Cisco Managed IP Telephony Solution

Cisco Managed IP Telephony Solution
Service Provider-Managed Cisco AVVID IP Telephony
Executive Summary
(Architecture for Voice, Video and
Service providers are seeking new,
Integrated Data) IP Telephony
high-margin revenue streams, both to
solutions, Cisco’s carrier-class packet
capitalize on their packet networks and to
voice products and solutions, and key
compensate for recent declines in revenues
Cisco Ecosystem Program partners
from legacy private-branch-exchange
products and solutions
(PBX) sales and Centrex services deployed
• Provide a greater return on capital
on legacy time-division multiplexing
expenditure than traditional TDM voice
(TDM) switches. The most profitable voice
services because several
services share two attributes. One is a
revenue-generating, enhanced IP
“success-based” capital expenditure model,
services can be deployed on a common
which accelerates return on investment
network infrastructure
(ROI) because the service provider makes
• Take advantage of and complement
most of its capital investment after
Cisco enterprise IP telephony expertise
acquiring a customer. The other attribute is
and market success by offering business
an infrastructure that can be used to deliver
customers the option of outsourcing the
multiple services so that the service provider
operation of their integrated voice and
can increase revenue per customer over time
data solutions to a managed service
with little incremental investment. To
address this new business imperative, Cisco
One of the Cisco solutions for Managed
Systems has defined a set of solutions for
Voice Services, the Cisco Managed IP
Managed Voice Services that service
Telephony solution, enables service
providers can profitably deploy and offer to
providers to offer their business customers a
enterprises and small and midsized
cost-effective, richly featured alternative to
businesses. These solutions include the
legacy PBX systems and Centrex services.
Cisco Hosted IP Telephony solution, Cisco
The service provider sells, deploys, and
Managed IP Telephony solution, and Cisco
provides ongoing management for the
Multiservice Virtual Private Network
customer’s Cisco CallManager, which can
(VPN) solution. All managed voice services
be located either on customer premises or at
based on Cisco solutions share the
a central office or data center. Depending on
following characteristics:
the business model, the service provider can
• Are delivered through a tested and
either lease or resell the customer premises
validated combination of the
equipment (CPE) to the enterprise.
market-leading Cisco AVVID
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Management services are offered individually or in tiered bundles and are priced on a monthly per-user basis.
Cisco offers clear advantages as a provider of managed IP Telephony solutions. The installed customer base of
Cisco—the leading supplier of voice and data IP network infrastructure to enterprises—represents the largest
available market for service providers offering managed voice services. This, combined with the Cisco commitment
to enhancing and supporting solutions for managed voice services, makes the Cisco Managed IP Telephony solution
the choice with the lowest risk and highest revenue potential.
This solution overview describes the market drivers that contribute to the managed IP Telephony service opportunity,
the Cisco Managed IP Telephony solution and its components, and the benefits of the solution to service providers
and their business customers.
Market Drivers for Managed IP Telephony Services
Recent changes in the voice market have set the stage for the profitable introduction of managed IP Telephony
services by service providers.
Accelerated adoption of IP PBX technology by business customers
As business customers deploy converged voice and data networks to cut Total Cost of Ownership (TCO) and increase
productivity, IP PBXs are gaining popularity. In addition to delivering basic business phone services such as call
waiting, conferencing, and call forwarding, IP PBX systems enable new communications applications such as unified
messaging, notification services, network-based call distribution, and find-me/follow-me services. According to
Gartner Group, nearly 50 percent of all PBX sales will be IP-based in 2005.
Significant interest in outsourcing voice services
A significant percentage of enterprises want to outsource the provisioning and ongoing management of their voice
services so they can focus on their core competencies. By outsourcing, businesses exchange variable internal support
and capital costs for a predictable monthly communications bill. The trend is escalating: recent Phillips InfoTech
customer surveys showed that 47 percent of customers would prefer to partially or fully outsource the management
of their IP Telephony networks.
Furthermore, Gartner Group reports that 28 percent of PBX systems in the United States are sold by carriers and that
most of these systems are managed or maintained by the service provider. The carrier share of the European PBX
market is even higher: from 30 to 50 percent depending on the country. IP PBX deployments offer greater
managed-service opportunities for service providers than PBX systems based on legacy TDM switches. Therefore,
service providers can earn higher average revenue per user (ARPU). For example, the service provider can provide
remote fault, performance, and configuration management services for the customer’s complete IP telephony
infrastructure, delivering a higher level of added-value services to the customer than typical break-fix maintenance
services for legacy PBX systems.
