VoIP for Retail --Spring 2008

Heeding
the CALL
of IP Telephony
Providers of advanced communications
solutions DIAL INTO specialty retail
by Martin Vilaboy
Small and specialty brick-and-mortar retail operations
haven’t exactly been a primary target for
providers of data and communications services.
That’s probably no surprise, since most retailers
connectivity needs have been fairly modest
– T-1 Internet connections or less, a handful of phones,
mostly local calling, with some messaging – certainly less
than a few other small business verticals, such as small
law and medical offices, tech start-ups, financial services
and local banks, to name a few.
But independent retailers, all of a sudden, have appeared
squarely on the radar of providers of advanced
and emerging connectivity and communications services.
It’s not so much that specialty stores have seen dramatic
changes in their voice and data needs, though changes in
the way we all communicate are occurring. It’s more that
20 | InsideOutdoor | Spring 2008

many retailers fit the mold of operations that stand to reap the
most gains from the capabilities that can and are being wrought
by advanced communications.
Touting “enterprise-class functionality at small business prices”
and overall savings in voices services spending, groups of advanced
communications providers have zeroed in on businesses
that operate multiple offices or branch locations (each with about
five phone lines or less); owners-managers that need to be accessible
but rarely can be found at their desks; employees who
share desks and phone lines; modest local networking requirements
with little or no “telecom equipment” on site; and some
customer service functions moving to the Web. Sound familiar?
For most purposes, we’re talking here primarily about “IP
telephony,” also known as “VoIP,” or “voice over Internet protocol.”
It’s important to note that while IP is short for “Internet
protocol,” it doesn’t necessarily mean on or utilizing the public
“Internet,” nor is it limited to PC-based calling. IP just happens
to be the protocol behind the “Internet” we all know and use.
In other words, while the much-advertised Vonage telephone
service, for example, sends calls over the public Internet,
other providers of IP communications have built private IPbased
networks that in no way ever touch the public Internet,
and therefore are not susceptible to the quality and reliability
issues of the public Internet. But by being fully compatible and
interoperable with the widely available and easy-to-access public
Internet, IP networks allow providers to develop and deliver
new and existing communications services much more affordably
than ever before, often on a nationwide or global basis.
Use of VoIP Products and Service by North American
Businesses, 2005
Small Businesses
Medium-Sized
Businesses
Large Businesses
14% 23% 36%
Source: Infonetics Research
For starters, on IP-based “packet switched” networks, time
and distance are less relevant than in the old world of the “circuit
switched” telephone networks, so the line between local
and local distance calling has been blurred, and as such perminute
pricing plans are all but disappearing, much as has happened
with cell phone plans.
So, if you currently are paying per-minute fees for long distance,
and your monthly phone bill is significant, IP telephony
services definitely should be a consideration moving forward.
At the very least, IP telephony providers tend to offer free or
unlimited “on-net” calling, such as the calls between dispersed
branch locations.
Of course, phones bill are a fairly modest chunk of retailer
operating expenses, so even a good percentage of savings may
not necessarily be enough to encourage a switch in telephony
services. Savings can be driven further, however, by bundling
landline voice services with other applications such as Internet
access or even mobile services. The upside for subscribers
of bundled plans are one point of contact for all services (i.e.
one bill to pay) and discounts for buying multiple services
from one provider.
Source: 8.0% NSGA
7.0%
Linear (Footwear)
6.0%
How Does Your VoIP Service Compare to Your Old Service
(Among 5.0% companies with 100 or fewer employees that have adopted VoIP)
4.0%
100
3.0%
2.0%
801.0%
60
40
20
0
9.0%
0%
68%
12%
8% Linear 8% (Footwear) 28%
20%
16%
8% 8%
Source: NSGA
Cost
1999
84% 60% 64% 80% 92%
84% Equipment
84% 92%
Moves, Adds,
Changes
2000
Footwear 8%
Linear (Equipment)
24%
Management
2001
Call Quality
2002
Reliability
2003
16% 12% 4% 4%
4% 4% 4% 4%
Routing
2004
Features
Capacity
How Does Your VoIP Service Compare to Your Old Service
(Among companies with 100 or fewer employees that have adopted VoIP)
VoIP Worse About the Same VoIP Better
100
Multi-Location
Source: Savatar
80
This “convergence” of services is where IP telephony gets
really
60
interesting, beyond just the potential cost savings. To
simplify Would you matters, recommend convergence VoIP service is when to
84% 60% voice and messaging
64%
services, your business 68%
Internet peers? connectivity and 80% all related data
92%
services are
40
84%
84% 92%
delivered using the same network through one connection to
8%
the customer 12% premises, 24% with increasing levels of cross functionality
20
2%
between the services.
