Consider the difference between an all-you-can-eat buffet and a restaurant with an a la carte menu. That's what companies see when comparing the cost of IP-based videoconferencing services with traditional ISDN offerings.

ISPs charge a flat monthly fee for IP videoconferencing, and companies can use the service as much as they want. In contrast, customers pay by the minute for ISDN, which can be very expensive, especially overseas.

The cost savings of IP videoconferencing - along with better resolution and easier call setup - are encouraging more companies to switch from ISDN to IP. ISPs say that pricing for IP video services can be anywhere from 30% to 50% less than for ISDN, depending on network configurations and locations of sites.

"We're saving 40% on our monthly bill, just for video," says Loc Nguyen, manager of IS infrastructure at National Semiconductor, a Santa Clara, Calif., chip manufacturer that migrated 15 videoconferencing sites in the U.S. from ISDN to IP this year. "We're running 30 to 50 videoconferences a week within the U.S. . . . Most of our calls are from headquarters out to the branch offices."

National Semiconductor plans to offer IP videoconferencing in five more of its U.S. locations before year-end. Meanwhile, the company's IT staff is trying to drive up usage of its IP video service, which is provided by AT&T.

"We're going to encourage employees to think of videoconferencing for any meeting," Nguyen says. "People still think of videoconferencing as too expensive internally."

National Semiconductor is not alone. Many corporations, including JT International and Zurich Financial Services, are starting to reap the financial rewards of deploying IP-based videoconferencing services. These companies are finding that the cost savings of IP video come not only from lower telecom bills but also from reduced travel costs and enhanced employee productivity.

"If you have to go to the U.S. for a meeting of four hours, it costs you three days," says Jan Wijbren Dijkstra, IT manager at Mammoet, a Dutch provider of heavy-lifting and transport solutions that in August began offering IP-based videoconferencing from Infonet at six corporate sites.

"What we really want to achieve is that all the main locations of our company automatically think of using videoconferencing if two or more people have to have a discussion," Dijkstra says. "This is especially important because our projects are getting bigger and are in more remote locations."

All top-tier ISPs offer IP-based videoconferencing services. Most are built upon Multi-protocol Label Switching (MPLS), which allows network managers to create a dedicated class of service for video applications.

With its dramatic cost savings, migrating from ISDN to IP seems like a no-brainer. In most countries, IP is anywhere from 30% to 50% less expensive and more reliable than ISDN. Users agree that IP videoconferences are easier to set up and troubleshoot than their ISDN counterparts. Additionally, IP video quality is better than ISDN's, offering as much as double the resolution.

So why do so many companies continue to use ISDN for videoconferencing? It's mostly inertia, industry observers say. Some companies aren't ready to upgrade their videoconferencing gear to support IP. Others find that it's easier to keep a legacy ISDN network running.

"Ten percent of our base [videoconferencing customers] have migrated over to IP," says Martha DeGraw, manager of Sprint's Collaboration Services Team. DeGraw expects that number to hit 20% by year-end.

Two of Sprint's largest customers of videoconferencing services show the market dynamics today. HQ Global Workplaces, a provider of furnished office suites in Dallas, uses a mix of IP and ISDN for its videoconferencing services. Meanwhile, Kinkos uses 100% ISDN.

"We have not been hugely successful in getting customers to get rid of ISDN," DeGraw admits. "They're not swapping it out; they're augmenting it with IP at new sites."