The standard in business telecommunications

Communication Upgrade Plan

Communications Upgrade Plan

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The Abco Company wishes to upgrade its telecommunications technology to a system that is more efficient than the outdated Centrex system now in place. As part of the upgrade plan, the CEO has asked for an explanation of the various systems and technologies available for the upgrade. This research explores various technologies and recommends the proper solution for the business problem at hand.

Communications Upgrade Plan

The Centrex phone system has been the standard in business telecommunications since the 1960s. The system has been the only system of this type for many years. Businesses, such as Abco have had their Centrex System for many years. However, aside from being outdated technology, the Centrex System is no longer the most cost effective solution for businesses. The Abco Corporation has had its Centrex system for as long as anyone can remember. Until recently, no one had ever thought of changing the phone system as Centrex was the current state of the art. However, with increased competition in the business environment it has become important to manage systems so that they are as operational efficient as possible. Now there are new technologies available that may soon make the Centrex System obsolete. This research will explore new technologies and their advantages and disadvantages as compared to the existing Centrex system at Abco.

The Centrex System

To understand how the other phone systems compare, one must first understand the Centrex system that is currently in place. The Centrex System is similar to a private branch exchange (PBX) system. PBX Systems use a switching station that serves only one office or building, as opposed to operating through a common carrier or telephone company. The Centrex System serves office or building, but it operates through a common carrier telephone exchange outside of the company (Tele-Movers, 2011).

The PBX and Centrex systems are less expensive for interoffice communications than placing all of those calls through the local phone service. Centrex systems were the first to allow data transfer over phone lines using the concept of packet switching (Tele-Movers, 2011). The Centrex system offered a solution that was superior to having to make all of those phone calls through the local exchange. However, it had several limitations for which no alternative was available, until recently.

One of the key disadvantages of the Centrex System was the expense. Smaller companies often could not afford to install such a system. For this reason, only larger corporations usually used Centrex Systems. Centrex systems had an advantage over the plain old telephone service (POTS) in that it had several features that were not available to residential customers (Green, 2007). For instance, the Centrex System could forward calls, it could transfer calls, and offered features such as call waiting and conference calling. These features offered many advantages over the POTS, but they were, and still are, expensive (Tele-Movers, 2011).

With the Centrex system, the telephone company owns and manages all of the communications equipment & software. The customer leases the equipment and pays for various services. With the Centrex system no equipment is located on the customer’s premises, but is supplied and managed from the phone companies exchange site. The service is provided through lines running from the exchange to the office or building. This service can be delivered either over traditional copper wires, fiber optics, or by multiplexing a number of lines over a single fiber optic or copper wire (Tele-Movers, 2011).

Leasing of the equipment and the need to run wires to the building is a key reason for the expense of the installation and maintenance of the Centrex System. The cost of installing a Centrex System can devour startup capital quickly. However, this installation method also makes it easy to customize to meet the business’s individual needs. The expenses involved with the Centrex System go beyond equipment, maintenance, and the monthly costs of services. When the Centrex System is installed the building owner must also include extra insurance, must assure that proper primary and backup power is available, and must include proper fire suppression systems. They must also have sufficient security on site as well (Tele-Movers, 2011). These costs are often not considered as a direct cost of the Centrex System, but many agents require these items as a minimum of the lease agreement. The business’s leasing a Centrex System must assure, to the greatest extent possible, that no damage or harm will come to the system even in the most unlikely of circumstances. In the event of a loss, the Centrex system would be costly to replace.

The Centrex System at Abco is antiquated and although the phones themselves have been updated as necessary, much of the system still operates using the same wires and hardware that was installed in the 1960s. The cost of services on a monthly basis, as well as maintenance and repair of the system are becoming a burden to the company. In addition to the monetary burden, the old system simply cannot keep up with the demands that are being placed on it and it is subject to go down at the worst possible time, which it does on a more frequent basis as time goes on. Many agree that it is time to scrap the old system and find a new replacement. The next section of this research will explore solutions to the problem of replacing the old Centrex System.

New Solutions and Technology

One of the solutions that many businesses are choosing to replace their old Centrex systems is Voice-over Internet Protocol (voice-over IP or VoIP). VoIP represents a family of technologies and communication protocols to deliver voice communications and multimedia sessions over the Internet (Packetizer, Inc., 2011). This technology is also known as IP telephony, Internet telephony, voice-over broadband (VOBB), and a broadband phone. VoIP can be used to deliver voice, fax, SMS, or voice messaging over the Internet, rather than a public switched telephone network.

