Hoot networks are critical to most businesses in the financial sector. These networks link hundreds or thousands of users around the world and provide real-time access to market data and analysis as well as shout down capability between groups of users. This could be inter-office or even inter-organization.

Supporting these global hoot networks is a large amount of leased line infrastructure costing thousands or millions of dollars each year. While leased lines are a tried and true technology, they are becoming cost prohibitive. Customers are looking for alternative ways to keep their hoot networks live while driving down operating costs.

Voice over IP (VoIP) is a logical, proven choice to replace leased lines. Many large banks and institutions have spent a considerable amount of money installing world-class data networks. These data networks can be leveraged to carry hoot audio throughout the organization, thus eliminating the leased line infrastructure and their accompanying high recurring costs.

VoIP allows an institution to reach its large, corporate offices as well as its local, remote offices that may only have one or two employees. The costs of deploying and maintaining a leased line infrastructure to 500+ offices is massive compared to the data network that already exists.

A VoIP solution can also provide many other benefits beyond the cost savings of replacing the leased line infrastructure. Some of these benefits include the ability to see who is actively speaking on the hoot, seeing who is available on a particular hoot to take a trade, having logs of who was logged onto a particular hoot during a given period and having SNMP traps generated if an error occurs on the hoot network. These additional features offer compelling reasons to move to a VoIP solution, which can also help meet stringent compliance regulations.

To put this in perspective, a large financial institution has 300 offices throughout the world and currently spends over $2 million annually on its leased line infrastructure. Adding a new office to this infrastructure costs $45,000 up front and also increases the annual recurring costs. Meanwhile, the global MPLS data network is only about 15% utilized and can easily handle the traffic of 20 hoot networks. The firm explores all options and decides on a software-based application that meets all of its security needs. In addition, this application also lets the firm keep its existing turrets and other devices. This application costs $1.5 million.

The ROI implications are clear and the firm has implemented a solution that allows it to expand with ease. This solution also provides hoot access to back office users or remote office users who were originally priced out of the hoot network by the cost of the turret system or leased lines. Because the IP network already reaches all of these offices, there are no additional costs to add these users (except for possibly a small software license fee).

VoIP is fast becoming an accepted standard in the financial sector where analog-based circuits have long been the incumbent technology. VoIP is transforming the market, reducing costs and providing additional features and services unavailable with analog-based systems.

Robert Mitchell is Market & Technology Specialist
at Twisted Pair Solutions, 206-812-2360;
email: rob.mitchell@twistpair.com;
web: www.twistpair.com.