Enterprise mandate to achieve operational cost saving and efficiencies via converged services
Achieving greater cost savings and operational efficiencies is a critical objective for virtually every business. In a Meta
Group survey, 50–70 percent of enterprise customers said they expected that converging their networks would help
them realize moderate to substantial savings in infrastructure, administration, and toll costs.
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Incumbents losing long-term TDM Centrex accounts
Market researcher RHK reports that incumbents have lost millions of lines and billions of dollars in TDM Centrex
services revenue since the introduction of IP PBX technology. For example, Probe Research found that when a major
university implemented an IP PBX solution, its incumbent carrier saw monthly Centrex revenue decrease from
$40,000 to $6,000. Offering managed IP Telephony services is a way to counter the erosion of revenue from the
defection of long-term traditional Centrex accounts. And because a managed IP Telephony solution offers richer
features and is more flexible than traditional Centrex, the long-term monthly revenue potential is greater.
Service Description
Using the Cisco Managed IP Telephony solution, a service providers sells, deploys, and provides ongoing
management for a Cisco AVVID IP Telephony solution, creating a new source of high-margin revenue. The system
either replaces or co-exists with the customer’s legacy PBX or Centrex service. Many carriers price the managed
service at a fixed per-user monthly fee, including all managed services plus unlimited “on net” calls within the
enterprise, and price “off net” calls at competitive per-minute rates for global termination.
The service provider earns revenue from a set of management services offered individually, in tiered bundles, or both.
Grouping services into different bundles gives business customers flexibility in determining which IP Telephony
management services to outsource. The bundles differ by service provider and can include some or all of the elements
shown in Table 1.
Table 1 Components of a Managed IP Telephony Service Offering
Managed Service
Site and network assessment
Documentation of the physical infrastructure: switches, cabling, equipment
racks, backup power, and so on. Discovery and documentation of the existing
data network, voice system, and business applications
Solution design
Design of WAN, LAN, and voice-over-IP (VoIP) solution elements for
quality-of-service (QoS), redundancy, failover, and so on
Provisioning and installation
Cisco CallManager, Cisco IP Phones, Cisco in-line-powered LAN switches, and
all associated Cisco IP telephony components
Performance management
Measurement of network responsiveness, service-level agreement (SLA)
reporting, and trend analysis
Configuration management
Changes to and backup of CPE configuration; device restoration in event of
failure; moves, adds, changes, deletions (MACD); creating and maintaining a
database of managed network element configurations, dial plans, site
information, and features
Fault management
Automatic alarm and ticket generation on network problem events, proactive
customer notification and escalation, resolution procedures, and fault
tracking through life cycle for reporting purposes
Service Provider and Enterprise
The Cisco Managed IP Telephony solution offers measurable economic
benefits to both the service provider and its enterprise customer
Device and application
Operation, configuration, and backups of Cisco CallManager, Cisco IP Phones,
Cisco voice gateways, and Cisco Unity™
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Table 1 Components of a Managed IP Telephony Service Offering
Managed Service
Capacity planning management
Statistics on network performance, identifying impending and future issues,
and recommendations for enhanced performance
Break-fix support for all systems components
End-user help desk
24 x 7 support; Tier 1–3
Metrics and reporting on management services; call detail records (CDRs);
billing; secure Web access to billing data and trouble-ticket status
Call routing and termination
Routing of “on-Net” and “off-Net” voice and data traffic over the service
provider’s QoS-Enabled IP network
Service Provider and Enterprise Benefits
The Cisco Managed IP Telephony solution offers measurable economic benefits to both the service provider and its
enterprise customer.
Service Provider Benefits
• Generates new, high-margin revenue streams with a success-based capital expenditure model—Managed IP
Telephony services can be profitable from the outset because the service provider makes most of its capital
expenditure after the customer has been acquired. With TDM Centrex services, in contrast, carriers must spend
millions of dollars for expensive Class 5 switches in advance of any customer acquisition and revenues.