Several steps are involved in sending a VoIP telephone message. These are:

• signaling

• media channel setup

• turning the analog voice signal into a digital signal

• encoding the signal

• packetization of the signal

• transmission as IP packets over a packet-switched network.

Several steps are also involved on the receiving side as well. They are:

• receiving the IP packets over a packet-switched network

• decoding the packets from digital to analog to reproduce the original voice message (Packetizer, Inc., 2011)

The end result is a voice message that the receiver can understand and respond to. When the receiver of the message responds, the process starts all over, only they now become the transmitter and the process happens in the other direction. During the course of a conversation this process happens over and over again so quickly that there is hardly any noticeable interruption or break in the conversation at all. All of this happens so quickly that the result sounds just like talking to the person as if they were in the same room.

VoIP is available for use with standard PCs and networks. Now it is available on portable devices other than phones. Many devices can still make calls or send a SMS text messages using 3G or Wi-Fi technology. This makes VoIP able to communicate in many ways that the old Centrex System could not.

Initial Basic Equipment and Cost

The equipment needed to connect to VoIP service is much less expensive than that needed to connect to the Centrex System. Dedicated VoIP phones connect directly to the IP network using wired Ethernet or Wi-Fi. Many of the business phones that connect to VoIP service are designed to look like the traditional Centrex business phone. In order to connect, you need a laptop or personal computer, a router/hub/switch device, an analog phone, and a power source. An analog phone adapter connects the analog phone to the network, allowing a normal phone to be used over the Internet (Callahan, 2008).

Abco already has PCs and laptops that could be used in connection with the VoIP service. It already has everything except for the router/hub/switch. These are available from VoIP providers for under $100 each. The total cost would depend on how many phones the company chooses to hook into the new system. It is not expected that the company would have to purchase much in terms of additional equipment other than the router for the phone. The company already uses a cable network and would be able to use the existing Internet connection. VoIP requires that the network is able to download at adequate speeds. The current network at the company is already the fastest available, therefore it is not expected that any upgrades would need to be made on this system.

Many of these look exactly like traditional phones only some of them are in a new design called a soft phone. In this case an application looks like a dial pad and the user can operate it using mouse clicks or keyboard input. It consists of a microphone and speaker or a headset. The style of the input device and headset is a matter of preference. Phones range from around $60.00 for a simple unit, to upwards of $400 to $500 for a professional headset such as those used in a customer service bank (Fortinet, 2011). The type of phone purchased and the numbers needed would determine the final cost.

As one can see, the equipment costs for VoIP are much less than the original Centrex System. The company can use much of the existing equipment with only a few small purchases of the router and phone that they will use to connect to the service. There many choices in the type of phone and the expenses that they will incur for this purchase.

Operational Cost Comparison

The company installed its original wires for the Centrex System nearly 50 years ago. However, since the initial installation they have needed upgraded four times. The phones themselves have needed replaced on an average of every five years due to them becoming obsolete technologically. The old Centrex System was reliable and seldom needed maintenance. However, when it did need maintenance, there are often long waits until a service person could repair the system. These outages are not only inconvenient, they harm business as well. At times, repairs were free because the equipment was leased from the phone company. However, depending on the part that need repaired, and circumstances, sometimes the company had to pay for the repair.

Over the long run repair and maintenance of the Centrex System has been expensive. It is not known how much repair and maintenance the VoIP service will need in the long run, but if it does need serviced the costs are not expected to exceed the initial cost of the equipment. The VoIP service is expected to be much less expensive in terms of repair and maintenance than the Centrex System.

Quality of Service

One of the key concerns about changing phone systems is quality of service. The old Centrex System was reliable, except for times when needed repair. Consistent quality of service is a concern with the VoIP service simply due to the nature of the traffic flow within the system. Lost packets are often a problem with VoIP. There is no way to assure that all of the packets are delivered and that they are delivered in sequential order. This can create breaks in the quality of the voice transmissions. Network routers handle traffic on a first come, first served basis. Certain delays in package delivery are caused by the physical distance that the packets must travel. This is known as latency. When too many packets are sent at the same time it can cause queue overflows in the system (Cisco, 2011). When this happens quality is compromised and sometimes packets are lost altogether.

However, software has been developed to mark voice packets for better quality. Differentiated Services (Diff Serv) is one such example of the software. Diffserve classifies and manages network traffic over IP Networks. Diffserve can reduce the latency time and improve the quality of streaming media and voice transmissions. Diffserve and other software like it ration customer use so that the network will run smoothly even in times of peak bandwidth usage (Search CIO-Midmarket, 2011). Another concern that can affect quality of service is when the signal has to pass through firewalls and other network address translators. This can slow transmission of the packet significantly.

