However, the move to the Internet Protocol (IP) often means that video winds up competing with data for both bandwidth and support from IT departments. "Commandment No. 1 is: Thou shalt not slow down the data network," said Barry Walker, vice president of marketing at Polycom Inc. (Milpitas, Calif.), the largest vendor of videoconferencing systems.

While corporate IT managers may not like the per-minute charges for ISDN lines, they worry that adding video to the corporate network may slow data transfer speeds to a crawl as videoconferences hog available bandwidth. Data, not video, remains king of the enterprise, and keeping data traffic flowing can mean interruptions to videoconferences and other quality-of-service issues in poorly managed networks.

Thus far IP-based videoconferencing has taken root mainly in the large educational and government markets, and less so within enterprises. And the videoconferencing industry hasn't grown much since the mid-1990s. Andrew Davis, senior analyst at Wainhouse Research (Boston), said that since 1994 the 20 percent annual reductions in hardware costs have been offset by 20 percent increases in unit shipments.

"More of the value is shifting to the channel," Davis said-to integrators that help companies bring IP-based video and, in some cases, IP-based voice to enterprises. In fact, Wainhouse Research sees 2003 as the year that IP overtakes ISDN. "We think that transition is really important; it is truly an inflection point," Davis said.

Schools are in the forefront as teachers adopt IP-based videoconferencing to conduct distance learning, using one monitor to show the instructor and another to display learning materials. "Schools led the charge to IP for cost reasons, because it is a lot cheaper than ISDN," said Jim Rank, director of product management and marketing at VTEL Corp. (Austin). The Oregon state school system, for example, has 300 VTEL classroom "endpoints" in place, all running on IP-based networks. Because schools don't worry that much about security-who cares if a hacker breaks into a lecture on Beowulf?-firewalls there are much less of an issue than in the corporate market, he noted.

While only about one-fifth of all industrial-commercial videoconferencing is done over IP networks now, analysts predict that will shift quickly as ISDN networks are abandoned. Of course, that won't happen without a fight from the phone companies, which are dropping usage fees as they try to milk their fully amortized ISDN ports.

Eventually, some observers believe, companies will embrace IP as the management of converged voice, video and data networks becomes less of a challenge to IT managers. Forgent, for its part, markets a software product, Video Network Platform, that allows an IT staff to manage networks of disparate video equipment-or endpoints-across corporate IP networks. Forgent's software is designed to "mask the complexity to the IT manager," said marketing vice president Nancy Harris. Getting to that point, however, will require some companies to upgrade to higher-bandwidth channels, including fiber links in some cases, and to ensure that edge routers and other infrastructure hardware are capable of handling video.

Keeping videoconferences from affecting data traffic involves setting network policy to give priority to data, said Polycom's Walker, or limiting the amount of bandwidth that videoconferencing users can consume at any one time. To that end, Polycom has developed a policy server, gatekeeper and routing system called Path Navigator that constrains the amount of video bandwidth on the wide-area network.

"If 5 megs of bandwidth on the VPN [virtual private network] are consumed by video, then Path Navigator will either refuse more video calls, drop some from 384 kbits per second to 128k or switch calls from IP to backup ISDN links," Walker explained.

While some equipment companies charge $12,000 or more for conference room videoconferencing systems with two large monitors, a special cart, a whiteboard that instantly transfers written images to a distant conference site and other features, Davis said that "a very fine room conference system can be purchased for $6,000 now." Desktop systems, meanwhile, have plunged to about the $600 to $1,000 range, and are expected to drop much further as volumes ramp.

Polycom's ViaVideo system uses a USB link to connect a personal computer with a palm-size unit that packs a Trimedia processor and a video camera. Launching a videoconference from this contraption is simple: Just turn on the camera, double-click on the software icon and then type in the IP address of the distant party's system, which can be another desktop or a room conferencing system. Vcon (Herzliya, Israel) offers a competing desktop system, called ViGo.

Gordon Daugherty, president of Vcon's U.S. subsidiary, said that despite the falling prices, the total number of desktop videoconferencing systems sold has declined, from about 60,000 to 80,000 systems a few years ago to an anticipated 50,000 units worldwide this year. Corporate customers, in particular, have backed away from desktop systems until IT managers can assess their impact on the overall network, he said.

Walker of Polycom said that as the wider bandwidth of USB 2.0 becomes prevalent, and as microprocessors reach 2 GHz or faster, videoconferencing will become largely software-based. USB cameras, software, IP networks and the faster PCs built on those blazing CPUs will widen the number of people capable of participating in videoconferencing. "Then [Robert] Metcalf's Law kicks in," said Walker, referring to the maxim that a network's "value" or "power" increases in proportion to the square of the number of nodes on the network.

Vcon and Mitel Networks (Ottawa) are doing their part to make videoconferencing easier. The two companies have integrated telephony and video technologies so that launching a videoconference is as simple as hitting the video button on an IP phone.

"To have video take off on the desktop, it needs to happen naturally-to be integrated with other forms of communication such as voice, or instant messaging," Daugherty said. By contrast, "Now, people have to decide ahead of time to do a videoconference, set a certain time, think about whether the video system is up and running, and so on."

Joe Gagan, a Yankee Group analyst, said that since Sept. 11 there has been significantly more usage of already installed videoconferencing systems. At the same time, however, the current clampdown on IT spending at many companies has been felt in videoconferencing system sales.

The Yankee Group estimates that in 2001 videoconferencing hardware revenue-excluding that of the service providers-was only $780 million. The market will grow as purse strings are loosened and as IP networks become more robust worldwide. Davis, the Wainhouse analyst, argues that video is a natural and informative means of communication, one that eventually will become widely used as technology-and human-barriers are surmounted.