The battle for broadband Britain has begun in earnest, with announcements from telecommunications providers heralding what many observers expect to become a fully-fledged price war between British Telecom (BT), Telewest and NTL. From 1 April, BT will cut wholesale prices for broadband from £25 per month to £14.75. The UK is currently lagging so far behind most of its peers in the take-up of broadband services that the situation has become something of an embarrassment for the Government. Many law firm IT directors have high hopes for better, cheaper services as the providers get serious about keeping their customers happy.

And law firms should be high on the companies' priority lists. According to a recent survey across all sectors of commerce and industry by Eurobell, a division of UK cable group Telewest, the legal sector is the third-biggest spender on international calls. Seen in this light, it is strange that none of the very large players in the market are focusing specifically on the legal sector. "You would expect more of a divisional focus from the likes of BT and Cable & Wireless: we are not treated as a market with huge potential, which is what we are," says Derek Southall, head of strategic development at Wragge & Co. "Any operator that really focused on law firms would do well because we depend on telecommunications in every way. But none of the popular suppliers do a fantastic job, nor do they have huge economies of scale." It is also hard to see why, if firms are spending so much on telecommunications, relatively few are using voice over internet protocol (VoIP), which potentially can deliver huge cost savings.

But is there a danger inherent in the much-hyped broadband price war? Adam Singer, chief executive of Telewest, was reported this month as saying it was ironic that BT was only cutting prices after most competitors had run out of capital and had given up trying to gain access to its local network. The regulator, OFTEL, is understood to be investigating the proposed price cuts at the time of writing.

Last year BT came under fire from critics who claimed that it was deliberately obstructing competitors' access rights to local telephone exchanges. For its part, BT vigorously denied any deliberate delays in 'unbundling the local loop'. Bitterness on both sides, presumably, is propelling the major providers towards a showdown. While BT's rivals may be at a disadvantage in terms of geographical coverage and flexible pricing strategies, this is counterbalanced by their ability to turn up the speed of broadband more rapidly than the national carrier and at less cost. All the companies have massive debts and Telewest's £2bn loss in the last financial year is fairly typical for the industry. Most cable operators are not expected to make it into the black for at least four years. And with the fate of alternative telecoms carrier Energis now at the mercy of its bankers with £600m of debt, there may soon be another stark reminder of the sorry state of the industry.

However, law firm IT directors appear unperturbed by the poor balance sheet performance of these vital suppliers. Southall says a price war would be to everybody's benefit. Nathan Hayes, head of IT at Osborne Clarke, says there is no danger that the current price war will lead to a monopoly because the regulators would not allow it. "The phone providers all have massive debt problems, but their ability to generate income is impressive and it will not be difficult for them to service these debts," he says. "But if the [economic] downturn had been more severe or had gone on for much longer, this would have been more of a problem."

Hayes says a broadband price war would be wonderful for corporate customers such as law firms. "But law firms have specific requirements," he says. "Telephony is the primary tool for communication so dropped calls and bad lines are unacceptable." However, there is a silver lining for the IT department. The end users tend to automatically blame the provider for poor service, rather than the firm's internal IT function, he says.

According to Hayes, the cost issue is less important than securing high quality service, especially in the US. "In the UK and Europe we make assumptions about telephony standards, but with the introduction of competition, these assumptions will be quickly removed as the providers begin cutting back to make cost savings, to increase profitability," he says. One issue faced by Osborne Clarke in the US was the provision of ISDN 2 facilities, which are quite heavily restricted. "We assumed that it was just incorporated into the providers' standard services," he says. "It is a lot more difficult in the US to get the quality and level of service that you need."

The price cutting proposals are by no means a certainty. Comments from IT consulting giant, Cap Gemini, seem to suggest that the industry's largest players are taking it all with a pinch of salt. Geoff Unwin, chief executive at Cap Gemini, was reported this month as saying that former government monopolies would continue to dominate their markets and the landscape was unlikely to become more competitive. He said: "There is enough capacity out there, it is just a question of being able to get at it. That is where the legislators need to get out of the way. UK penetration is pitiful. There is still a long way to go." Unwin, and heavily indebted companies in the sector such as Marconi, also blame the Government for damaging the industry by auctioning licence fees for each successive generation of wireless spectrum for stupendous – and unaffordable – amounts of money.

But the suppliers' financial woes do not mean they are unable to negotiate with their business clients. "There is a huge disparity in what law firms pay for essentially the same service," Southall says. Law firms have almost always outsourced management of the telecom function – which is becoming increasingly expensive, with mobile handsets that have to be replaced regularly and new pricing structures introduced each year. "The cost disparity between firms underlines the importance of developing more expertise in-house," he says. "We are not yet where we need to be, but this is high on our list of areas to advance."

