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A guide to updating telecommunications; how to get ready for phone and data systems in the office of the future.

Talk's not cheap. And with telecommunications technology becoming more sophisticated and critical to the success of a business, managers must focus more on finding economical ways to get the best equipment to meet their growing communications needs.

In general, planning a telecommunications network for an office is not a do-it-yourself project because the field is complex and highly specialized. Unless someone in an organization has the time and aptitude to pursue the subject, it's best to turn to a telecommunications consultant. The price of a mistake can be very high--not just in dollars wasted on the wrong equipment, but in the resultant office chaos.

This article focuses on the steps office planners--either at CPA firms or in industry--should consider to get maximum performance from the communications equipment that is available today and to be ready to upgrade painlessly to tomorrow's technology.

Communication these days means more than just being able to talk on the telephone. It means transmitting data files--incorporating words, numbers and graphics--from one computer to another, from one office to another and to and from a CPA in the field. It also means being able to search for answers in remote databases or in a client's computer.

The following advisories, while hardly designed to make an accountant expert in office telecommunications, should provide some of the basic background needed when confronted with the complex task of guiding an upgrade in the office communications network.


Critical to how high-tech an office can be is the choice of wiring that connects an office's telephones and computers. Pick the wrong kind or install it incorrectly and an entire telecommunications system could be an expensive disaster.

Telecommunications consultants say the wiring should have the capacity to handle conventional telephone talk and computer communications simultaneously. Such a setup, while initially more expensive, in the long run works out to be far more economical than separate phone and computer installations.

Also, a facility that installs the wrong wiring may not be able to upgrade or expand either its telephone system or computer network without an expensive replacement of the entire wiring network. Office planners have three wiring options:

* Twisted-pair wire is common telephone wire, used in most older installations. It's the least expensive and can handle limited data traffic for telephones or computers.

Such wire is adequate for the smaller office, but an office planning significant expansion should step up to a wiring system with greater capacity.

* Coaxial cable has far more capacity than twisted-pair wires. It's also more expensive since it comprises a bundle of wires, each insulated from the other. There are several different kinds of coaxial cable and not all are compatible with all phone networks. Three-quarters of computer network problems stem from incompatible cable choices.

Coaxial cables come in two basic configurations: those that transmit analog signals (adequate for all but the most advanced applications except video transmissions) and digital (a newer design, which can handle the most up-to-date communications, including video). Selecting the more advanced digital cable provides more flexibility in choice of telephones and other communications equipment.

One of the biggest pluses of coaxial cables is they are relatively immune to outside electrical interference; that's very important in an office crowded with electronic equipment.

* Fiber-optics cable, the state-of-the-art technology, is used in the most modern telephone-computer transmissions. It has a huge data-transmission capacity and is totally immune to electronic interference. However, its price is higher than coaxial cable and installation can be difficult.

Technology-savvy office planners generally opt for the more costly coaxial or fiber-optics cables; they know they will be upgrading networks from time to time and it's far more economical to install the best wiring at the outset.

While the final choice of wiring is best left to telephone and computer experts, clearly this is no place to cut corners.

Placement of the wires takes careful planning; they can't simply be bundled into the corner of an office or tacked along hallways. Not only would that be an eyesore but also crisscrossing wires creates safety hazards and electronic interference problems, causing cross-talk on telephone lines and garbled data on networked computers.

Offices situated in fairly modern buildings usually have ducts already installed in walls, under the floors or above the ceilings to accommodate the wire bundles. But in older buildings, pathways often must be created by snaking cabling through walls and celings and sometimes even by tearing up floors. The cost of such work is exceedingly high--sometimes comparable to the cost of the high-tech gear itself.

In configuring a telephone system, office planners should consider installing at least two or three modular telephone jacks in the walls of every office and conference room, in the library and even in storerooms. Installing them initially is a lot less expensive than adding one at a time later.

Those jacks can accommodate more than telephones; they can become the future conduits for high-speed computer networks and, in the not-too-distant future, for link-ups for video conference calls. While video seems like a luxury now, in a few years such conferences and video data transmission will be the usual mode of long-distance communications.


There was a time when the old Bell System, which was the only phone game in town, offered few choices. Today, the number of different telephone instruments manufactured by competitors runs into the hundreds. In addition, there are more than 200 communications systems (they are called controllers), small special-purpose computers that manage an office's telephone network.

