making: the call can be ignored, accepted, routed to a queue for others to handle, sent to voicemail, or added to a conference. The key difference from past systems is that these features not only exist on less expensive platforms but they are often displayed on a workstation screen. Hence, employees can actually use the features on the system because the interface is simpler.

• Simplified voicemail/unified messaging. Users can use their workstation interface to listen, save, skip, delete, and scroll through voicemail messages. Clicking on a stored message can return calls. For those so inclined, messages can be saved as an Internet standard WAV file or more compressed proprietary file and forwarded as an e-mail attachment.

To further illustrate some of the capabilities and benefits of IP-based telephony, we can use the Siemens' optiPoint 100 advance IP telephone (ww.siemens.com) as a representative model. Siemens states that optiPoint provides for the following features and benefits:

• Features:

  • Hands-free and speakerphone

  • Memory dial and redial

  • Display of the incoming number (CLI)

  • Call hold/consultation

  • Alternate

  • Call forwarding (CFU, CFB, CFNR)

  • Call waiting

  • Call transfer

  • Call deflection (user-controlled forward)

  • CTI interface allowing TAPI client control

  • Programmable ring tone, volume, and cadence

  • Country-specific menu guidance

• Benefits:

  • Long-distance and toll calls can be transmitted over the IP network, reducing communication costs.

  • Integrating voice and data into one network means investment in one technology and one support organization, reducing infrastructure costs.

  • Software updates and feature enhancements can be downloaded quickly and easily, thus enabling cost-effective upgrades.

  • Intuitive, interactive menu keys and displays along with simple dialing capabilities save time.

  • Direct-dial keys are programmable, providing ease of use.

  • OptiPoint 100 advance telephone automatically stores the numbers of the last 20 unanswered calls.

  • Excellent voice quality in both hands-free and open listening modes using special digital signal processor (DSP) technology and acoustic algorithms for echo cancellation.

The Siemens IP phones can be upgraded with software (a good feature in a highly volatile technical environment). Other examples of IP telephones include InterPhone by DSG Technology and Cisco's IP phone 7960 (see Exhibit 2). Cisco's IP phone can also accept firmware updates via download.

Exhibit 2: Cisco IP Phone 7960 (Courtesy of Cisco Systems.)

When evaluating IP telephony solutions, voice quality is obviously critical. A standard measure, MOS (mean opinion score), is used by the industry to determine the subjective quality of the telephone conversation. The ranking is from 1 (very bad) to 5 (perfect, undistorted toll quality sound). One firm, NetIQ, has a well-developed monitoring system, VoIP Assessor, that allows simulation of VoIP traffic and an assessment of its quality. According to a recent Business Communications Review article, "The Assessor software measures delay, packet loss and jitter, and produces a report showing call quality by day of week, location, network cause, etc. …There's been years and years of research that went into that ITU standard, so it really is a fairly scientific answer: You run this kind of traffic through this network with the parameters you told us, and here's what call quality's going to sound like." Call quality is expressed as MOS.

One clear indicator of the direction of the industry is the fact that Sprint, a major long-distance carrier, has decided to build out all its local telephone service using VoIP technology. Certainly the older technologies will co-exist for years, but the world is moving quickly to a fabric of interlacing packets that will carry information without regard to its original form.

Wireless Options | Wide Area Network Technology Options

George Gilder, a well-known champion of "infinite bandwidth," says the [wireless] spectrum is infinite, ubiquitous, instantaneous, and cornucopian. Current industry trends certainly support his hyperbole. Wireless Internet services, low earth orbit satellite services, Bluetooth, fixed wireless, and many other permutations of communications over the air are providing services that were either not available or prohibitively expensive in the past.

Following are some of the technologies and applications that have the potential to streamline operations or to serve as less-expensive, ersatz landlines.

VSAT and Geosynchronous Satellites

In the 1950s and 1960s, many organizations maintained private, point-to-point networks of terrestrial lines, often with multiple "drop-off points" in more remote areas. It was expensive and arduous to maintain this cobbled together network. For a network manager dealing with locations in the hundreds of thousands, it meant maintaining contacts with many small local exchange carriers (e.g., Bob and Pat's Telephone Company) and a relatively high level of downtime (for specific sites).

As commercial satellites began to be deployed in numbers during the 1970s, the use of VSAT (very small aperture terminals) networks increased significantly. Exhibit 1 shows a simplified diagram of a VSAT network.