Wragges has encountered a mixed response from fee earners trying out the latest mobile phones, which are generally referred to as 2.5G. "Some users say it is fantastic, while others report that the service is really patchy, with links falling down," he says. There is a clear advantage in the reduced download time, but the demand for 2.5G is by no means universal. Wragges concluded that while there is a strong case for a limited roll-out, the systems are too expensive for a firm-wide implementation.

National firm DLA is also looking at this area, according to IT director Daniel Pollick. "Pay-per-download (PPD) is a difficult issue because you do not know how much any download is going to cost," he says. "And in a law firm the end users do not care how much it costs."

Pollick's IT department closely monitors lawyers' phone bills to ensure that nobody is running up massive charges. "In Germany PPD is completely routine and widely accepted," Pollick says. "The bottom line is that I do not mind about the pricing structure. What I care about is that the service is economic, reliable and provides monthly bills for each user."

The biggest splash last year in the business communication market was made by Research In Motion's (RIM's) European launch of its BlackBerry remote e-mail device, now a de facto standard piece of kit for corporate lawyers in the US. Initially, lawyers and IT directors at some of the UK's largest law firms were bitterly disappointed that they could not use BlackBerry because their infrastructure did not meet the device's strictly Microsoft-based requirements. But others were delighted. "BlackBerry is fantastic – an amazing little device and currently the only true real-time e-mail solution with tight, two-way integration," says Pollick. "This year we will see a lot of people substituting mobile devices for laptops. Take-up of Blackberry is increasing rapidly now that people are seeing them in places such as airport lounges."

Pollick says although most other mobile devices are 'sexier' to look at, BlackBerry's performance is solid. "Smart phones might be a threat to the device, but RIM has launched a phone update for BlackBerry," he says. "I am unsure which way the market will go: it is a bit like the VHS/Betamax situation in the 1980s."

DLA has a mini-pilot in place with Pollick and one fee earner trialling the device. "It will only suit some lawyers," he says. "Everyone is dependent on e-mail to some extent, but the BlackBerry is suitable for really intensive e-mail users. You need basic IT literacy and more importantly, an innate curiousness about technology and a commitment to let it change the way you work. At DLA we will only give BlackBerrys to people who are self-starters when it comes to IT."

At Wragges, Southall is less convinced. "The value of the BlackBerry is hard to quantify," he says. "Roll-outs in the legal industry have not always been successful – it depends who you talk to – although the system is great in firms where it is working properly. At £1,000 per user for the first year, it would be easy to make a costly mistake."

This point of view is echoed by the head of IT at another major law firm. Speaking on condition of anonymity, he said: "We are minded to let Slaughter and May spend millions sorting it out and then we will all buy it for a reasonable price."

Bristol law firm Osborne Clarke has devoted considerable resources to rolling out mobile access facilities to lawyers across Europe. Because the system relies on a GSM connection – rather than the more powerful GPRS – there are speed limitations and therefore a limit on the amount of functionality that can be provided.

"We have been looking at GPRS as an option, but there is no supplier with a truly co-ordinated approach and a single solution and the service is very unreliable," Hayes says. BlackBerry does not suffer from these problems and is now a very viable solution with low implementation, support and administration costs, but Hayes regards it as a short-term solution. He predicts that, in the long run, it will be overtaken by more generic offerings from the mobile phone and PDA manufacturers. But it is still worth rolling out BlackBerry to heavy e-mail users because the PDA market will take at least two years to sort itself out, by which time the device will have paid for itself.

Cost is the major issue with mobile working facilities, Hayes says. "The on-going support of various PDAs, the devices' inherent instability and connection problems, can add up to a massive cost. If you could do a proper return-on-investment study on PDAs you would probably scare yourself silly." Hayes is personally opposed to proprietary solutions, but admits that there is a lot of potential value in the BlackBerry. He is running a pilot scheme, which has been generally positive, but has established that the device cannot be used across multiple countries. The IT department provides BlackBerry after examining the business case made by an individual user.

Hayes' personal view is that most PDAs are not secure, although the BlackBerry is adequate. "We must be careful not to blow it out of proportion, but security is an issue," he says. Rather than restricting the types of information that can be downloaded to a mobile device, Osborne Clarke focuses on providing a high level of support to ensure that all available security features are enabled.