Because the electronics for each of these systems are slightly different, few are compatible with competing models. For that reason, unless a buyer needs only a few incoming lines for a two- or three-person office, telephone system selection should be left to a telephone expert. A mistake can be very costly.

There are three generic phone systems:

* Single-line phones: instruments generally used in the home. They are inexpensive and, as the name implies, can handle only one telephone line.

* Key systems: the simplest and the least expensive way to handle multiple lines. They offer a wide variety of enhancements: automatic dialing and screens that show the number being called, the date, a message and even the length of a call.

Key systems have a serious drawback, however: They can handle only a limited number of phones. Few can handle more than 100. Once that maximum is reached, nothing can be done to expand a system's capacity; if more phones are needed, the entire system must be scrapped and new, larger-capacity hardware installed. A 25-phone key system can cost $50,000.

* Private branch exchange (PBX): the solution to key system limitations. With a PBX as the basic system, an unlimited number of phones can be added after the initial installation without drastically changing the original equipment. Its drawback is cost; the least expensive PBX costs about twice that of a comparable key system.

PBXs come in two varieties: the old-fashioned analog design and the more modern digital. While an analog PBX can accommodate most communications networks, only a digital unit can handle the most advanced video transmissions. A digital PBX needs digital coaxial cable to operate; it can't run on the old analog cable.


When conferring with a phone expert, here are some issues the office planner should consider:

* Whatever phone system is being installed, insist that it can be integrated with a computer system--not just the wiring but the controller as well. Such an integration provides many advantages, including the ability to use sophisticated software that keeps track of messages, times client communications and prepares invoices.

* To save money, consider a hybrid phone system: a mixture of a small PBX and a key system. But--and this is important--for complex technical reasons, be sure the key system can handle single-line phones in addition to multiple-line phones. A key system that can handle single-line phones provides the most flexibility in adding such accessories as facsimile machines and modems. These phones could be reserved for the handful of people who have special phone needs. The rest of the staff could use the PBX system.

* When planning a system, allocate at least two (and maybe even three) incoming lines for each key person. Extra lines should be reserved for modems and fax machines. Remember, high-tech CPAs don't mail reports or floppy disks loaded with data; they transmit data via modem and fax.

* When ordering the phone lines from the local telephone utility, ask for "hunt" numbers (so an incoming call will automatically transfer to the next available line). Also be sure that some numbers, such as for faxes and modems, are not in the hunt system.

* Add voice mail--a computer-operated phone-answering and messaging system; it's a most effective phone enhancement.

* Include an officewide paging system in the phone setup so staff members can be located anywhere in the office and messages can be broadcast to the entire staff or to selected offices or groups.

* Consider leasing a phone system rather than buying it. Aside from cash flow considerations, in most cases leasing provides more flexibility. With less invested up front, there is less hesitation to upgrade to more modern and sophisticated systems. One exception is if an organization is certain of its future telecommunications needs; in this case, purchase is probably wiser. Phone consultants say, however, the most frequent mistake clients make in planning phone systems is underestimating future needs and future technological updates.


Setting up a telecommunications network for an office is not an easy project. There are many high-tech options to consider. All the decisions are based on the organization's present and future needs, so careful planning is imperative. Buying a system with too few features can be as expensive a mistake as buying one with too many.

STANLEY ZAROWIN is a Journal senior editor.

Mr. Zarowin is an employee of the American Institute of CPAs and his views, as expressed in this article, do not necessarily reflect the views of the AICPA. Official positions are determined through certain specific committee procedures, due process and deliberation.

The following people contributed information for this article: James Metzler, CPA, a partner of Gaines, Emhof, Metzler & Kriner, Buffalo, New York; Mary Olds, administrator at Gaines, Emhof, Metzler & Kriner; Harry Newton, editor of Which Phone System Should I Buy?: The Guide to PBXs and Key Systems, published by Telecom Library, Inc., New York, New York; John Binkowski, district manager of systems network integration at Beta Business Products, New York New York; Edward O. Zinkle of Buffalo Telecom, Inc., Buffalo; and Michael R. Palmer, president, Commtech Communications, Inc., Tonawanda, New York.
COPYRIGHT 1991 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Zarowin, Stanley
Publication:Journal of Accountancy
Date:Dec 1, 1991
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