• Can be used to deliver other managed voice services—The Cisco Managed IP Telephony solution offers the
potential for rapid ROI because the same underlying network components can be used to deliver other managed
voice services such as:
– Hosted IP Telephony—The service provider hosts the hosted IP telephony service, shared by multiple business
customers, in its central office or data center. The Cisco Managed IP Telephony solution and the Cisco Hosted
IP Telephony solution share common network components and similar end-user services but differ in where
and how the call-control function is located, physically implemented, and managed.
– Multiservice VPN—The service provider delivers voice/data connectivity and closed user group dialing across
multiple enterprise locations.
• Generates increasing average revenue per user (ARPU)—Revenue per user tends to increase over time because
satisfied customers are likely to outsource more management services to the service provider. A customer who
initially opts for a basic service bundle—for example, fault management, backup, recovery, onsite assistance, and
reporting—might later add performance management, configuration management, and security management
services. Additionally, the service provider can add enhanced IP Telephony services such as unified messaging, IP
conferencing and XML IP phone applications. Ultimately, the customer might contract with the service provider
for full management of its LAN infrastructure, thus gaining maximum benefit from a fully converged voice and
data network.
• Takes advantage of existing investments—The Cisco Managed IP Telephony solution coexists with and takes
advantage of existing carrier VoIP infrastructure networks as well as customers’ LAN infrastructures and legacy
PBX systems.
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• Differentiates the service provider from the competition—By offering managed IP Telephony services, carriers can
differentiate themselves from other service providers, reduce customer churn, and attract new customers.
• Opens doors to new markets—The Cisco Managed IP Telephony solution gives service providers an entry to new
markets. Carriers who had previously offered only TDM voice services, for example, can begin adding Internet
and data services. Similarly, managed data network service providers can introduce managed IP telephony
services as an overlay option.
Table 2 Service Provider Go-to-Market Opportunities
Type of Service Provider
Selling Opportunities
Carrier that offers maintenance and
managed services for legacy PBX
Migrate existing legacy PBX customers to Cisco CallManager platform;
sell higher-value managed IP Telephony services; eventually sell
converged voice/data managed services
Carrier that resells legacy PBXs but
does not offer managed services
Resell Cisco CallManager platform and launch revenue-generating
managed IP Telephony services; eventually converged voice/data services
Network service provider (NSP) that
offers managed LAN or WAN services
Sell existing managed data services customers incremental managed IP
Telephony services as an add-on option
Enterprise Benefits
Business customers of service providers offering Managed IP Telephony services achieve greater ROI than they could
with legacy PBX systems, a result of lower telecommunications staffing and administration costs, reduced network
maintenance costs of a converged voice and data network, and lower capital expenditure. Market researcher
InfoTech’s study of a 100-user deployment of a converged network showed that the total cost of ownership for an
IP PBX solution was 20 percent lower than for an IP-enabled legacy PBX by the second year.
Furthermore, managed IP Telephony services greatly reduce the potential risk of migration to IP telephony because
the end customer relies on the service provider’s expert operational support resources and processes. Additional
benefits emerge from the increased employee productivity made possible by new IP-enabled communications
applications such as unified messaging, notification services, network-based call distribution, and find-me/follow-me
The enterprise benefits of IP PBXs are measurable and have been validated by actual customer experiences. For
example, one Cisco customer opening a new facility with 650 phones determined that the payback for a Cisco AVVID
IP Telephony solution was just nine months. Factors contributing to the rapid return were a reduction in network
administration costs by 33 percent, a decrease in total networking equipment costs by 25 percent, and a drop in
annual interoffice phone charges by 35 percent.
Cisco Managed IP Telephony Solution Components
Based on Cisco AVVID, the Cisco Managed IP Telephony solution includes call processing, voice messaging, line
connections, switching, voice-enabled gateways and network management systems.
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Call Processing: Cisco CallManager Software
Cisco CallManager is the software-based call-processing component of the Cisco Managed IP Telephony Solution.
Enabled by Cisco AVVID, Cisco CallManager software extends enterprise telephony features and capabilities to the
business customer’s IP phones and other telephony endpoints.