DLA's Pollick says one reason for selecting BlackBerry was the availability of high level data encryption, which is not an option on standard PDAs. "The ability to wipe data centrally is also a major plus," he says. Southall goes further, saying that security is massively overlooked by most law firms, especially on the PDA side. "Very few people use PDAs with adequate security settings and as mobile phones become more powerful they are also going to encounter the same issues," he says. Wragges takes care to ensure that all files on mobile devices are overwritten by the firm's IT department before they are passed on via resellers to the second hand market, whereas most firms rely on the resellers to do this. In contrast to Osborne Clarke, Wragges also takes steps to limit the amount and type of information that can be stored on PDAs. This is seen as important because mobile devices, like all small objects, are easy to lose.

Pollick agrees that wiping data irretrievably is a serious issue, but says outsourcing the work is acceptable, provided you only engage with a trusted handler that wipes off data to industry standards.

Hayes and Southall both agree that benchmarking the cost of telecoms services is essential for law firms, but it is difficult because the providers are opaque when it comes to costing and management information. Osborne Clarke's approach is to consolidate most of its requirement with a single supplier while using several secondary suppliers at the same time. Hayes says this keeps the companies honest. "We put a vast effort into negotiating a good arrangement with our primary supplier," he says. "To a large degree this has worked – we get the highest quality and levels of service at a lower than average price."

Osborne Clarke's perceived mastery of the telecoms function is partly down to its use of "incredibly complex routings" to cut call charges to a minimum. For example, by intelligently routing fax communications from its Bristol hub to its office in California, the firm only pays for calls at the local rate. "The permutations and combinations are enormous," Hayes says. "The key is to employ a full-time telecommunications specialist because better routing and control of the providers is imperative for any medium-sized law firm. This is not just an adjunct to somebody's job; it is somebody's job."

A few lawyers at Osborne Clarke have tried using voicemail as a digital dictation solution. While this is quite easy to do, most are more comfortable using a 'proper' dictaphone. This is not an insurmountable problem, but the capability of standard digital dictation systems goes so far beyond the scope of voicemail that it makes sense to buy one. Secretaries can use foot pedals to control the playback of dictations in the same way as with analogue tapes, which they cannot do with voicemail. "We have 30 people using Olympus DS 3000 voice recorders which are wonderful and very intuitive to use. But it is not for everybody. You have to be careful to [target] only people who have a healthy view of the technology and are genuinely heavy users of mobile dictation."

But perhaps the firm's innovation is most apparent in its extensive use of video conferencing systems. "Video conferencing has been absolutely wonderful for the firm as a cost saving device and as a general facilitator for communication between our offices," Hayes says. "We have eight or nine fixed units and are in the process of buying more." The firm primarily uses ISDN 2 lines to eliminate bandwidth and quality issues. But its US office is also experimenting with desktop video conferencing systems, over internet protocol (IP) and the firm's virtual private network. "I would not like to see too many people using it," Hayes says, aware that streaming video can have a huge impact on network performance. Bandwidth monitoring software in place at Osborne Clarke sounds the alarm when network traffic is unusually high, but the cost of a full bandwidth management system, at well over £100,000, is considered prohibitive. Also, there is no question of a firm-wide roll-out in the near future because bandwidth consumption can easily spiral out of control. "Under normal circumstances it is difficult to make a business case for desktop systems if the fixed units are not in constant use," Hayes says. "We will roll it out where there is a clear business case."

A senior industry professional says telecommunications is one of the easiest areas in which national law firms based outside London could quickly surpass their larger counterparts in the square mile. "I have sympathy for the City firms because they are huge ships to turn," he says. "The mobile technology situation will only compound the problems they face."

Reducing the cost of talking

Law firms can reduce the cost of communication by embracing VoIP as part of their IT strategy, write Elliot Rose and Chris Pickup

The legal market is facing unprecedented change. A recent survey of the top 100 law firms in the UK by Legal IT and PA Consulting Group found that 87% of firms expected an increase in competition from other professional services sectors, whereas only 20% were planning to branch out of the legal profession. Therefore, law firms can expect increased competition for business from clients who want easier and lower cost ways of doing business.

Traditionally, the majority of costs incurred on behalf of clients have been charged back to the client. However, with increasing levels of competition, some law firms are already performing fixed or discounted fee work.

Telecommunications costs often form part of the costs incurred in the pursuit of client work. A recent survey by Eurobell highlighted the legal sector as being one of the highest users of international telephony and this can be expected to rise with the globalisation of legal work and the resulting need for geographic mobility of staff.

However, a new opportunity to reduce communication costs has arisen with the ability to convey international telephone calls across the internet using voice over internet protocol (VoIP). A survey by Rhetorik of European IT directors found that 22% of companies are using this technology.

E-mail has revolutionised the postal industry. Over a period of 10 years it has become the most heavily utilised form of written communication. Voice and video-based communications are now set to join e-mail on the highly versatile internet highway.