100
4% 34% 8% 8% 21% 28%
16% 39%
<
Consider, 20% for example, 16% a link on a Web 12%
site 4% 4%
8%
that a consumer
8%
4% 4% 4% 4%
anywhere 0 on the globe can click, from a computer at their home
or on a sales floor, and instantly be connected to a live, human attendant
who speaks the caller’s language and can handle orders,
frequently asked questions, take a message or forward the call 100 to
4% >
VoIP 20% Worse 24% About the Same 52% VoIP Better
the phone of the proper recipient, all for a monthly fee that easily
can be justified by a small amount of newly generated business.
Source: Savatar
Taking things one step further is “fixed-mobile convergence,”
whereby applications seamlessly travel across
0 20 40 60 80 100
both
Cost
Moves, Adds,
Changes
Management
Call Quality
Reliability
Routing
Features
Would 1 you recommend 2 VoIP service 3 to 4 5
your business peers?
Not Recommend Recommend Highly Recommend
2%
Source: Savatar
4% 34% 21% 39%
4% 20% 24% 52%
Source: Savatar
2005
Capacity
2006
Multi-Location
0 20 40 60 80 100
1 2 3 4 5
Not Recommend Recommend Highly Recommend
Employees
Employees
100
<
Employees
100
>
Employees
Spring 2008 | InsideOutdoor | 21

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wired and wireless devices. Such services
can automatically forward and direct all
calls (desk, mobile or home phone, for example)
to whatever device is selected by
the subscriber according to time of day,
who is calling, the type of call or other
factors determined by the subscriber.
This is not down-the-road technology.
Rather, theses capabilities already exist, with
most already on the market. And a good deal
of these technologies now are working their
way down market, from Fortune 1,000 and
carrier-level networks to within the reach of
small and very small businesses.
What makes the move down market
possible are a current crop of fully managed
IP communications solutions that remove
all the big hardware and complexity from
the customer premises and places them on
the service provider’s facilities. At one time,
deploying advanced and customized communications
applications required sophisticated
equipment reside at the customer
site or sites and a tech staff be employed to
run things. That’s no longer necessary in
the software-driven IP-based environment,
where voice functionalities, settings, security,
management and remote monitoring all
can be hosted securely by the providers and
delivered for a fraction of former prices.
One such example is multi-location
phone service. Capabilities such as fourdigit
extension dialing to multiple stores
and home-based workers, hunt group
lists, automated attendant/interactive
voice response systems that answer and
direct calls across all extensions or offer
a menu of selections (Press 1 for store
hours, 2 for directions, etc.) and self-administration
tools now can be delivered
without the installation of expensive private
branch exchange (PBX) systems.
Unified messaging, meanwhile, combines
a user’s voicemails, emails and
faxes into one in-box where they can be
viewed and/or directed to the desired
device. Other capabilities of a unified
messaging suite typically include call
screening and preview, do-not-disturb,
one number to receive all phone and fax
messages, call detail records, message archiving
and “find me follow me.” Among
the services gaining early traction with
small business executives and owners,
“find me follow me” automatically dials
a pre-assigned group of phone numbers
until the subscriber is found and the call
is answered, depending on how accessible
that user wants or needs to be. Users
also can direct calls based on day, time,
who is calling or availability, and special
rings can be assigned to certain callers.