Exhibit 1: Typical VSAT Configuration

By using a satellite to transmit all traffic within a large geographic region (e.g., Canada, the United States, and Mexico), the need for terrestrial lines is eliminated except for the backhaul (high-capacity terrestrial circuit from the commercial satellite hub to the organization's headquarters location).

Following are advantages and disadvantages of VSAT systems versus traditional terrestrial networks:

• Advantages:

  • Less expensive for data communications. Satellite systems become less costly per site as the number of sites increases. The cost differential is most significant in rural areas where terrestrial access lines (e.g., for Frame Relay) are costly.

  • Less expensive for video communications. Terrestrial lines with the bandwidth to support video are expensive (typically requiring a minimum of 384 kbps for good quality). VSAT can deliver one-way video for a fraction of the cost of a terrestrial solution (point-to-point solutions or ATM).

  • Known, reliable technology. VSAT technology has been around for decades, with the dishes progressing from type I to the current type III technology. In many areas of the world, including oil rigs in the ocean, VSAT communications is the only practical alternative. Over time, techniques to optimize common protocols such as TCP/IP over higher delay satellite networks have been developed.

  • Much quicker to deploy. In some remote areas, the local telephone company can take months to install a data circuit. In some cases, the LEC may not be willing to incur the up-front cost. VSAT equipment, on the other hand, can be set up relatively quickly — in a week or two. The only requirements are that electrical power be available and that the satellite be within the VSAT dish line-of-sight (proper angle).

  • Available in remote and underdeveloped areas. VSAT technology functions well in northern Alaska, Pitcairn Island, and Tierra del Fuego.

• Disadvantages:

  • Only moderately high uptime. Satellite communications cannot provide an extremely high uptime, such as 99.999. Providers such as Hughes will typically quote numbers such as 99.5 to 99.8 percent uptime. Unavoidable events such as extremely heavy rain, sunspots, and even solar transit outage cause the signal to degrade and thus interrupt transmission. In some cases, interference from improperly configured ground stations (bad polarity, for example) from other carriers can weaken the signal.

  • Transmission (propagation) delay. Because the signal must go up 22,300 miles from the VSAT and down the same distance to the hub (ground station), there is a noticeable lag time for interactive systems (0.25 second one way, 0.5 second round trip). This reduces the popularity of VSAT for traditional voice communications, although it can work in a "take your turn … Roger … over" mode.

  • High initial cost. VSAT equipment will cost an initial $6 to $8K per site, plus any monitoring equipment that the organization chooses to use. Also, satellite contrasts are lengthy, generally five years.

  • Limited uplink bandwidth. While large volumes of data can typically be downloaded from the satellite (e.g., for video), uplink from a single VSAT dish is typically less than 128 kbps.

  • Single point of failure. Satellites have a limited life (a 15-year-old satellite is an antique) and are subject to limited fuel to keep them in proper orbit, electrical breakdowns, meteors, being hit by other satellites, and other sources of destruction. For example, PanAmSat lost its Galaxy-IV satellite in 1998, resulting in widespread loss of paging services across the United States for a few days. To mitigate this risk, organizations can obtain rights to use a backup satellite from their provider. If the primary satellite fails, VSAT dishes must be repositioned to point to the backup satellite. Repositioning can take anywhere from a few days (best case) to several weeks for a large number of sites.

An important economic consideration for an organization with a large VSAT network is hub ownership. Firms with a smaller number of sites typically use their provider's hub and receive all communications via a dedicated leased line from the provider to their headquarters site. However, even at a cost of roughly $1 million, at some point hub ownership becomes a viable option. Only organizations committed to VSAT over a relatively long time period should consider this option, because the technical staff and expertise to operate a satellite hub are considerable.

Comparison of terrestrial network costs to comparable satellite numbers depends on a number of factors, such as:

• Number of sites

• Uplink and downlink bandwidth

• Service level agreements and disaster recovery requirements

• Price of the VSAT equipment

• Maintenance costs of the equipment (dish, RF equipment)

In one recent study, the cost of supplying comparable bandwidth to 1000 sites was found to be approximately $400 to $450 per site with Frame Relay and $150 per site using VSAT services (Global VSAT Forum, http://www.com-sys.co.uk/vsatind.htm). The authors have seen similar figures for other firms. Including video in the mix would make the cost disparity even greater.

