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Story URL: http://www.silicon.com/research/specialreports/voip/0,3800004463,39128168,00.htm

VoIP set for high-street boom?
LloydsTSB on board, Virgin Megastores 'thinking about it'

By Will Sturgeon

Published: Thursday 24 February 2005

A number of high-street names are making the move to voice over IP (VoIP) telephony with a rollout now underway at LloydsTSB and Virgin Megastores currently assessing the business benefits of a VoIP implementation across the UK and Ireland.

The VoIP implementation being rolled out at LloydsTSB will see the bank install 70,000 Cisco internet telephony handsets in 2,500 branches and 1,000 other sites across the UK. The rollout represents one of the largest of its kind in Europe.

UK virtual network operator Vanco is handling that contract as part of a £19.1m deal it won from IBM, which holds a £500m contract with the UK bank.

Another Vanco customer, Virgin Megastores, has admitted it too is currently assessing the business benefits of a move to internet telephony.

Allen Timpany, CEO of Vanco, told silicon.com growth in VoIP will be steady but not spectacular.

"LloydsTSB is a visionary and Virgin has traditionally been a visionary business but this won't be for everybody," he said. "These guys are typical of the early adopters."

"Around 80 per cent of the networks we are developing are being developed with VoIP in mind, with companies now anticipating it could become a matter for consideration in the next couple of years," said Timpany. "But two years from now I think it will still only be around 20 to 30 per cent of businesses who use VoIP."

Timpany believes VoIP will work best for companies with large regional or overseas offices because they typically have large volumes of intra-company voice traffic.

Tony Johnson, CIO of Virgin Megastores, told silicon.com: "We're currently assessing whether there is a business benefit in VoIP."

Johnson said one consideration is whether past investment in the existing voice infrastructure across the business has run its course or whether a switch now would move that investment to end-of-life ahead of its natural time.

"Of course the network is there for voice over IP," he said. "But are we ready to write off our previous investment in voice just yet?"

It's a point Timpany and telecoms analyst Morten Singleton from West LB agree on.

"A lot of the reasons why people are looking at VoIP now is because of a natural replacement cycle," said Singleton.

Timpany also believes "application development will be key". Companies will see benefits beyond cost - such as the integration of email and voice applications.

West LB's Singleton said: "For a lot of people VoIP is not just about cost savings. It rests on all the extra stuff you can do with it."

Certainly handset costs, often regarded as a stumbling block, won't prove fatal to the take-up of VoIP.

"It's one element but we all know those costs will come down over time as we've seen in the past with all high-tech equipment," he said.