Packets transmitted over IP Networks have a fixed maximum capacity and some will be more prone to congestion than others. Another problem that could affect quality of service on VoIP Networks is the possibility of a hacker attack. Denial of service attacks are the most common (Cisco, 2011). It is also possible for hackers to steal information such as customer data, record conversations, and break into voicemail boxes on the system (Cisco, 2011). Network security is a major concern with the VoIP. These concerns usually do not plague half hardwired Centrex Systems.

The question is whether security poses a major risk to the Abco Company with the installation of VoIP. Security is a concern for any business that is on the Internet and many businesses already have protocols and software to help avoid data corruption and theft. Abco has a firewall and proxy server in place already (Cisco, 2011). This same system would serve the security needs of the VoIP system. However, as noted earlier this may slow the transmission of packets considerably and could affect the quality of the transmissions received. It can make voices sound choppy or be missing some portions altogether.

Government and military organizations are using VoIP successfully using secure IPs for transmissions. This type of system is often known as Secure Voice over IP (SVoIP) (Cisco, 2011). SVoIP solves many of the security issues by using encryption on a classified network (Greenberg, 2008). This type of network is expensive and is not always considered necessary for the average business. Depending on the type of business, for instance, government contractors may be required to install this type of system. However, Abco does not perform any types of work such as this.

Abco does keep and store customer information, which means that the system will have to take some type of security measures to protect this data. A Public Secure VoIP is available with free GNU programs. This is an option, but it is not likely that Abco will choose to have their network operated via free GNU programs, as these programs are not designed for business applications. GNU programs are designed for the average home consumer. This is not an option for the installation of Abco’s VoIP system. Many consumer VoIP solutions do not support encryption, but installing a secure phone is easier to implement with VoIP than with the traditional hardwired phone lines involved with the Centrex System.

Because consumer VoIP solutions do not support encryption these are not the best solution for protecting valuable customer information. Customers call into a call center and must provide private information such as credit card information, address, bank information, and other pieces of information that are attractive to identity thieves. However, Abco does not need the level of security required by government systems. Many businesses have this problem and solutions have been devised for enterprises that address the needs of both large and small businesses.

The solution for many businesses is to use a virtual local area network (VLAN). Any call that is not transmitted over the VLAN can be intercepted by an attacker with a packet sniffer. Research has demonstrated that tapping into a fiber optic network without being detected is next to impossible, which means that once the voice packet is within the Internet backbone it is relatively safe from interception. This type of system represents the best level of security for the Abco VoIP installation.

A VLAN has the same characteristics as a hardwired (physical) local area network (LAN) (Varadarajan, 1997). Members on a VLAN that is internal to the company must share bandwidth. This can create the congestion and throughput problems discussed earlier. The Abco Company is small, consisting of less than 100 users. Most of the average systems on the market today are designed to handle many more users than this. It is not expected that the VLAN would suffer from congestion issues under these circumstances.

Telecommunication and IT Convergence

VoIP represents a convergence of telecommunication and IT. VoIP is a relatively new technology and as only been around for about six years. However, IT was already advanced significantly when it was introduced and VoIP technology quickly caught up. Developers of VoIP already knew many of the issues that they would have to address in the development of VoIP technology as many of these problems were already a part of the Internet environment. They knew about bandwidth congestion and security issues. Tthey knew that different types of users would need different levels of security and were ready to provide these solutions from the very beginning. VoIP technology did not have to start from the beginning, but rather entered the market as an add-on to an existing Internet backbone.

The introduction of Skype added a new level to the VoIP idea. Skype is a software package that allows users to make both voice and video calls, as well as chat over the Internet. Skype is free to calls with other members of the service. However, calls to land lines and other mobile phones outside in the network are made using a debit- based user account system (Skype, 2011). Skype has recently upgraded and decided to remove Google product bundling, making it more acceptable to business clients (Warren, 2011). Skype would be an excellent addition to the VoIP network at Abco, as it would if allow the ability to video conference with Abco’s satellite offices. Holding virtual meetings avoids the expense of live, in-person meetings. However, due to the expense involved with making calls outside of the Skype System, another VoIP service is suggested for those calls. Skype represents a new level of communication and is representative of many of the changes that are taking place within the telecommunications and Internet convergence.

One of the key limitations are of VoIP is in the ability to send faxes. The existing voice software is not designed for fax transmission. Their purpose is to digitize an analog representation of the voice, but digitizing a document image is different. One of the key research problems in this area is that faxes require tremendous amounts of bandwidth (Soft-Switch, n.d.). The fax “sounds” of the image do not fit on the channel. A solution is available for delivering fax over IP (FoIP) called T.38. This protocol compensates for the differences between traditional communication over analog lines and packet-based transmission used in IP communications. There are several different types of the systems available. One of the key problems with sending faxes over IP is lost packets . Currently, this technology is not perfect and there are many obstacles to overcome to simulate fax machines using packet-based protocol.