Combine the capabilities of find me follow
me, automated voice response, multistore
phone service and click-to-call Web
links and the potential includes providing
a link from an Internet-enabled PC located
on a sales floor that a customer can click
to get a question answered by any department
or expert at any of the connected
stores or home offices, no matter where
that employees is at that moment.
More to the present, existing hosted
IP telephony services include many of
the above features at prices that are below
what most retailers likely pay for
their standard business phones lines
from the dominant telecom providers.
IP-based providers will come knocking
with promises of as much as 50 percent or
more savings off your current phone bill,
but something around 20 to 30 percent is
more reasonable, says Frank Paterno, vice
president of marketing for Intelliverse, a
provider of hosted IP communications.
Intelliverse’s CompleteCall hosted
VoIP service, for example, offers local
phone numbers, unlimited nationwide
calling, multi-store services, unified messaging,
automated attendant, find me follow
me, one number service and more for
about $50 a month per line.
To get on board with the service, it’s
likely new desk phones will be needed or
an adapter be installed so the old phones
can interact with the new network. It also
assumes an existing Internet connection
can handle the load, as the Complete-
Call solution falls under the “bring your
own broadband” scenario. And since
voice traffic is now traveling on the data
network, there must be adequate bandwidth
or voice quality can suffer, which
may be okay for interoffice calling but is
not something customers and partners
should experience.
The big issue with the “bring your own
broadband” approach is the hosted provider
has no control over their customers’ “last
mile connection,” which brings the Internet
into the building. So if the Internet connection
is spotty or temporarily goes down, so
might the voice services in some capacity,
unless a back-up method is deployed.
22 | InsideOutdoor | Spring 2008

In most cases, retailers with a T-1 line or higher are good to
go. A typical digital subscriber line (DSL) or cable modem connection,
meanwhile, normally can handle three to four phone
lines, says Paterno, and still leave enough room for Internet usage,
assuming Internet usage at a location is not too heavy, such
as multiple users on the Web surfing simultaneously and heavy
downloading/uploading of video and graphic files.
In terms of bandwidth allocation, “when it comes to voice
over data, it doesn’t really matter whether you have three or
four phone numbers or how many phone lines or how many
people are at a location. What matters is how many people are
talking or using the Internet at the same time,” says Paterno.
In other cases, some IP-based providers
will require that customers purchase
Internet connectivity from them in order
to get the IP communications solution,
or purchase the data connection from a
partner provider. This approach allows
the service provider to control the last
mile connection to better guarantee the
quality and reliability of the service. It
may or may not save the customer money
over their current voice and Internet
services spending.
Since the voice and data networking
requirements of most specialty retailers
are relatively simple, either option
should be viable in most instances. But
quality and reliability, as well as security,
are important considerations, and so far
have been the primary drawback of VoIP
services. Where the old public switched
telephone network (PSTN) provided
99.999 percent reliability, IP-based voice
networks tend to hover around the mid-
90s in terms of service reliability, particular
those services that utilize the “bring
your own broadband” approach.
On the other hand, performance assurance
continually improves, with service
level agreements now being offered
by select IP telephony distributors.
After all, VoIP still may be a novel concept
to the greater population, but the platform
is actually somewhat mature, widely
deployed for several years across telecom
carrier and enterprise networks. One big
reason why most people are not yet familiar
with VoIP is because the large incumbent
phone companies (Verizon, AT&T, Qwest)
have been given little incentive so far to
cannibalize their existing revenue streams
by offering customers a cheaper way to do
the same thing: make phone calls.
The shift is coming, however, as global
networks migrate fully to IP and the old
circuit-switched, copper networks, which
are more complex and costly to manage, manipulate and upgrade,
are eventually retired. Already, investment in the old networks
has all but ceased.
That’s not to say you will wake up one day and your
legacy-based services will be turned off. The point, rather,
is that a time is coming when the lower cost structures and
higher levels of functionality and innovation made available
through IP networks will be the norm, so the bar will be
raised in terms of how a company communicates internally
and with its customers and partners. And it’s always best
to be somewhat informed and prepared for when the time
comes to make the switch.
Spring 2008 | InsideOutdoor | 23