Low Earth Orbit Satellite

The economics of wireless communications are not always suited to broad generalizations. Each business case must be considered individually. As an example, consider energy firms that use pipelines to transport natural gas across the United States. The pipelines must constantly be monitored for signs of rust to ensure that a gas rupture does not occur. One engineering technique long used by pipeline companies is cathodic protection, in which a metal rod is attached via wires to the pipelines and serves as a "sacrificial anode" to keep a correct electrochemical balance. In effect, the expendable rod rusts instead of the pipeline itself.

Because the metal rod eventually rusts out, inspections and replacements must occur on a regular basis. Trips to the more remote sites may require hours of "windshield time;" that is, a service technician driving a truck a hundred miles to spend a few minutes inspecting and possibly replacing the anode. Attaching an inexpensive transmitter to each site and then sending appropriate telemetry data to low earth orbit satellites can eliminate many of these inspection trips. The satellites, in turn, transmit to an Earth station. From there, the data is sent to a data acquisition center where appropriate maintenance reports are created.

Whether the above scenario makes economic sense depends on a number of factors: people costs, time on the road, unit capital costs (for the remote field transmitter), and system maintenance costs. Low earth orbit, or LEO, satellite transmission is relatively expensive on a per-packet basis. However, if the application requires only a small quantity of data per month (as in the previous example), LEO technology may be a good fit. Exhibit 2, courtesy of Orbcomm and Leocell, illustrates a typical implementation.

Exhibit 2: Low Earth Orbit Transmission Example

Bluetooth

For selected environments and applications, a radio-frequency, personal area network may be superior to its wired counterpart. Bluetooth is a popular, open standard for wireless transmission over a relatively short range (10 to 100 meters). It enables functions such as:

• Wireless LAN access

• Synchronization of PDAs and laptops

• Midrange bandwidth for connection to the Internet (up to 720 kBps): any Bluetooth-enabled device, such as a mobile phone, can link to the Internet if within range of a suitable access point

• Conferencing functionality: documents and business cards can be quickly exchanged among the participants

• Faxing

• Facilitation of electronic paper transmission: for example, a sales rep could fill out a form using a Bluetooth-enabled pen that records the motion of the pen on paper and transmits the order to appropriate servers via a nearby access point or receiving PDA

To some extent, Bluetooth competes with the older Wi-Fi wireless LAN specification. However, Wi-Fi is intended as a cable system replacement and has a higher bandwidth than Bluetooth. Wi-Fi does not fill the same market space.

From a cost perspective, implementation of wireless solutions depends on the organization's workforce. Some car rental companies, for example, use CDPD (wireless) to check out returning customers. Hospitals track patient records using secure wireless technologies as well.

Fixed Wireless Broadband

The slow speed of narrowband wireless communications such as cellular voice transmissions, CDPD, infrared, etc., reinforces the general perception that "wireless" denotes slow and error prone. In fact, there is no theoretical reason why fixed wireless systems cannot transmit very large quantities of data with extremely low error rates. For example, one of the networks discussed below, LMDS (local multipoint distribution services), tops out above OC-3 (155 Mbps) and is typically deployed at 45 Mbps downstream and 10 Mbps upstream. These networks use high-frequency radio connections to send and receive voice, data, and video; from the user's perspective, the result is no different than what would be expected from a copper- or fiber-based solution.

Fixed wireless solutions can often be a lower-cost alternative for broadband access, particularly in rural/low-density areas within the United States. Internationally, fixed wireless is increasingly popular due to its quick deployment, avoidance (from the carrier's perspective) of heavy infrastructure development, and, for some very poor nations, the absence of copper wires, which are sometimes stolen.

From an architectural perspective, broadband wire line access methods, such as xDSL and cable modem, compete with fixed wireless solutions. All these solutions are targeted toward solving the "last mile" problem — getting broadband to the customer's premises. When reviewing options, an organization should consider the following issues:

• Advantages:

  • Fixed wireless can be the lowest-cost alternative.

  • The technology is quick to deploy. In some U.S. rural or international locations, wired broadband access can take several months (T1 drops can take up to nine months in some areas). Fixed wireless antennas and services can sometimes be implemented in weeks.

  • Coverage increases are incremental (just add more receivers/transmitters).

  • Legal/governmental regulations are much easier to address. For example, easements or special licenses are not usually required from the end customer.

