Cisco Moves to Quell Rumours on Annual Phone License Fees.

A news story from the US earlier this month suggested that IP communications giant Cisco would be charging an annual license fee for every 7900 series IP phone attached to its CallManager IP telephony system. The story, which appeared on the web site on September 12th, revealed that Sam Houston State University in southern Texas was replacing its Cisco CallManager with an Asterisk open source call control platform. One of the main reasons given was that Cisco charges a separate annual license fee for each phone attached to the CallManager.

Comms Business contacted Tim Stone, European Unified Communications Business Development Manager for the Bedfont Lakes based networking company, to ask if there was any truth to this aspect of the story. “Absolutely not”, was his reply. “Cisco has always charged a one-off license fee for its phones, and that will continue. It’s in line with what the rest of the industry does” he said. Fair enough, we said, and filed the story in the usual receptacle.

But some news (like some gossip) never seems to fade away completely. A few days later Comms Business were told that Cisco would be charging an annual license fee if a third party SIP phone were attached to a CallManager system running the latest version 5 software, which supports SIP extensions. This pricing policy was designed to discourage users from buying the relatively inexpensive CallManager call processing software and then attaching non-Cisco SIP phones to it. We contacted Mr. Stone again, who once again denied that there would be an annual license fee. This time he also pointed us to a Cisco web page which gives details on the pricing policy for version 5 of CallManager.

As a Cisco representative had taken the trouble to respond not once but twice to our enquiries, we thought it only fair that we read the “Cisco Unified CallManager Licensing Pricing Model” more than once. In truth we had to, in order to understand it.

Here is the gist of the matter – with CallManager version 5 there has been an increase in the device license fee but this has been matched by a decrease in the cost of the phone hardware. The license is granted in perpetuity – i.e. you only pay once. So far so good!

But, and this is where it gets confusing, there is now a sliding points scale for devices: a basic Cisco 7902G phone rates just 1 unit, whilst a large screen Cisco 7985G video conferencing phone weighs in at the maximum 6 units. As with most things in life, the more you use, the more it costs. The not unreasonable justification given is that you pay for what you get.

However, there is a twist, as always. In the document Cisco juxtaposes the number of features available on a Cisco phone, be it running SIP or the company’s proprietary SCCP protocol, with those available on a third party SIP phone. It suggests that the latter would have less than 25 features as opposed to the 175 or more on the Cisco phone. One may possibly assume then that, like for Cisco’s own basic phones, the basic SIP phone would rate no more than 1 unit on the licensing scale – not the 3 units that are actually applied. And if the customer should choose an “advanced” third party SIP phone, then he or she is looking at a whopping 6 units per device. It was not made clear who would determine whether a third party phone was basic or advanced, but we wouldn’t be surprised if it were the party doing the licensing…

So there you have it. Cisco is not charging an annual license fee for its phones. It is charging more for its phone licenses than before and if you should choose to attach a ‘basic third party SIP phone to a CallManager system, you will pay more than for a ‘basic’ Cisco phone. And should you, or rather your customer, choose to buy an IP phone described as ‘more complex’ and with ‘high end capabilities’ – from either Cisco or a third party – they better have deep pockets!

Of course, the customer could always do what Gartner suggest. Don’t waste money on “high end” IP phones. Spend the money on the Unified Communications applications that will truly change the way that people do business. And we are sure that Cisco will be quite happy if those applications come with a little blue bridge logo on the CD.

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