Consider the difference between an all-you-can-eat buffet and a restaurant with an a la carte menu. That's what companies see when comparing the cost of IP-based videoconferencing services with traditional ISDN offerings.

ISPs charge a flat monthly fee for IP videoconferencing, and companies can use the service as much as they want. In contrast, customers pay by the minute for ISDN, which can be very expensive, especially overseas.

The cost savings of IP videoconferencing, along with better resolution and easier call set-up, are encouraging more companies to switch from ISDN to IP. ISPs say that pricing for IP video services can be anywhere from 30 percent to 50 percent less than for ISDN, depending on network configurations and locations of sites.

"We're saving 40 percent on our monthly bill, just for video," says Loc Nguyen, manager of IS infrastructure at National Semiconductor in California. The chip manufacturer has migrated 15 US videoconferencing sites from ISDN to IP this year. "We're running 30 to 50 videoconferences a week within the US. Most of our calls are from headquarters out to the branch offices."

NatSemi plans to offer IP videoconferencing in five more of its US locations before year-end. Meanwhile, the company's IT staff is trying to drive up usage of its IP video service, which is provided by AT&T.

"We're going to encourage employees to think of videoconferencing for any meeting," Nguyen says. "People still think of videoconferencing as too expensive internally."

NatSemi is not alone. Many corporations, including JT International and Zurich Financial Services, are starting to reap the financial rewards of deploying IP-based videoconferencing services. These companies are finding that the cost savings of IP video come not only from lower telecom bills but also from reduced travel costs and enhanced employee productivity.

"If you have to go to the US for a meeting of four hours, it costs you three days," says Jan Wijbren Dijkstra, IT manager at Mammoet, a Dutch provider of heavy-lifting and transport solutions that in August began using IP-based videoconferencing from Infonet at six corporate sites.

Think videoconferencing first
"What we really want to achieve is that all the main locations of our company automatically think of using videoconferencing if two or more people have to have a discussion," Dijkstra says. "This is especially important because our projects are getting bigger and are in more remote locations."

All top-tier ISPs offer IP-based videoconferencing services. Most are built upon Multi-protocol Label Switching (MPLS), which allows network managers to create a dedicated class of service for video applications.

With its dramatic cost savings, migrating from ISDN to IP seems like a no-brainer. In most countries, IP is anywhere from 30 percent to 50 percent less expensive and more reliable than ISDN. Users agree that IP videoconferences are easier to set up and troubleshoot than their ISDN counterparts. Additionally, IP video quality is better than ISDN's, offering as much as double the resolution.

So why do so many companies continue to use ISDN for videoconferencing? It's mostly inertia, industry observers say. Some companies aren't ready to upgrade their videoconferencing gear to support IP. Others find that it's easier to keep a legacy ISDN network running.

"Ten percent of our base (videoconferencing customers) have migrated over to IP," says Martha DeGraw, manager of Sprint's Collaboration Services Team. She expects that number to hit 20 percent by year-end.

Two of Sprint's largest US customers of videoconferencing services show the market dynamics today. HQ Global Workplaces, a provider of furnished office suites in Dallas, uses a mix of IP and ISDN for its videoconferencing services. Meanwhile, Kinkos uses 100 percent ISDN.

"We have not been hugely successful in getting customers to get rid of ISDN," DeGraw admits. "They're not swapping it out; they're augmenting it with IP at new sites."

Gradual replacement
Companies that migrate from ISDN to IP for videoconferencing tend to do so gradually. They choose IP video when they move to IP-wired buildings, open new locations or need to replace ageing ISDN equipment. Companies that already have IP VPNs find it relatively inexpensive to add video traffic across the same backbone.

"In the past 12 months, we've seen a 100 percent increase in the number of customers for our IP video services," says Jean-Matthieu Tilquin, head of real-time collaboration services at Equant.

Equant has attracted about 75 customers for its IP video service since it was introduced 18 months ago.

"When we see customers planning a full migration to an IP VPN, video is the last item they take care of," Tilquin says. "It often starts with IP telephony and when everything works with that, then they take care of video. That is why there is a slight delay between the time it takes for a customer to buy a network from us and to put the video traffic on that network."

One factor encouraging companies to stick with ISDN overseas is that in some countries the cost of IP services has not dropped enough to make migration worthwhile.

That's what's happening at NatSemi, which is taking a hybrid approach to videoconferencing services. By year-end, it will migrate all 20 of its ISDN videoconferencing sites in the US to IP. However, it will keep ISDN in 15 sites overseas.

"The reason why we haven't deployed it internationally is because of the cost of the IP network overseas," Nguyen says. "We are maintaining ISDN for international (videoconference calls) right now, but we have had some discussions with AT&T about using their MPLS technology globally. I think that's about a year away."

NatSemi can operate a hybrid network because last year the company upgraded all its videoconferencing sites to equipment from Tandberg that supports both IP and ISDN.

Unlike many IP videoconferencing users, NatSemi is operating a separate video network that is of hybrid IP/ISDN design, instead of using a converged backbone.

"We keep it separate because of the quality of service. We don't want (video) to compete with other kinds of traffic," Nguyen says.

Buy in, or roll your own?
Some ISPs, including Infonet and Sprint, resell videoconferencing equipment from manufacturers such as Polycom and Tandberg.

These service providers will install, integrate and manage the videoconferencing equipment at the customer's site along with all the required customer premises equipment, routers and backbone network service.

Buying videoconferencing equipment from an ISP helps reduce the interoperability problems that can crop up when installing gear in far-flung locations. ISPs often have preferred platforms that they've already tested for compatibility.

One company that didn't go this route and regrets that choice is Mammoet. It migrated to Infonet's videoconferencing service in August and has run into interoperability problems using equipment that it bought and installed itself.

"One of our offices in Canada is perfect with both the sound and vision," Dijkstra says. "The other one has perfect sound but not vision. We've been in close contact with Infonet to fine-tune the service."

Mammoet is new to videoconferencing. The company migrated from a frame-relay network purchased from MCI to an IP VPN from Infonet this summer. Since then, Mammoet has migrated six offices around the world to Infonet's service and will migrate two more by year-end.

Mammoet is using two configurations for its videoconferencing gear: one for boardrooms and the other on a cart that can be rolled into conference rooms. If he had to do it all again, Dijkstra says he would have bought the videoconferencing gear from Infonet.

"If you're really into videoconferencing, choose a service provider that also provides equipment and everything around it. That way you're assured from Day One that everything is tuned," he adds.

Is IP video the killer app it's claimed to be? Let us know in the forum.