  • Under certain circumstances, fixed wireless can deliver more bandwidth than xDSL or cable.

• Disadvantages/concerns:

  • Some technologies require line-of-sight from transmitter to receiver.

  • Tall buildings, mountains, and heavy rainfall can interfere with signals for some of the networks.

  • Standards for equipment have not yet crystallized, resulting in uncertainty in the marketplace and a smaller number of equipment vendors creating the equipment.

  • Economies of scale are still needed to achieve lowest pricing to the end user.

Listed below are the most common broadband access options using fixed wireless.

LMDS (Local Multipoint Distribution Services)

Operating in the 28-GHz range of the spectrum, LMDS provides transmission rates exceeding OC-3 (155 Mbps). A typical deployment provides 45 Mbps downstream and 10 Mbps upstream. Well suited for urban areas, LMDS can be considered "ersatz fiber" when installed with sufficient cell overlap to reduce the effects of heavy rain. One limitation is that line-of-sight is required and wireless links (transmitter and receiver) must be less than 2.5 miles from each other.

MMDS (Multichannel Multipoint Distribution Services)

Although it has been used for more than 25 years to transmit television signals, MMDS is now finding a new niche in the high-speed Internet access service world. It does not require line-of-sight transmission and can work effectively over 35 miles. At 10 Mbps, downstream speed is considerably less than LMDS but its lower frequency range makes it less susceptible to weather interference.

After gaining an understanding of the technologies available and the financial consequences of options within each technology, the next step is to perform a comprehensive review of the existing network.

Frame Relay | Wide Area Network Technology Options

In the 1970s and 1980s, IBM mainframes were so dominant that the comment "no one ever got fired for buying IBM" became a cliché. Frame Relay now appears to have a similar cachet — the service is low cost, almost ubiquitous in the United States and reliable. Also, contrary to general perception, Frame Relay is expandable well beyond T1 speeds and, in fact, has no specific bandwidth limit (e.g., Verizon offers speeds up to 44 Mbps). So any organization considering a WAN deployment should include Frame Relay as a priority option.

Why Frame Relay rather than traditional circuits (e.g., T1s or ISDN)? Frame Relay costs less for the same throughput because it more efficiently uses bandwidth. As the successor to the hoary X.25 standard, ^[1] Frame Relay allows multiple customers to share the bandwidth of a physical connection by taking advantage of the bursty nature of data transmissions (bandwidth on demand). It supports applications such as host-to-host/LAN-to-LAN links, telecommuting, multiple user Internet access, PBX-to-PBX communications, and passable voice/video communications.

The cost for Frame Relay service usually includes three elements:

1. PVC (private virtual circuit), which is usually related to the CIR (committed information rate)

2. Port charges

3. Access to the premises

It would seem that with only three major cost elements, comparing service offerings would be straightforward. Unfortunately, there are a number of factors that complicate the analysis. Following are key factors to consider.

Port Size, CIR, and Discard Eligible Flag

A rough rule of thumb that some network designers use is to set the CIR at half the port size (e.g., a PVC with a port size of 512 kb might have a CIR of 256 kbps). A better approach is to understand the bandwidth requirements of the organization's users and applications and set port size and CIR at optimum levels.

Assume, for example, a Portland field office is connected to the New York headquarters building. Portland has low bandwidth requirements but needs to be able to connect at any time (and not be subject to bottlenecks during busy times of the day). Portland might have a port speed of 128 kbps and a CIR of 64 kbps. In addition, there are six other field offices that transmit to headquarters, with the same specifications. The headquarters port speed is set at 256 kbps, with a CIR of 128 kbps. Clearly, headquarters is seriously oversubscribed. That is, if all sites transmit at once, headquarters will not be able to handle the volume. If the business environment is such that the network designer knows all six will not be transmitting at once, this can be a practical way to minimize costs.

If the network designer also knows that users in field offices can tolerate some transmission delay, further savings can be obtained by reducing the CIR, maybe even down to zero. At zero CIR, all packets are marked as "discard eligible" and are marked for a later transmission.

