That's according to VARs and analysts in the field, who said return on investment and a lack of understanding of the potential have left businesses stuck in a limbo between traditional telecom and full IP telephony.

"Right now the IP part stops at the building and becomes a standard telephone system," said Ken Batorski, president of Wood Networks Services Inc., of Farmington, Conn., a network VAR specializing in IP telephony.

"The future is end-to-end IP telephony, where an IP phone plugs into an Ethernet line, not a phone line, and makes that same call without ever touching an analog device."

The future Batorski sees is not necessarily around the corner.

The transition requires an investment in infrastructure that may not reap immediate returns.

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But the question is "when, not if, this will become a reality," said Jeff Snyder, a research vice president at the Gartner Group specializing in telephone technology.

"Eventually the whole world will be on IP telephone systems," Snyder said. "It's just a question [for businesses] of when is the right time to make the move, and how to do it."

It will be up to VARs to coach businesses through the transition as they make the investments in infrastructure and learn what the capabilities of the technology are.

In the process VARs and their sales teams will be critical coaching businesses through the transition.

"They aren't going to see a cost savings on this for some time; that's not an argument that will compel them," he said. "When you talk about improving the business process, efficiency, suddenly you are talking about something that has an impact."

Part of IP telephony's attraction, Batorski said, is the endless possibility of applications.

"It goes way beyond making calls over the Internet," he said. "It's like a handshake between your telephone and your computer allowing a world of integration and control from your telephone."

Batorski already has customers using the technology to monitor video cameras, initiate certain desktop applications automatically when certain numbers are dialed and remote access for employees, whose extension now travels with their PC.

Potential applications include automatic billing based on timed calls; conference calls combined with document sharing and video; and remote time-cards.

Vendors, such as Cisco Systems, Avaya and Alcatel are already rolling out full solutions, and VARs are delivering solutions based on verticals and client needs everyday, Snyder said.

A key to pushing the technology early will be making it a staged migration, Snyder said.

IP-enabled equipment allows businesses to begin the making the transition without having to overhaul their entire background system, he said.

In 2004, 23 percent of telephone lines shipped in North America were IP or IP-enabled, according to Gartner research.

By 2009, 96 percent of business telephone systems will be at least partly running in part or whole on IP technology.

For now a major revenue source for IP telephony VARs is institutions that already have the infrastructure in place, such as hospitals, government buildings and most prominently schools, where classrooms rarely have telephone lines, but always have Ethernet connections, Snyder said.

While leaders in the field pioneer the technology at those and other outlets, Batorski said, interested VARs need to start making investments in their own infrastructure.

"It's a real learning curve, about two to three years, before you're ready to do it right," he said. "But it's worth it, because this is going to happen."

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