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Summary:

This is one of those oh shit type stories. Baseline magazine has an interesting case study on Heinz, which has 37 different locations in Europe. It has basically replaced most of its voice contracts with a company owned IP-PBX service, which has allowed them to cut […]

This is one of those oh shit type stories. Baseline magazine has an interesting case study on Heinz, which has 37 different locations in Europe. It has basically replaced most of its voice contracts with a company owned IP-PBX service, which has allowed them to cut costs seriously.

Let’s say you want to connect 37 branch offices here in the States. At going rates, the cost of connecting them by a private frame relay service runs about $61,000 a month. But if you put the connections on the Internet and use virtual private networks to connect the sites, that fixed cost drops, to an estimated $39,000 a month. Which could make large corporations the driver of how communications services get deployed in the future—and who controls relationships with small and medium-sized companies. Why wouldn’t a company like farm equipment maker Caterpillar, for instance, want to put its trading network under its wing, if it can control costs, features and services under one master quality-of-service agreement with an Internet access provider?

It shows that if mega-corporations think creatively, they can become their own phone companies. They can interconnect their partners, their suppliers and manufactures on a private VoIP network and basically cut their long distance and business communications costs. If the falling revenues of AT&T and MCI’s business services are any indication, it is happening already. It is only a matter of time before these companies get reduced to being pipe-providers, though quality of pipe will matter in the long run.

By Om Malik
  1. You forgot the link:

    http://www.baselinemag.com/article2/0,1397,1669673,00.asp

    I’ve been meaning to comment on the Heinz / Wincanton Group part. Taking over an outside partner’s telecom services and putting VOIP on every desk is rather extreme. Using Asterisk, or even Cisco Call Manager, to add a VOIP trunk to their existing PBXs probably would have been cheaper and less disruptive.

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  2. This is a simple evolution of Private line market segment: PL, (telephony) VPN, FR and now IP technology. Long time back, this leading telephony R&D lab used to have TIE lines between its different locations. Then one day they dismantled it because it is cheaper to use PSTN rather than maintaining the TIE trunks. So, if the only objective of Heinz is saving (granted not an insignificant) money, don’t wake me up; the carriers will catch up. But on the other hand, if they are using sophisticated terminals with rich user interface and user empowering applications, then I say, ’ÄúRight on’Äù.

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  3. I was interested in the story up to the point where it said they put there own fibre in. It would have been interesting if they were using the internet or some other spare network capacity of there own – but Fibre?

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  4. Om, I am starting a comprehensive cluster of sites that address communications needs for Traveling Biz professionals… give it a few weeks to build out… but here are the place holder urls…

    voip phonesworld phonetri band cell phonesinternet phonecell phone planscell phonesevdo wireless internetwireless internetdvd vending machines

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