Consumer demand for cheaper and more effective technology is set to force large corporates to adopt voice over internet protocol (VoIP) sooner than they have planned.

Most new technology hits the corporate market first, before filtering down to consumer level as it becomes less expensive and more accessible. However, the reverse is likely to be the case with VoIP, according to leading global IT services company Computer Sciences Corporation (CSC:NYSE).

VoIP involves the convergence of voice telecoms and computer data by moving call traffic onto one simple network, the internet. Its application has traditionally been confined to the business world, but a number of domestic VoIP providers have entered the market recently, attracting consumers with the promise of no traditional call charges if they make phone calls over a broadband connection. Together with the widespread adoption of wireless networks in the home, this is leading to the next wave of convergence – between mobile and fixed telephony.

“A challenge to corporate IT departments is that the consumerisation of technology is setting much higher expectations in price and functionality amongst their user base,” said James Walker, director of managed network services EMEA at CSC.

“The internet revolution of the 1990s was driven by more the ability of more powerful PCs to compress data to get it down a slow, 56khp connection. The next phase of the internet revolution is driven by universally available broadband. Coupled with cheap, easy to install consumer wireless network devices, individuals have now have access to a richly functional high capacity network for £20 or £30 pounds a month that that until recently was only available to corporates for several thousand pounds a year.

“This has empowered users and democratised their access to technology to a much greater extent than ever before, with the result that they now question why their corporate IT department is able to supply so much less than they have at home when it has a budget that is so much more.

“As VoIP becomes more common in the home, which is happening rapidly, then there is little doubt that consumer pressure will force corporates to move it up the agenda from a medium term strategy and adopt the technology in the short-term.”

Early attempts at VoIP were plagued by technical glitches and poor call quality, but this has improved enormously and the use of wireless WiFi networks to carry calls will inevitably lead to VoIP creating real competition for traditional mobile phones.

“Most innovations are driven by tariff avoidance. That is, finding another way of doing pretty much the same thing, only cheaper,” added Walker.

“As globalisation intensifies, mobility increases and businesses become more customer centric, organisations are being driven to optimise their working practices and business processes so that their workforce is equipped with full business functionality and is able to operate effectively anywhere in the world at any time, day or night.

“VoIP is being driven by the younger end of the market because they so reliant on their mobile phones that many do not have fixed landlines at home. The convergence of mobile technology, as well as data and fixed-line voice, is just around the corner. This will inevitably lead to decreases in price and if the quality of WiFi VoIP calls is as good as, or even better than, mobile phones, then this could have a significant impact on the revenues of GSM operators.

“Again, this will be consumer-led, but corporates are aware of what is happening, particularly as tariff avoidance is a likely outcome. Very few companies are now investing in TDM (time division multiplex) systems, the traditional way of putting voice onto a wire, as everyone is now buying into IP.

“What corporates have realised is that mobile phone technology is overtaking land-based PBX and that mobile calls now represent a significant portion of the telecoms cost. As the new wave of VoIP WiFi technology comes onto the market it could become a serious direct competitor for 3G GSM technology.

“However, it could be that the technologies end up complementing each other as what is not yet possible is full mobile use of VoIP WiFi systems, so you will find technology utilising it within companies’ premises and then switching to GSM outside.

“For example, in the UK, BT has recently launched a product called BT Fusion, a mobile phone that automatically switches from GSM outside the home to landline call rates within the home area using broadband VoIP technology. This is a clear indicator that wireless/landline convergence is now a reality in the retail market.

“In the near term we will see similar products and services becoming available to the enterprise market. This represents a real opportunity for enterprises to reduce their mobile telephony costs as the majority of business related mobile calls are made from either an office or home location.

“The convergence of voice and data and the convergence of wireless and wireline, together with falling costs and the need for mobility driven by both consumers and enterprises, will dramatically affect the rate of adoption of VoIP.”

About CSC
Founded in 1959, Computer Sciences Corporation is a leading global information IT services company. CSC's mission is to provide customers in industry and government with solutions crafted to meet their specific challenges and enable them to profit from the advanced use of technology.
With approximately 79,000 employees, CSC provides innovative solutions for customers around the world by applying leading technologies and CSC's own advanced capabilities. These include systems design and integration; IT and business process outsourcing; applications software development; Web and application hosting; and management consulting. Headquartered in El Segundo, Calif., CSC reported revenue of $14.1 billion from continuing operations for the 12 months ended April 1, 2005. For more information, visit the company's Web site at www.csc.com.