TDM Telephony vs. VoIP

As many vendors of legacy TDM telephony technology end their support for classic End Office and PBX solutions, customers are faced with the challenge of deciding what their transition strategy is going to be and how much is it going to cost. With flagship TDM companies like Nortel and Lucent no longer in the voice telephone switch business, many customers are left with 99.999% reliable telephony systems (i.e. Nortel SL-100, CS2100, CS1000M; and Lucent 5ESS) that are still performing, but are now without any manufacturer support. There are the few businesses that once performed as integrators of these technologies who have swept up some of the unemployed talent and are offering break-fix maintenance support at prices typically found in monopoly markets, which ultimately is becoming a forcing function for many to abandon the reliable TDM telephony systems for less expensive and less reliable Voice over IP (VoIP) options. But is that really the only option available? The answer is no.

When one looks under the hood of a TDM telephone switch, one will find three key components: 1) Processors; 2) Switch fabric; and 3) Line & Trunk Interfaces. The processors are typically proprietary processors developed by the telephone switch manufacturer that run proprietary operating systems and software applications unique to that given telephone switch. The switch fabric employs Time Division Multiplexing (TDM) technology to route calls between line and trunk ports. The line and trunk interfaces are physical ports that allow for the termination of Primary Rate Interface (PRI) T1 trunk interfaces, DS0 (64 Kbps) trunk interfaces, and analog, digital and BRI ISDN line interfaces for terminating handsets. Considering the support for the operating systems and applications responsible for running the telephone switch is now no longer available, the real cost of maintaining legacy TDM voice solutions is in replacing hardware components critical to keeping the telephone switch operational. The gamble owners of these TDM telephony systems must consider is how long the operating systems and associated software will continue to run without corruption. In truth, considering these systems are closed computer environments with no external connectivity to untrusted data networks, the answer lies with who has physical access to the telephone switch, as that is the only real threat to corrupting the software. The only other potential risk is the age of the processors and hard-drives themselves, as eventually there will be a failure, and then replacing the software with the installation of a new hard-drive (if not backed up) will be the downfall of the telephone switch.

For those who don’t have the stomach for risk, this represents a crisis, and that typically is followed by the push to replace the TDM telephone switch with a new and shiny VoIP solution. Vendors from all around will be lined up to sell you on their particular technology, with many “over selling” their solutions reliability and capabilities. What they won’t tell you is all the hidden costs associated with software licenses, end-point replacement costs, and network dependencies necessary to achieve service reliability anywhere close to what you’re used to with the old TDM telephone switch. And why would they? They are only interested in making the sale. It is your job to become quickly savvy on this new technology, and to keep the vendor’s honest.

So let’s breakdown the actual real cost drivers of deploying VoIP, and then explore some logical options to bring down that cost.

When you look at most all VoIP solutions, you have two key components: 1) SIP Session Managers; and 2) Application Media Servers. They may be wrapped into vendor specific names, and be represented as more than two components, but holistically, the functionality of an open systems compliant solution will always boil down to SIP Session Managers and Application Media Servers. The role of these components is fairly simple. The SIP Session Manager replaces the old TDM fabric and interfaces with SIP signaling and negotiates the set-up and teardown of SIP media sessions (which can be both voice and VTC media). The Application Media Servers is the toolbox of goodies that delivers telephony features (i.e. voicemail, audio conferencing, caller ID, call forwarding, etc.) to users subscribed to the VoIP solution. Licensing takes many different forms depending on the vendor, and in many ways it can quickly become as confusing as trying to understand how airlines price airfares! In many cases, there is not one license to consider, but many. You will pay for the number of concurrent SIP sessions the SIP Session Manager can support. The more concurrent sessions you want it to support, the more expensive the solution. What drives that number is similar to TDM when sizing the number of trunk lines you needed to ensure line side quality of service calculated by the probability of blocking. But then there is another set of licenses tied to the Application Media Server, because depending on how many “features” you want activated, and how many substantiations of that feature you want also contributes to the final cost.

The unspoken cost, which is often the highest, is the replacement cost of the legacy analog/digital/ISDN handsets. While the last five years have seen the costs drop significantly, the average costs of an office grade multiline SIP handset still will run anywhere between $150-$250. If your business supports, say 2,500 phones within an office building, the replacement costs would be $375,000-$625,000! Your CIO then may say “Let’s roll out soft phone clients instead”. The average cost for that is typically $50 a seat (includes client license and headset for the PC or Laptop), so then your endpoint cost would be $125,000. You may think, “OK, we can swing that”, but then you have to evaluate your Local Area Network (LAN). Is it sized to support the new voice and VTC traffic you are going to put on it? Does your access switches support Power over Ethernet (POE) so the desktop phones you decide to deploy can be centrally powered? Can your LAN support VLAN and QOS programming to ensure Voice packets are not competing with the other LAN data traffic? If you have to replace your LAN switching technology, you can easily be looking at another $330,000 for the support of 2,500 ports.

Interestingly, the actual cost of the VoIP servers and associated software and licenses may be attractively priced at somewhere around $68,000, which when compared to the maintenance cost of a legacy TDM switch will look very attractive; but when you add the end-point replacement cost, and any LAN upgrade costs needed, your prized $68,000 cost will balloon to as high as $773,000.

But all is not lost… there is another option. Instead of replacing all your legacy analog handsets (which for many represent anywhere from 80%-95% of their handset inventory), keep them in service and augment your VoIP servers with analog media gateways. Media Gateways have been around for a long time, and companies like Genband offer carrier grade high density analog media gateways (e.g. Genband G5) specifically designed to be installed in commercial carrier central offices and connected to the existing main distribution frame (MDF). Other manufactures, like Patton Electronics out of Gaithersburg, MD offer lower density options, and most brand name VoIP solution vendors like CISCO and Avaya also offer media gateway options (albeit typically more expensive than going pure VoIP). But for the savvy CIO, this is where doing a comprehensive Cost Benefit Analysis (CBA) is worth the time and investment, as one can explore the idea of replacing the unsupported TDM telephony processor and switching fabric with a VoIP solution, while keeping the existing analog phones and associated wiring in service. This will result in a much lighter load being placed on the existing LAN, and will significantly reduce the number of endpoint replacements you need to invest in. I once heard it said “Why replace a piece of plastic that is paid for with another piece of plastic that is going to cost you an average of $200?” To me that makes good financial sense!