In the Cisco Managed IP Telephony solution, Cisco CallManager is deployed on the customer premises or in the
service provider’s central office or data center—one CallManager implementation per customer. The software can be
installed on the Cisco Media Convergence Server (MCS) 7800 Series platform, Cisco Integrated Communication
System (ICS) 7750, or selected third-party servers. It ships with a suite of integrated voice applications and utilities,
including the Cisco WebAttendant, which is a software-only manual attendant console; a software-only conferencing
application; the Bulk Administration Tool (BAT); the CDR Analysis and Reporting (CAR) tool; and the Admin
Serviceability Tool (AST).
For managed IP Telephony services, key advantages of Cisco CallManager software are its unmatched scalability,
high availability, and voice QoS—essential attributes for attracting and retaining business customers.
• Scalability—Scalability is unsurpassed because each Cisco CallManager server can support up to 10,000 IP
Phones, and a cluster of Cisco CallManager servers can accommodate up to 35,000 users. If the service provider
establishes H.323 links among Cisco CallManager sites, it can network up to 100 Cisco CallManager clusters,
scaling to meet the requirements of enterprise customers of any size.
• High availability—For high availability, the service provider installs additional Cisco CallManager platforms in
a redundant, clustered configuration, configuring the Cisco IP Phones to automatically seek out and register with
these backup servers. For companies with centralized call processing—that is, with remote sites such as branch
offices connected to a CallManager cluster at headquarters—a feature of Cisco IOS® Software called Survivable
Remote Site Telephony (SRST) provides backup phone connectivity and services. Installed on remote site
voice-enabled routers, the software ensures that basic phone service is available even if the WAN goes down.
• Voice quality—For deployments in which IP is the main transport, a software feature called Cisco Call Admission
Control (CAC) helps ensure voice quality. Cisco CAC helps maintain voice QoS across constricted WAN links
and automatically diverts calls from the IP network to alternative Public Switched Telephone Network (PSTN)
routes if WAN bandwidth is not available.
Service providers who offer the Cisco Managed IP Telephony solution typically deploy Cisco CallManager in one of
three configurations: single site; multisite using an IP WAN with Cisco CallManager installed centrally; or multisite
IP WAN with distributed call processing.
Figure 1 illustrates a hybrid deployment architecture with both distributed and control call processing.
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Figure 1
Managed IP Telephony Solution Architecture
Cisco CallManager
Rest of World
Cisco 2600
Router with
Small Branch 24 User
Cisco 3660
Router with
Powered QoS
Medium Branch 48 User
Cisco CallManager
• Cisco CallManager
Admin and Serviceability Tools
• CiscoWorks2000, ITEM
• Cisco and Partner NMS/OSS
Network Operations Center
Service Provider
*SRST = Survivable Remote Site Telephony
Large Branch 250 User
Voice Mail and Unified Communications: Cisco Unity
Cisco Unity unified communications software, another component of Cisco AVVID, provides voice mail as well as
advanced communications services that unify data and voice messaging. Service providers can choose from two
products: voice mail or unified messaging. With Cisco Unity Unified Messaging, service providers can offer their
business customers converged communications capabilities, such as listening to e-mail over the telephone, checking
voice messages from the Internet, and forwarding faxes to any local fax machine. Built on a platform that can scale
to meet the changing needs of service providers’ customers, Cisco Unity uses streaming media and an intuitive
browser interface for system administration. The latter reduces administrative burden, increasing the profitability of
managed IP Telephony services based on Cisco solutions.
Line Connections: Cisco IP Phones
Cisco IP Phones are fully programmable, next-generation intelligent communication devices. The service provider or
business customer can customize the phone feature set easily as business needs change. The two-port 10/100BASE-T
switch interface can be used to connect the phone to a PC, satisfying most desktop users’ needs with a single Ethernet
port. In-line power is accepted from an integrated Cisco Catalyst® switch card or the Cisco Catalyst in-line power
patch panel.
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Service providers can offer their customers a choice of several Cisco IP Phones depending on their price and feature
requirements. For example, the Cisco IP Phone 7940 is a full-featured phone for light to medium traffic volume, the
Cisco IP Phone 7910 is a basic-feature phone mainly for use in lobby areas, and the Cisco IP Phone 7960 is designed
for executives and managers. The Cisco IP Phone 7905 is a low cost, full-featured IP telephone particularly suitable
for the small-to-medium business market.
Cisco Catalyst Switches
Cisco Catalyst switches deliver the QoS capability required to identify voice traffic and give it priority over data
traffic. This ensures that the voice quality experienced with the Cisco Managed IP Telephony solution is comparable
to TDM voice quality. Cisco Catalyst switches also provide the in-line power required for Cisco IP Phones.