Asymmetric PVCs

Some carriers, such as AT&T, allow PVCs to be configured with CIRs (committed information rates) that are not equal in both directions. For example, assume a firm's corporate office is in Knoxville, Tennessee, and one of its field offices is in Houston, Texas. Data transmission from Houston to Knoxville may require a CIR of 64 kbps, whereas Knoxville to Houston may only require a 16-kbps CIR. If the carrier permits asymmetric PVCs, they should be considered because many times traffic is unequal between sites. Because the CIR is one factor driving Frame Relay charges, use of this technique can drive down costs with no decrease in service levels to the organization. Many WANs using Frame Relay have been implemented without fine-tuning for unequal traffic.

Multi-Carrier Networks

Many Frame Relay networks are single vendor from the IXC (interexchange carrier) POP to the destination. The local access link may be provided by the LEC, but the Frame Relay network itself is all one vendor. An alternative and more economical solution is to use a LEC Frame Relay network to concentrate traffic to a hub within an intraLATA area, and then transmit to major sites using IXC Frame Relay facilities. The critical factor is the access link. There are two disadvantages to this approach: (1) additional time is required to negotiate and manage separate vendors, and (2) some network management information is lost when Frame Relay packets cross vendor boundaries.

Exhibit 1 illustrates the multi-carrier approach. This solution only makes sense if the organization's topology fits the scenario — smaller locations in relatively close proximity to a hub location (within an intraLATA boundary). The alternative to this approach is to connect each site directly to the IXC POP.

Exhibit 1: Multi-Carrier Frame Relay Configuration

PVC versus SVC

Initially, carriers set up Frame Relay circuits with dedicated, permanent virtual circuits (PVCs) that required an always-up access circuit to the POP. However, switched virtual circuits (SVCs) are now available for organizations that need (1) less frequent access to the network, or (2) more dynamic connection requirements. An SVC is started by the user, then the data is sent and the connection is torn down as in a traditional telephone call. SVCs are less expensive than PVCs up to a point (similar to traditional dial-up per-minute charges versus a dedicated circuit). Aside from lower transmission costs for limited duration sessions, SVCs offer other potential benefits:

• Reduced equipment costs (FRADs ^[2] and router serial ports) relative to a complete PVC implementation, particularly as the network grows in a highly meshed configuration.

• Inexpensive disaster recovery capability. Ongoing backup PVC costs are not incurred and regular database updates for backups can be scheduled as appropriate.

• Temporary, any-to-any connections. These limited-duration links eliminate the need for PVCs between sites that only occasionally communicate with each other.

• Simplified administration. Preconfiguring and managing PVC changes are time-consuming. For highly meshed networks, SVCs can reduce network configuration maintenance.

The above advantages are contingent on the availability of SVCs from the carrier and on user requirements. Also, at certain volumes of traffic, SVCs are no longer economical — sites should be periodically reviewed for appropriate technology. Unfortunately, many carriers do not offer SVCs.

Frame Relay over DSL

Increasingly, CLECs are offering Frame Relay via a DSL link (FRoDSL). Combined with the increased ability of providers to monitor commercial DSL and provide service-level guarantees, this option can provide significantly lower access costs.

Voice Communications Networking

Voicemail

Voicemail, which became widespread in the 1980s, was originally considered a substitute for a live person at the other end of the line. More recently, however, a shift in usage toward intentional messaging has occurred. Where there is no need for dialogue, voice messages can be recorded and sent quickly to an individual extension or distribution list.

Most major voicemail vendors have long provided the ability to transfer voicemail messages from one location to another over dedicated lines or the PSTN (public switched telephone network). For example, Avaya's Audix system can forward messages to another Audix server or to a different vendor's voicemail system using the AMIS (Audio Messaging Interchange Specification).

More recently, a new standard called VPIM (Voice Profile for Internet Messaging) has been developed, which allows voice messages to be packetized and sent over IP networks (or the public Internet). Most major voicemail vendors, including Avaya, Nortel, Siemens, and others, are implementing this standard into their voice messaging products. VPIM provides both economic and functional benefits:

• Conserves bandwidth. The message is packetized and compressed to one half its original size.

• Simplifies distribution. As more voicemail systems become VPIM compatible, distribution to multiple locations is easier.

• Improves efficiency of message broadcast. The older AMIS system sent messages one at a time, even if many users at a distant location were receiving the same message. VPIM sends a single message, which is then addressed to multiple recipients, resulting in both a quicker and more efficient (i.e., less bandwidth) transmission.

• Integrates easily with unified messaging. Sending and receiving voicemail messages in VPIM format is more straightforward, because the transmission is treated as a special, multimedia e-mail.

