Don Proctor On The Inexorable Rise Of IP Telephony Around The World

December 23, 2003

From technological curiosities just a few years ago, voice over IP and IP telephony have grown in importance to a point where it is almost difficult to find an enterprise or service provider that is not looking into the migration of its voice services to IP - or has not already made the switch.

The reasons for this trend are not hard to find and include, among others, increased user productivity and the ability to transport voice calls cost-effectively in network environments that are now dominated by data.

Cisco Systems® has been at the forefront of this change and has unparalleled experience in the implementation of IP telephony systems the world over.

In this special feature, News@Cisco talks to Don Proctor, vice president and general manager of the Voice Technology Group at Cisco, about IP telephony's spectacular rise worldwide.

How has demand for IP telephony been growing worldwide?

Don Proctor: Since we introduced our first IP phone in 1999, there have been thousands of public branch exchange (PBX) replacements and our customers have enjoyed significant benefits from their adoption of IP telephony.

However, the market has really taken off this year. In August of 2002, Cisco announced that it reached the 1 million milestone for IP phones sold, an accomplishment that took the company three and a half years to achieve.

Since then, Cisco has sold an additional 1 million-plus IP phones to customers.

Today, Cisco's next-generation IP communications systems - which include all technologies which enable converged communications over a single IP-based network, including IP telephony, which specifically refers to packet-based telephone systems over IP - are helping more than 10,000 organizations worldwide to increase their productivity and business flexibility.

Is IP telephony being adopted in a similar way across territories?

Don Proctor: No. We have seen voice over IP and IP telephony emerging in some fairly distinct ways.

In the US, for example, the take up of IP telephony has largely been driven by big, multi-site or multinational enterprises where there is a significant return-on-investment advantage to deploying centralized voice technology that provides voice services to remote offices through the company's IP networks.

That is quite different to what we are seeing in Europe, where mid-sized companies were among the first to adopt the technology, typically using customer-located equipment or getting managed services through a service provider.

In Asia, service providers play a much larger role.

The largest voice-over-IP network, in fact, is a Cisco network for a service provider in China. And the dynamics of the market are often based on the fact that service providers are deploying voice services in green-field environments which had no voice services in the past.

What kinds of applications are helping to drive up take of IP telephony?

Don Proctor: The ability to relocate employees within an enterprise easily and cheaply is an obvious one, but there are many others that are more exciting. At ITC Expo this year, for example, we had 75 companies demonstrating a wide variety of compelling productivity applications using Cisco IP telephones.

In which regions is Cisco selling IP telephony most actively?

Don Proctor: Our business is fairly well balanced, with a slight bias towards the US. We are shipping more to the US than any other theatre but in terms of growth, Europe is very strong. Asia is in third place in terms of shipments, with solid growth in Australia and New Zealand.

Earlier this year we announced that we had shipped more than 50,000 IP phones to more than 200 customers in Australia alone.

The analyst group Frost & Sullivan gave us a 38.5 percent share of the Asia Pacific market, including Japan, in 2002, making us the market leader in the region.

What ambitions does Cisco have in the IP telephony market?

Don Proctor: Today, Cisco has sold more IP phones than all of our competitors combined and is the clear market leader. Strategically, we are following a unique course. Our objective is not just to be number one in IP telephony - we want to be a market leader in business voice.

That represents a US$14 billion market worldwide, including telephony infrastructure, applications, call center equipment, gateways and so on.

What is Cisco doing to achieve this success?

Don Proctor: We will achieve it, one, by helping our customers accelerate the transition to IP telephony and, two, leveraging our position as a global player.

We have already localized our products for dozens of markets in Europe, Asia and Latin America. We even have Canadian French language support.

Because traditional TDM-based telephony systems were historically so tightly meshed with public switched telephone networks in each country, it was difficult for vendors to deal with some of the issues related to transport.

We can overcome many of these challenges with IP while implementing region-specific protocols such as Q.Sig and DPNSS as needed.

What is the future for IP telephony?

Don Proctor: I believe that in a very short period of time we will see a world where every phone is an IP phone. It is the fastest-growing segment of business communications and we are the leader.

I am excited by the opportunity of helping companies to cut the costs of their voice communications and also help their employees be more productive.