Defense Department Adopts VoIP Technology

In a move that both validates the technology underlying Voice over Internet Protocol (VoIP) and promises to help advance it, especially in terms of security, the Department of Defense (DoD) has taken a step toward developing its own, privately managed VoIP system.

The DoD said it had awarded Nortel Networks (NYSE: NT) a contract worth up to US$20 million to migrate the department's network to one that, through installation of new software and other upgrades, will be able to support VoIP.

The agency said testing had been completed and that the rollout would give it more flexibility, better control of its own communications needs and provide long-term cost benefits.

Crisis Response

A key consideration was doing away with private control of the phone networks that the DoD relies upon, Chuck Saffell, president of Federal Solutions for Nortel, said. However, the system was also designed to avoid completely scrapping existing phone and data networks.

"Nortel worked closely with DoD to custom-design a solution that would support mission-critical communications while reducing operational costs and increasing the efficient use of the existing infrastructure," Saffell said. Previously, he added, "the ability of the DSN [defense switched network, the current system that is managed by telcos] to respond to any given crisis could be restricted because it is not under direct governmental control."

The project will result in a new, multifunction switching capability fully contained with the agency that will enable it to prioritize traffic based on urgency and eventually enable it to consolidate voice, data and video conferencing.

Analysts say the move will undoubtedly be a boost to the public image of VoIP, which got a somewhat rocky reception from some early adopters because of reliability issues and security concerns.

Hitting the Gas

A similar effect was seen last year when European financial firm Lloyds tapped IBM (NYSE: IBM) for a massive VoIP network rollout that will eventually include some 70,000 phones.

"When you have a big-name, public adoption, there is a strong message sent about security and reliability," Gartner (NYSE: IT) analyst Bob Hafner told the E-Commerce Times.

Such deals underscore the fact that the long-awaited convergence of data and voice traffic onto a single network is "finally becoming a reality," he added. "The result is going to be great upheaval in the telecommunications industry."

The broadband industry and especially enterprise suppliers of VoIP solutions have worked hard to address security concerns about VoIP and have made enough headway to enable the cost-savings potential of the technology to be the main focus as industry weighs the pros and cons.

Analysts said the move is also seen as an affirmation that the DoD feels the Internet is a secure enough medium to transport voice traffic converted into data.

Forward, March

Meanwhile, the adoption of VoIP by consumers is likely to continue to grow apace as more big-name carriers enter the space and as the cost benefits are recognized.

Nortel will be able to translate some of what it learns in deploying the DoD system to help enterprises build more robust systems and potentially to help phone carriers, who make up a significant portion of its customer base, address VoIP issues as well.

Early adopters, be they cutting-edge consumers or major agencies such as DoD, provide the necessary information for refining the technology.

"VoIP providers learn from early adopters and are able to help grow their customer base as a result," independent telecom analyst Jeff Kagan told the E-Commerce Times.

Hurdles remain, though, including issues surrounding emergency calls -- there is no enhanced-911 option for the technology yet, for instance -- that will slow adoption and push critical mass of adoption back a few years. "VoIP is going to take a while for mainstream adoption, but that's certainly the direction the industry is headed," Kagan said.