Cisco Voice Gateways
Cisco offers a portfolio of gateways for connecting an IP telephony network to the PSTN. Options include specialized
standalone customer premise gateways, such as the Cisco VG200 VoIP Gateway; remote-branch integrated-router
VoIP gateways, such as the Cisco 2600 Series and Cisco 3600 Series; high-density campus and service provider
network VoIP gateways, such as the Cisco AS5000 Series Universal Gateways; and voice-service modules for the
Cisco Catalyst switch family. The service provider can often take advantage of the customer’s existing
infrastructure—for example, by simply adding a voice gateway card to an existing Cisco Catalyst switch. The service
provider selects the appropriate gateway based on the business customer’s port density and network capacity
requirements as determined by the service provider during the network assessment process.
Network Management
In the managed-services environment, the service provider monitors the enterprise customer’s IP Telephony network
remotely, typically from an existing network operations center (NOC). Network management tools are available
from both Cisco and Cisco AVVID Partner Program members. Cisco has teamed with partners to provide the
optimum feature set for service providers that want to manage multiple customers from a single software tool.
Table 3 summarizes the capabilities of network-management software options for the Cisco Managed IP
Telephony Solution.
Table 3 Cisco Network-Management Software Functions
Cisco IP Telephony
Environment Monitor (ITEM)
Monitors the health of IP telephony installations (including Cisco CallManager,
switches, gateways, and IP phones) and the underlying IP fabric. Provides
real-time, detailed fault analysis of Cisco devices in IP telephony environments.
Uses synthetic traffic to replicate network activity associated with IP telephony
implementations. Alerting functions can send information to paging and e-mail
servers as well as to the Managed IP Telephony service provider’s network
management system
Prognosis IP Telephony
Manager from Integrated
Provides a single point of management for the Cisco CallManager and its
underlying infrastructure, including clusters and remote sites; can be partitioned to
manage multiple customer deployments
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Table 3 Cisco Network-Management Software Functions
NetIQ VoIP Manager for Cisco
CallManager from NetIQ
Monitors the health, availability, and performance of Cisco CallManager, including
the operating system, Structured Query Language (SQL), Interim Interswitch
Switching Protocol (IISP), Trivial File Transfer Protocol (TFTP), and application
services; can be partitioned to manage multiple customer deployments
Why Cisco?
The leader in IP telephony, Cisco offers a complete end-to-end solution that enables service providers to deploy
managed IP Telephony services profitably. Cisco offers service providers the following advantages:
• Market leadership in enterprise converged networking—More enterprise customers have built their LAN
networks with Cisco equipment than with any other vendor. These existing Cisco customers can easily upgrade
their LAN infrastructures to support IP telephony. Synergy Research reports that Cisco is number 1 in worldwide
IP phone and LAN telephony revenue, and Infotech ranks Cisco CallManager number 1 in IP PBX shipments.
Therefore, service providers that deploy the Cisco Managed IP Telephony solution gain the largest available
market—not only for managed IP Telephony services but also for other high-margin managed voice and data
services that can be deployed on the same infrastructure.
• Technology leadership—Cisco IP telephony solutions offer an unmatched feature set, scalability, and high
availability, and they comply with open standards. Service providers can base their managed service offers on a
platform that helps them remain competitive in the market.
• Commitment to managed services—Cisco has gained invaluable experience and expertise by offering IP
telephony and converged services to enterprise customers. Now Cisco is employing its unique knowledge
base to create new revenue opportunities for its service provider partners by affecting the Managed IP
Telephony Solution.
• Ready access to skilled resources—The extensive sales and support staff at Cisco and its reseller channel for
converged voice/data solutions give service providers access to an unparalleled skilled resource base for
accelerated market penetration. Cisco IP telephony reseller partners can help the service provider extend its sales
reach and also support the installation and configuration of the Cisco Managed IP Telephony Solution.
• Comprehensive product portfolio—Service providers that choose Cisco can work with a single source to obtain
all necessary enterprise and central office-based Cisco Managed Voice Services solution components.
For More Information
To learn more about the Cisco Managed IP Telephony solution and other Cisco solutions for Managed Voice
Services, visit:
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