Up to 44 percent of the world's corporate telephone lines may be IP-based by 2008. Falling equipment costs and better integration with existing TDM-based telephony systems will boost adoption of voice over IP (VoIP) technology, according to recent research by consultancy firm the Radicati Group.

A separate survey of Nortel customers found that 48 percent of firms remain unconvinced of VoIP's ability to deliver an adequate return on investment, however.

Figures released last week by the Radicati Group suggest that the cost of installing VoIP should fall from around $375 (£200) to $1,000 (£550) per line today, to $75 (£40) to $600 (£330) by 2008, as leading vendors reduce their manufacturing costs and pass the savings on to attract more buyers.

Most VoIP installations are deployed at new sites or offices with no existing telephone system or network infrastructure. In these cases, building one converged voice and data network instead of two separate systems can deliver significant cost savings and management efficiencies. But most IT managers have been reluctant to write off the substantial investments already made in analogue private branch exchange (PBX) systems at offices by replacing them with VoIP. Radicati analyst Teney Takahashi, believes most VoIP deployments will therefore continue to be hybrid PBX systems that marry IP technology with existing TDM infrastructure.

"[Firms] just don't want to forklift in a whole new system," said Takahashi. "Rather, they just want to add a few IP phone line cards at a time." He added that most pure IP-PBX deployments will take place in small companies and greenfield sites.

Another barrier to VoIP adoption has been the high price and limited availability of IP telephone handsets, forcing firms to seek alternatives in the form of software-based telephony apps and ways to attach legacy analogue handsets to IP networks. Last week's Computex show in Taiwan, traditionally a showcase of new technologies developed by Far Eastern manufacturers for European markets, did not yield many new IP handsets. But it did feature a number of new IP telephony gateways from vendors such as Micronet and CyberTAN, sporting RJ-11 ports that allow companies to plug standard telephones into VoIP-enabled networks.

The Radicati Group's upbeat assessment for VoIP appears to be backed up by a separate survey of 430 members of the International Nortel Networks Users Association (Innua), which indicates that 79 percent plan to converge their voice and data networks to some extent within the next five years, or have already done so.

Cost clearly remains an issue for many firms, however, with 48 percent claiming the cost benefits of VoIP are insufficiently compelling to justify investment yet, and 47 percent citing budget restrictions as a barrier to adopting the technology.