Exhibit 2 illustrates the use of VPIM for voicemail message transmission.

Exhibit 2: Transfer of Voicemail Messages Using VPIM Protocol

Virtual Private Network (VPN)

The term "virtual private network" has become closely linked with substitution of an IP-based public network (usually the Internet) for dedicated or leased facilities. Instead of leasing a T1 or Frame Relay circuit to link office A to a distant office B, an encrypted "tunnel" can be established across the Internet to securely transport data packets. Originally, carriers such as AT&T used the concept of VPN (called SDN by AT&T) to describe a logical private network for each customer using the service. The term "virtual" was used because the actual hardware, software, and circuits are shared among all the carrier's customers, but the end customer perceives the service as a dedicated facility.

VPNs reduce long-distance communications costs — particularly for international sites — by eliminating much of the IXC expense. However, there are start-up and maintenance charges that can make a VPN implementation uneconomical for certain volumes of traffic. Also, VPNs that use the public Internet are subject to the vagaries of events on the Net — congestion, irregular quality of service, etc.

Exhibit 3 shows a typical VPN configuration. The example shown is for data communications only. Although voice over the public Internet may yet have its day, currently the quality of service (QoS) on the Internet is not adequate for most enterprises. Voice-over-IP, using private transmission facilities with guaranteed QoS, is discussed in another section of this chapter.

Exhibit 3: VPN/Firewall Deployment with Security and Monitoring

Generally, most medium to large organizations that have multiple, dispersed sites can use VPN technology to supplement (rarely to completely eliminate) their existing wide area networks. The likelihood of a good fit increases dramatically if the organization incurs a large dialup (800 number) bill, typically associated with a RAS (remote access service) implementation. Indeed, organizations such as PricewaterhouseCoopers, having thousands of professionals on the road, have saved hundreds of thousands of dollars annually by sharply reducing long-distance dialup minutes.

When considering implementation of a VPN, there are a number of financial, business, and security issues to consider:

• Advantages:

  • Replace some dedicated lines, such as T1s, with transmission over the Internet (e.g., backup T1s could be eliminated). The organization must be aware of the caveats, such as the potential for Internet congestion and poor quality of service.

  • Eliminate some or most RAS dial-up charges. While ISPs may charge a per-hour charge for users tunneling through a VPN, those charges are significantly less than IXC per-minute charges. For example, a large organization might negotiate a $1-per-hour ISP connect time charge, whereas the same charge for an hour of toll-free dial-up could be $5.00.

  • Enable quick bandwidth increases by adding additional ports (compared to lead-times of two to eight weeks for new T1/T3 services).

  • Facilitate extranets for customers, suppliers, and partners, and provide additional E-commerce functions.

  • Make secure intranets available to field offices around the world (at a reasonable cost).

  • Provide high-speed services to telecommuters who have broadband access in the home/small office. For example, VPNs can operate over cable modem lines or DSL. With this capability, some jobs can be accomplished off site that might otherwise require office space/equipment.

  • Reduce management costs of a WAN by using a fully integrated, secure VPN solution, in contrast to the traditional plethora of network access gear.

  • Reduce the number of access lines for some field offices. If the office has a separate line for Internet access and data communications (e.g., for Frame Relay), VPN can eliminate one access line.

  • EDI (electronic data interchange) communications costs can be reduced by establishing an extranet using a VPN and eliminating use of a value-added network (VAN).

• Disadvantages/concerns:

  • VPNs are more complex to manage. Some organizations outsource the management of the VPN network.

  • VPN is not always the answer. For example, a small network with low bandwidth requirements may be better served via a Frame Relay solution (less expensive edge equipment, less maintenance).

  • The public Internet occasionally suffers congestion. Although this may someday change with the introduction of MLPS, ^[3] for the moment it is a significant concern for organizations that must have extremely high uptime. Some vendors offer fail-over capabilities that allow traffic to be sent over an alternative link (e.g., dial-up ISDN) if the Internet is congested.

  • The level of available VPN encryption, while certainly adequate for any domestic U.S. commercial needs, may not be available for some international traffic due to government restrictions. However, this may be changing, at least for some countries. France, for example, has long required that encryption be no stronger than that afforded by a 40-bit key. Recently, the maximum permitted length has been increased to 128 bits, a considerable increase in security levels.