About four years ago, Dave Thompson was looking for ways to cut his then-employer’s telecom bills. There was some buzz around a new technology called Voice over Internet Protocol, or VoIP, a method of using the Internet, private data networks, or both in lieu of conventional telephone networks. In theory, VoIP calls were free, so Thompson gave it a try. He wasn’t impressed.
“There was so much jitter you’d sound like you were in a helicopter,” he says, launching into an imitation of a typical chopped-up conversation: “…-lo? Do…hear me?…Is any-…there?” So he abandoned the idea of replacing or supplementing the company’s traditional phone service with VoIP.
But Thompson has since changed his tune. Now director of IT at Muzak LLC, the (in)famous purveyor of background music, he realized last year that the company’s existing public branch exchange (PBX) system couldn’t support its fast-growing workforce much longer. So he faced a tough call: should he upgrade to a new PBX or look for a different approach?
He decided to try Internet-based calling again. This time, thanks to vast technological improvements, the calls sounded just fine.
So in August 2002, he began switching the company’s 2,000 workers to a VoIP system from Shoreline Communications Inc., in Sunnyvale, California. Now employees at Muzak’s Fort Mill, South Carolina, headquarters and about half of its 40 U.S. branch offices can call one another online by dialing four digits. They run up no toll charges, nor do they need any special equipment. “You can use an $8 phone from Wal-Mart,” Thompson says. And they usually notice no difference in audio quality.
So far, the system isn’t saving that much money on long-distance calls—only about 5 percent on the usual bills in each office where it’s been deployed, says Mark Williams, Muzak’s chief controller. That’s primarily because people with VoIP can only call other people with VoIP. If they call anyone else, they’re switched to a standard phone line that takes advantage of least-cost routing.
But Muzak executives say lower phone bills aren’t the only benefit of the Internet-based system. When it finishes switching the remaining offices, the company will be on a single platform for all data and telecommunications, instead of the previous mixture of different PBXs in different offices. “Doing that saves money right off the top,” says Thompson. Adding, dropping, or moving a phone anywhere in the VoIP network is a snap. Previously, individual offices had to contact local phone vendors to make such changes, usually paying a service charge each time. Now, says Thompson, “if someone in California wants to switch desks, we can change their phone from here in about 35 seconds” at no cost. Finally, because the VoIP system uses standard phones and a computer network that requires no special training, Thompson can upgrade each office himself rather than paying a phone or VoIP vendor to do the work. He estimates that this saves the company an average of $11,000 per site.