As IT budgets shrink and sensitivity to travel costs grows, recent improvements in videoconferencing have made the technology a logical consideration for many companies. Videoconferencing helps reduce travel expenses and decreases carbon footprints, while also creating a highly productive work environment. These benefits create a compelling return on investment (ROI), but if organizations do not have the foresight to power their videoconferencing technology with a supportive network environment, they put their investments and potential cost savings at risk.

The ROI of videoconferencing

Expense reduction through a decrease in travel is the primary reason corporations cite for deploying videoconferencing systems. Due to the availability of reasonably priced, high-definition videoconferencing devices, a favorable return on investment and quick payback period are easier to achieve, further driving adoption. Exact ROI for a videoconferencing deployment will differ from company to company based on factors such as the number of employees that travel, their location and concentration, and the type of videoconferencing experience desired (e.g., HD, telepresence, webcam), but any type of deployment offers significant cost/benefit potential, especially with the right network behind the scenes.

For example, consider a basic room system deployment of an HD system for two corporate offices that need to communicate regularly. This could be a manufacturer or developer with distributed engineering and marketing resources, for example. Assuming the technology can replace seven business trips per month between both locations and all employees, the deployment can achieve an ROI of 35% in the first year of use. This considers savings only due to eliminating internal trips. Extending the videoconference capability to include partners and customers provides an even more compelling ROI.

Figure A

Not only does the example in Figure A show the substantial savings created by replacing business travel with videoconferencing, but further calculations reveal that the break-even point is in month seven, which means the video investment pays for itself in just over half a year.

Benefits beyond these financial calculations include more on-site hours for executives, greater productivity as executives are not losing time due to travel, as well as the potential for increased job satisfaction and employee retention due to a decreased travel schedule. In addition, the workforce can be more distributed, so corporations can take advantage of a worldwide talent pool and favorable business climates. Carbon footprint reduction and the resulting goodwill are additional benefits.

Saving money sounds good: What next?

Given the compelling ROI potential, it’s no surprise that adoption rates for videoconferencing are on the rise. Myriad options — from HD to telepresence and everything in between — allow companies to meet budgetary and quality requirements. A final consideration, and probably the most critical, however, is the network. All the time and dollars invested in video equipment, HDTVs, room modifications, and end user training will be wasted if the network cannot handle the video traffic appropriately.

Video is not a forgiving application, and dropped packets cannot be resent, so the quality of the WAN connectivity is paramount. In addition, telepresence systems are transporting vast amounts of information and have limited error correction ability. A small amount of packet loss can be highly noticeable on a video call and can quickly render the communication intolerable.

Is the WAN network ready to meet the increased demands placed on it? Corporations need a high-quality network to connect multiple locations across the globe, possibly requiring the use of multiple carriers for their video connections. Adding partners on disparate networks to a conference presents an even greater challenge. IT managers need to ensure that they can meet these challenges by choosing high-quality bandwidth to connect existing sites as well as new sites that might be added as a result of opening new offices or being involved in a corporate acquisition. An ROI for videoconferencing is meaningless if a reliable, high-performance WAN network is not in place.

First, the network must be sized appropriately to handle the increase in bandwidth required for video traffic. Deployment leaders must decide to either converge the video traffic with data traffic or purchase a dedicated connection for the video traffic. Convergence provides the added benefit of additional bandwidth that is available when video traffic is not in use and is also economically efficient because the cost/Mbps typically decreases as bandwidth scales up. This approach works well for corporations transporting large files, for example, for data backup purposes, as they can maximize their bandwidth use by scheduling their backups during non-peak times when video is not likely to be utilized. In addition, convergence is typically more cost effective and less disruptive as long as bandwidth can be scaled on the existing link.

MPLS services can facilitate the converged network by providing multiple Classes of Service and application prioritization, allowing video traffic to be prioritized above lower priority data services. MPLS has the ability to separate traffic into multiple classes of service while also providing further application prioritization within a class.

Finally, because network performance is critical to the success of a video deployment, managed service providers that act as network integrators can ensure reliability and minimize problems caused by individual network disruptions. By interconnecting with multiple redundant backbone transport infrastructures, these providers can move traffic from a poor performing network onto one that is more resilient in the event of an outage or severe performance degradation and ensure the best path routing of traffic within and between regions of the world.

Performance metrics: The affects of jitter, packet loss, and latency

Video traffic is highly demanding in terms of jitter, packet loss, and latency specifications. Telepresence systems require an even higher level of service because larger amounts of data are being transmitted at any given moment, and a slight performance disruption can result in noticeable packet loss. Following are the three top performance metrics to consider:

  • Packet loss: Typical numbers for acceptable packet loss during a conference range from 0.1% to 2%. Packet loss for telepresence systems typically needs to be under 0.1% to remain unnoticed, with some vendors recommending even tighter specifications for their telepresence systems. The effect of packet loss on the video application is “blockiness” and/or jerkiness of the video, as well as audio drop-outs.
  • Latency: Without prioritization of the video conference traffic as a whole, latency can cause the effect of a loss of lip synchronization. Audio packets tend to be small (480 bytes or less), while video packets are typically large (800-1500 bytes). Intermediate routers may prioritize the two packet sizes differently, creating differing transit times so the audio and video packets become out of sync. A typical rule of thumb for latency is < 300 msec round trip between endpoints before users in an interactive call start to notice a delay between the speaker and the receipt of their words by the far end participants. Increased latency can be tolerated, but it will eventually result in awkwardness during the call and a potential hindrance to the free flow of communication as parties talk over each other at > 400 msec. The lesser the interactivity, the more tolerant the latency specification can be, such as in a training situation that is largely one way, even a satellite link might work sufficiently.
  • Jitter: Jitter refers to unwanted variation when packets are received. If there is a traffic delay, data can be buffered accordingly; however, when the delay continues to change, processors get overloaded, driving up latency and packet loss. This can result in “blockiness” of the video as well as a frozen or jerky appearance. A good rule of thumb for jitter is < 20 msec for a high-quality videoconference experience.

It is critical to mitigate any negative effects on a videoconference caused by latency, jitter, and packet loss, or the ROI of video deployment will not be realized.

It’s no fun to videoconference alone: Connecting disparate networks with video extranets

In addition to the network considerations mentioned above, many companies face another hurdle on their way to realizing the full ROI potential of their videoconferencing deployments: connecting to partners outside the corporate network via videoconferencing without compromising quality. A similar situation results when a multinational company utilizes different network providers around the globe.

One way to address the potential pitfalls of disparate networks is through third-party secure extranet services. Third-party providers can implement and control policies between two corporations so both can securely communicate across a neutral private network while bypassing the public Internet and potential points of service degradation. Tunneling across a private backbone mitigates the long latencies associated with using the Internet at large and entirely avoids public congestion points that would contribute to lost packets, jitter, and latency. Using a third party, such as a managed service provider, lets an organization have confidence in their network without having to worry about monitoring, management, and infrastructure investments.


To maximize ROI for videoconferencing, corporations must choose their networks wisely. With a supportive network environment, organizations can take advantage of convergence where it makes financial sense, decrease any jitter, packet loss, or latency, and accommodate partner extranets when the need arises. In addition, choosing a provider that can supply a high-quality network worldwide with global aggregation points to connect to partners outside the corporate network provides a future-proof solution that can expand as business needs and partners change.

Kathryn Lynch is Virtela’s senior product manager responsible for overall development and delivery of video communications and convergence services. Prior to Virtela, Kathryn held product management and marketing positions at Nortel, AT&T, and Qwest and has worked extensively in the telecommunications, Internet, videoconferencing, and cable TV industries.