New research and technology will continue to evolve and developers will find creative ways to solve the problems that result from the interface of telecommunications and IT. Many of these problems, such as the inability to transform certain types of analog data into packet-based information, congestion problems, loss of packets, and security issues are not unique to telecommunications over IP. They are problems inherent with the Internet and have been known for quite some time. Research will continue to solve these issues in the future and it is expected that telecommunications and the Internet will continue to merge.


The outdated Centrex System at Abco is expensive to maintain. The monthly service fee continues to add unnecessary expense to the budget. New VoIP technology would be cost effective to install and would eliminate the monthly service fee to the Centrex provider. The company already has much of the equipment including PCs, routers, phones, and an Internet connection. The existing funds could be simply plugged into an adapter, which can be purchased inexpensively (Callahan, 2008). Providing VoIP over a company VLAN represents a secure system for the maintenance and storage of customer records. This is the recommended solution for Abco. VoIP over a VLAN would replace the existing Centrex system.

In terms of software, it is also suggested that managers and executives be provided with Skype for teleconferencing. Skype is not necessary for every single employee, only those that must attend meetings regularly. In addition, a different VoIP provider should be used for standard calls, as Skype can be expensive for out of network calls.

At present, upgrades to Centrex Systems are still available, but these upgrades require the installation of new hard wiring and phones. From a cost perspective, installing VoIP with a VLAN requires little cost for the initial installation and less for maintenance than the existing Centrex Systems. Installing VoIP using a VLAN represents lower long-term operational costs.

Unfortunately, at this time fax transmission over IP is in the early stages of research and development. At this time it is not recommended that FoIP be installed. Only a few fax machines exist in the company and for these a standard phone line, outside of the Centrex System, can be used. It is suggested that the company keep abreast of new technologies as they emerge and when research is developed to the point where FoIP is suitable and cost effective, then the purchasing decision can be revisited. However, at present it is suggested that only VoIP be installed.

Upgrading the old Centrex System would be much more costly than installing VoIP over a VLAN. Quality concerns over congestion and lost packets are not expected to be problematic for Abco, as their system is relatively small compared to the loads that current VoIP systems are designed to handle. Installing VoIP involves lower initial installation charges than upgrading the Centrex System and will also result in long-term savings as well. VoIP solves many problems associated with the old Centrex System and will result in greater long-term savings and operational efficiency.

Annotated Bibliography

Callahan, R. (2008). Businesses Move to Voice-over-IP. 12 September 2008.

Retrieved from

This article explores the advantages and move towards VoIP in many businesses.

CISCO. (2011). Quality of Service for Voice over IP. Cisco Systems. Retrieved from

This technical paper describes various quality and security issues regarding VoIP.

Fortinet (2011). Talkswitch. Retrieved from (Packetizer, Inc., 2011).

This website explores some of the solutions that are available for interface with VoIP phone service.

Green, T. (2007). PBX v. Centrex. Network World. Retrieved from

This articles explains the differences between Centrex and PBX.

Greenberg, Andy (2008). The State Of Cybersecurity Wiretapping’s Fuzzy Future. 15 May 2008. Retrieved from

This research explores government opinions on the security of VoIP and wiretapping. It lends insight into how easy it is to intercept VoIP packets over the air.

Packetizer, Inc. (2011). How Does VoIP Work? Retrieved from

This white paper provides general information on how VoIP works.

Search CIO Midmarket (2011). Differentiated Services (DiffServ or DS). Search CIO-

MedMarket. Retrieved from http://searchcio-

This article explores a software package that provides solutions for quality problems in VoIP. (2011). Home. Retrieved from

This page examines Skype’s products and features. If (n.d.). Faxing over IP networks. Retrieved from http://www.soft-

This website explains fax over IP and the various research and limitations of the current technology.

Tele-Movers, Inc. (2011). CENTREX. Retrieved from http://www.tele-

This source describes the Centrex phone system and some of its advantages and disadvantages for other phone systems.

Vadarajan, S. (1997). Virtual Local Area Networks. Retrieved from

This white paper describes VLANS, their uses and standards.

Warren, T. (2011). Skype for Windows updated to remove Google product bundling. 14 October

2011. Winrumors. Retrieved from

This article reviews upgrades to Skype that make it more suitable for business applications.

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