VX Systems ROI FAQs

What is meant by “VX Return on Investment”?

Most broadcasters are still using traditional POTS, T1, or ISDN PRI telecom circuits for their on-air phone lines. These legacy services from Incumbent phone companies continue to rise in price. Many stations pay nearly $100 per month for each POTS line, or from $800 to $1,100 per month for 24 lines on a T1 circuit. ISDN PRI can cost even more.

Moreover, most on-air phone systems connect only with POTS or ISDN lines. This means that using older on-air phone systems requires connecting them to legacy phone lines whose monthly cost keeps rising.

An attractive solution is to purchase a new on-air phone system - one that serves multiple studios for talk shows, contest lines, and news gathering - that also natively uses newer SIP/VoIP telecom services.

The “Return on Investment” part comes in when the savings in moving to SIP/VoIP services actually pays for the entire new on-air phone system, typically in two to three years, and sometimes in under 18 months. Once the new on-air phone system pays for itself in telecom savings, those savings continue for years into the future.

Specific examples of monthly telecom savings are presented in a new video, “Telephone ROI: Save Significantly Every Month with New IP Phone Tech”

What does new tech like VoIP have to do with Return on Investment?

Think back to earlier days of business telephony. Broadcasters were forced to buy their phone connectivity the same way they purchased other services such as electricity, natural gas and water—from a monopoly provider. Even after the telephone monopolies were somewhat broken up in the late 1980s, things didn’t change very much because the technology was still the same.

Broadcast engineers at the time may not have realized it, but we were severely constrained by the analog and TDM circuit-switch technology of the day and what it offered. With the introduction of Voice over Internet Protocol (VoIP), voice calls can be converted into data packets just like any other data travelling over IP networks, including the Internet. Since they use a common and open standard, the VoIP packets can interact with practically any other internet-based data system.

This might not sound like a big deal, but in reality, it’s changing everything. Since VoIP packets are handled the same way as other IP-based data packets, companies are creating VoIP applications that are best suited to their own needs. This includes broadcasters and their on-air talkshow systems.

Broadcasters save money by replacing older phone and leased lines (T1 or ISDN-PRI circuits, etc.) with newer IP-based services. Older phone and leased lines typically come from the ILEC in your area. For many locations in the USA, this will be AT&T, Verizon, or perhaps CenturyLink, Cincinnati Bell, Fairpoint, Sprint, or Frontier. These ILECs have typically been slow to offer alternatives to their traditional, tariffed services. Moreover, ILECs’ traditional services often have myriad Federal, State, and Local taxes tacked on

Competitive Local Exchange Carriers (CLECs) must also charge taxes for equivalent services. However, CLECs have been more nimble, introducing IP-based connections along with voice and data services.

You mentioned specific examples of telecom savings. What do those say, exactly?

Let’s examine some actual costs as reported by broadcast engineers in some Top 100 US radio markets.

First is a large commercial cluster in a Top 50 market. By moving from ISDN-PRI to a “Managed SIP” connection, the stations are saving $900 per month, or more than $10,000 per year. Their Director of Engineering reports his clusters’ telecom savings:

I was paying $1,500/month plus usage for a traditional PRI. I now pay $600/month flat (includes unlimited local and LD calling) using a “Managed SIP” trunk. Basically it’s a service provided by a CLEC; they manage the traffic entirely on their network as VoIP. It’s more reliable than pure VoIP, but costs more.

The engineer at a community station in that same Top 50 market brought in SIP trunks and installed his own SIP PBX phone system and new SIP phones. Legacy POTS phone service would have cost about $400 per month for similar capacity. Savings for this small radio operation, then, is about $250 per month.

Another station cluster in a Top 75 radio market is using a combination of PRI and SIP connections. The engineer is responsible for cost optimization not only at the main facility, but also at co-owned station clusters in two other markets within the state. Their stations were less interested in MRC savings and more focused on improving telecom and data service in each of the three market clusters they operate. Moving to an IP infrastructure—both for incoming telecom and Internet service and for intra-market service—these stations greatly improved their business processes and communications by moving to IP. Plus, they saved enough money to replace their business phone systems with VoIP equipment.

For our business and on-air lines, we moved away from four bonded T1s for internet and three PRIs for telephone and ISDN, replacing them with just one 30 Mb/s fiber link. That was around three years ago. Our objective was to get as much guaranteed bandwidth as possible without increasing the monthly recurring costs (MRC). We went from 6 Mb/s to 30 Mb/s for about the same money.

Now, we have added 6 Mb/s MPLS circuits to our two other markets. These tie those two smaller markets to our big market for corporate WAN access and SIP telephone service. The Asterisk PBXs in each market have dial plans that direct market-to-market calls over this MPLS to avoid toll charges. Also these circuits were much less expensive than having corporate WAN access provided to each market.

Our final example is a station cluster in a Top 30 radio market. Their engineer notes that ISDN BRI costs “are skyrocketing” and notes, “we should have weaned ourselves off that technology years ago.” That’s a candid and truthful admission, to be sure. This station cluster is now in high gear, planning replacement IP-based service. The sooner they switch, the more they’ll save on monthly recurring costs.

We have only a very few POTS lines, but a large number of T1s and, believe it or not, ISDN-BRIs. Some of our on-air talkshow lines are direct BRI circuits. These BRI lines are skyrocketing! Seems every month the charges get higher and higher. We are moving more and more off these circuits as quickly as budgets allow for new VoIP equipment. One station does at least six remotes on a weekly basis. We have a number of T1s, plus fiber into the building. And, we have ordered some additional 250-meg Internet circuits from the cable company to get us more onboard with remotes via Internet. We can no longer justify ISDN orders, which is good since we should have weaned ourselves off that technology a few years ago.

You mentioned specific examples of telecom savings. What do those say, exactly?

Let’s examine two very simplistic telecom cost scenarios—one for a Medium-market facility and one for a Small-market facility. The services and costs shown may be wildly different from your own; every facility is different, and some staggeringly so. Nevertheless, a basic comparison on two different market scales demonstrates great promise for significant monthly cash savings when replacing old telecom services with new ones.

Telos VX talkshow equipment natively uses SIP/VoIP connections, so it’s ready to take advantage of new cost-effective SIP service. As with telecom service, every Telos VX talkshow installation will be different. However, here’s a look at a typical scenario for Medium- and Small-market station clusters. These scenarios assume that a station already has a Livewire studio network or is about to move into the Livewire AoIP world, and that either a business PBX or standalone SIP PBX will be used with the Telos VX system.

Both ROI scenarios above are realistic for many Telos customers already using some Livewire AoIP infrastructure (consoles and routing). Broadcasters connecting a Telos VX on-air phone system to non-Livewire equipment will typically see a 20 to 30 percent extra one-time cost for interfacing “nodes.” This changes the ROI period to typically just under two years.

Interestingly, some broadcasters have taken a long-term approach to their ROI on telecom savings by upgrading some or all of their audio consoles when they make the switch to SIP/VoIP phone service. The telecom savings can fully fund the whole-facility upgrade to Audio over IP (AoIP) consoles and routing when considered over a longer time frame.

What would you suggest as my next step in exploring this kind of ROI?

When considering a change of telecom technologies and providers, it’s important to be aware of alternative approaches to both on-air and business phone systems. We’ve focused here on the on-air side. However, combining the business and on-air considerations will likely result in further savings and efficiencies. It’s not necessary they share anything in terms of services or equipment (or, they can fully share) to realize a full slate of Monthly Recurring Cost (MRC) savings.

As part of a meaningful discussion about ROI, broadcasters will want to consider the various business and technical scenarios available in bringing VoIP services to their facility