Business looks at VoIP phones

By Astrid Wendlandt

PARIS (Reuters) - The use of VoIP technology to cut fixed-line phone costs is set to double in France this year to reach 30-40 percent of traffic and is flourishing across Europe.

Two years ago Voice over Internet Protocol (VoIP) hardly existed. Now, everyone is talking about it.

"The future is VoIP, let's be clear," Ian Livingston, chief executive of BT Retail, (BT.L: Quote, Profile, Research, Stock Buzz) told the Reuters Global Technology, Media and Telecom, Summit in Paris on Tuesday.

But while the adoption of VoIP is becoming a no-brainer for consumers, it is less so for businesses, which represents a potentially lucrative market for VoIP providers.

The main reason is cost. Consumers pay only 30 euros ($36) in France for a monthly high-speed Internet service -- partly because the equipment is subsidized by access providers. That gives them unlimited free landline calls within France and discounts on other calls.

But it can cost about 250 euros to fully equip an employee at a big company with VoIP, says the research house IDATE, as businesses have to invest in gear such as dedicated IP networks and expensive phones.

"There are many companies for which the return on investment in VoIP is not at all clear and that concerns about 70 percent of businesses," says Bruno Teyton, analyst at IDATE.

LOWER PHONE BILLS

Internet telephony can lower companies' phone bills by between 30 and 40 percent, IDATE estimates.

But investing in it only makes sense if the business is spread out across the world and more than one of out five employee phone calls are made internally, IDATE says.

VoIP allows for less expensive calling than traditional phone services because it does not require a dedicated circuit for each connection.

It cuts voice conversations into digital bits that are sent over Internet Protocol-based networks and reassembled as voice calls at the receiving end.

IDATE estimates only 2 to 3 percent of small to medium-sized companies in France have adopted VoIP but numbers are growing.

"We are talking internally about moving our own communication system to VoIP and I think every big company is," IT services group Capgemini (CAPP.PA: Quote, Profile, Research, Stock Buzz) Chief Executive Paul Hermelin told the Reuters Global Technology, Media and Telecoms Summit in Paris on Wednesday.

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