RealTime IT News

Ford in Major Shift to VoIP

UPDATED: Ford Motor Co. will move 50,000 employees at 110 facilities to Voice over IP calling, a ringing endorsement for the emerging technology's performance and reliability.

SBC Communications will design, install and manage the project using IP phones and network equipment from Cisco Systems . Network consultants from Callisma, which SBC bought in January, will play an important planning role.

"This is a really, really big deal," Bryan Van Dussen, director of telecommunications strategies at Yankee Group, said, adding that the large rollout validates the go-to-market strategy of SBC, AT&T , Verizon and telecoms that are readying enterprise VoIP offerings.

The Ford VoIP deployment will occur over three years and impact the headquarters and other facilities in southeast Michigan. Financial terms were not disclosed.

Profits aside, the Ford contract could serve as a case study for SBC and Cisco to present to other large corporations that may have misgivings about VoIP.

"Ford is going to realize several efficiencies through this migration," Wes Warnock, an SBC spokesman, said. "As more businesses come to see this potential, we'll see even more interest [in VoIP]."

Ford is expected to save money over its Centrex phone system in several areas, including the decrease in its long-distance bills. The company also expects system maintenance to decline by shifting voice and data onto a single IP network.

Also, IP telephony service makes handling employee moves more efficient, because businesses can scale up or down without calling vendors or ordering new cards. That cost could be significant in a company the size of Ford.

Warnock declined to say whether the contract includes an option to expand the rollout further after 2008 to Ford operations outside Michigan. He also declined to say whether SBC has received, or expects to receive, inquiries from others in the notoriously competitive auto industry.

For Cisco, the deployment solidifies Cisco's position as the leading IP phone vendor.

According to Kevin Mitchell, directing analyst, service provider networks at Infonetics, the company could gain from other upgrades that often accompany large-scale VoIP deployments.

VoIP has been gaining momentum in the last 18 months, but primarily in the consumer market. Businesses have been more cautious because of concerns over the quality of service. Early VoIP service experienced problems with the clarity of the signal, as well as delays in transmission -- obstacles enterprises were not willing to endure.

In addition to improvements in the service, the FCC has indicated it will take a hands-off approach when it comes to imposing fees on VoIP service. And although several issues like 911 and the ability for federal authorities to wiretap VoIP calls need to be addressed, they didn't give Ford pause.