Cisco wins VoIP deal with Bank of America

Cisco Systems has racked up another significant internet telephony contract.

The company on Tuesday will announce a deal with Bank of America to begin deploying 180,000 Cisco Internet Protocol (IP) telephones throughout 5,800 banking centers and enterprise locations in 29 states and the District of Columbia.

In July, Cisco announced a similar contract with defence contractor and airplane manufacturer Boeing. Earlier this month, Ford Motor announced that it plans to install 50,000 Cisco IP phones in 110 offices throughout Michigan.

The Bank of America deployment will occur in three phases during the next three years. The company is currently conducting a pilot program, which will conclude at the end of this year. The first phase of the production deployment will begin in early 2005, said Craig Hinkley, senior vice president of network architecture and strategic direction for Bank of America.

In total, the company plans to eliminate a disparate collection of 362 PBXs in favor Cisco's IP telephony products. Systems integrator EDS will help Bank of America transition to its new voice and data network infrastructure.

Cisco has been the industry cheerleader drumming up interest among large businesses for voice over IP (VoIP) services since it deployed its first phone back in 1999.

Today, Cisco is considered the equipment leader in this market. It has sold more than 3.5 million IP phones, displacing 8,000 traditional circuit-based telephones every business day, according to company officials. Cisco also claims to have more than 16,500 IP communications customers worldwide, 40 of which have already deployed more than 5,000 phones in their networks.

But while Cisco has been racking up big contracts, not every deployment has gone smoothly. In the past few years, several Cisco customers have cancelled contracts with their systems integrators.

Last year, Merrill Lynch and the state of Alaska both cancelled their contracts with integrators that had recommended Cisco gear be used in their VoIP networks. Merrill Lynch is now deploying a mix of gear from Cisco and its competitor Avaya.

In the face of these problems, Cisco has defended its technology.

Hank Lambert, Cisco's director of product marketing for enterprise call control, said: "In these two cases, the customer said it was complications with their integration partners that became a problem, not Cisco's technology."

In August, Dow Chemical, another large Cisco IP telephony customer, cancelled its data networking contract with EDS, tapping competitor IBM to take over its data and voice projects. Cisco's Lambert said that Cisco's VoIP gear is still being used in the Dow Chemical IP telephony network but he wouldn't comment on specifics about what has changed since IBM took over the project.

Cisco agrees that some customers have hit bumps along the way. These glitches are often blamed on a variety of factors involving the integrators, such as poor network planning and project oversight. Experts agree that despite the recent hype concerning VoIP, the technology is still relatively young, and customers, integrators and vendors such as Cisco are still working out the kinks when it comes to deployment.

Dave Passmore, an analyst with The Burton Group, said: "We've seen a lot of variability among the VoIP networks that have been deployed. The biggest thing to recognise is that ultimately the performance of the VoIP network rests on the quality of the underlying data infrastructure."

The data network that will be used to carry the voice traffic must be ready to carry the additional, latency sensitive traffic, Passmore added. Customers need to have a reliable, highly available and secure network in place before they can even think of deploying VoIP, he said.

Lambert said that Cisco has learned a lot during the past four years and is applying that knowledge to how it works with customers and network integrators today.

"The technology and the integrators' knowledge of deploying the gear has improved dramatically over the past four years," he said.

Hinkley of Bank of America said that his company has already been through a full upgrade of its data infrastructure. He doesn't anticipate any major problems as the network is rolled out.

"We're ready to support real time traffic over a converged network that is highly available and redundant," he said. "We have a model in place for managing the outsourced project. We are working with our provider to maintain architectural direction and control. This is not a situation where they go away and come back two years from now saying, 'Here's you're network.'"

Marguerite Reardon writes for CNET News.com