Video and voice communication have different user requirements from e-mail. Writing an e-mail typically takes a couple of minutes, so a few minutes' delay in delivery across a network is acceptable. However, no delay is acceptable for voice and video. Without the ability to relay immediate responses it becomes unacceptable as a communication medium. Therefore, specialist protocols and technologies are required to achieve the required performance level. VoIP is a commercially available solution.

The adoption of VoIP is being driven by the efficiency savings of having to maintain only one communications infrastructure. A simple analogy can be drawn from the use of road transport. A road is used for a variety of vehicles e.g. cars, lorries and buses. A bus user requires a greater level of punctuality than either a car or lorry user. There are two ways of increasing the punctuality of buses: either create a separate road for buses or give priority to buses on an existing road by means of a bus lane.

The first solution requires the upkeep of two separate infrastructures. It is unlikely that a 'bus only road' will ever be used to full capacity, therefore the road system as a whole is under-utilised and inefficient.

The flexible bus lane approach, however, can vary the enforcement of the bus-only rule as a function of the flow of traffic. If the volume of traffic is low, then all road users can use all the lanes and the arrival time of the bus is still guaranteed. However, if the volume of traffic is very high, then the bus-lane can be enforced and the bus can still arrive on time, albeit with a slight delay to other traffic that is less time sensitive. The ability to prioritise the traffic on a single road leads to greater efficiency and, therefore, reduced cost compared to the dual-road solution.

This transport analogy can be applied to the transfer of various media over the internet. If it is possible to transfer video conferencing data, voice data and documents down one infrastructure with prioritisation, then efficiency savings can be realised over the use of separate dedicated telephone and internet infrastructures. This efficiency saving is driving the market towards the use of the internet.

The business case for VoIP is best suited to enable the use of unutilised bandwidth on a wide area network (WAN).

The two forms of telephony (circuit switched and VoIP) have different pricing structures. Circuit switched telephony has a complex charging system based on the type, length and distance of the call. The suppliers provide a bewildering range of packages that do not always clearly indicate the true costs of calls (and thereby complicate comparison). One thing is common to all the pricing plans – if an international call is not made then there is no charge.

The purchase of WAN services typically provides capacity (bandwidth) for a fixed period of time. The price is generally not dependent on the usage of that bandwidth. If a firm does not use the bandwidth fully then it may, in effect, be wasting money. VoIP implementation costs aside, the calls across a VoIP-enabled WAN or LAN are free.

Therefore, it may be economically viable to increase the bandwidth of a network to allow a greater proportion of calls to be routed via the internet. The Legal IT/PA survey found that 15% of law firms had implemented VoIP for video conferencing and 35% were considering implementation. Video conferencing is an ideal candidate for VoIP because it involves heavy communication for long periods between offices that are (often) located in different countries. Video conferencing equipment can have built-in VoIP technology to connect directly into a network. The cost of implementation can, therefore, be very low because it uses existing bandwidth to communicate without any international telephone calling costs.

Factors that affect implementation

There are several key factors to consider for VoIP:

- The existence of a high performance WAN. Without a dedicated WAN with agreed service levels, it is unlikely that the performance of voice and data transfer will be sufficient to ensure an acceptable quality of service. If users perceive a significant reduction in quality compared with existing international telephony then users will be unlikely to accept VoIP.

- High volumes of international telephony between countries. For VoIP, an organisation may need to invest in new equipment at either end of the communication channel. It is, therefore, beneficial to implement VoIP between two countries where there is known to be a high volume of calls, e.g. between regional offices.

- Experienced personnel. VoIP is a relatively new technology and significant expertise within organisations may be limited. A business case would need to factor training of existing personnel (or hiring of new) or potentially outsourcing the skills required.

- VoIP technology. There is a bewildering array of
technology available running on a variety of VoIP standards. As the market matures, it is likely that specific standards will dominate. Expert knowledge is, therefore, essential to ensure that the best equipment is chosen for the requirements of the organisation.

- Secure communication. VoIP can be highly secure if strong encryption standards, such as Triple DES, are used. Security is very important within the legal sector especially given the need to discuss privileged and confidential matters.

- Local VoIP solutions. In addition to international telephony, it is also possible to implement a VoIP solution whereby all phones, faxes and video conferencing units can be connected to the LAN. The implementation of such a solution at a site means that there may well be limited need to maintain private exchanges (just an interface to the public network).

VoIP can deliver cost savings on communication and, therefore, help provide competitive advantage. Given that VoIP technology is expected to drive the complete convergence of voice and internet communications over the coming decades, it is important that law firms should consider it as one of the core components of their IT strategy.