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VoIP: Is It Ready for Primetime?

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Is Voice over Internet Protocol (VoIP) -- or Internet telephony -- yet another over publicized technology, or is there some real meat to it? According to market research firm The Yankee Group, over 800,000 residents of the U.S. are expected to rely on VoIP by the end of this year and predict that number will jump to 10 million people by the end of 2007.

The recent news that Ford just paid $100 Million to deploy and manage a network of 50,000 VoIP phones has made many businesses sit up and pay attention. Ford said the drive towards VoIP was to take advantages of efficiencies in cost and operations related to moves, adds and changes. With so many people poised to take advantage of VoIP, it would seem that its time has finally arrived.

But what is it, and how can you employ it in your business?

In a nutshell, VoIP uses the Internet to replace ordinary phone service. VoIP turns the sound of your voice into data packets, which are then sent over the Internet just like an e-mail, digital video, or other data. A computer with a broadband connection that provides at least 128K of bandwidth and some additional hardware can turn your Internet connection into a phone line. The only types of connections that won't work are dial-up and a satellite dish connection.

Utilizing VoIP

Depending on what you're trying to accomplish, you can employ VoIP technology in a number of ways in your organization:

  • Your business organization can use VoIP for all calls within the company network, and then once calls go outside the company, they can be routed over standard phone lines.
  • The second option is plugging your phone into a sort of gateway that then plugs into your broadband modem. This allows you to talk on an ordinary phone and to call people who don't have a VoIP set up at large discounts.
  • PC to PC software based applications allow you to speak someone anywhere in the world as long as your caller also has the same software application on his PC.

Pros and Cons

The most obvious benefit to employing VoIP technology is cost savings. VoIP allows you to make extremely cheap, if not free, phone calls and have unlimited calling plans at half the cost of a standard phone service.

More advantages of VoIP over circuit-switched technology include the ability to:

  • create your own private interoffice network for communication between main and branch offices;
  • use the same lines to transport voice and data transmission;
  • eliminate or reduce intra-office toll charges.
  • avoid service and support contracts on existing PBX hardware;
  • eliminate the need for on-going Centrex services -- and charges;
  • reduce expansion costs due to lower costs for moves, changes and adds;
  • reduce the on-going costs for separate voice messaging systems;
  • improve productivity for remote and traveling workers by offering the same integrated capabilities as their office workers;
  • allow more flexibility in a call center architecture since it can now be virtual; and
  • reduce customer turnover via improved call center services.

Though advantages abound, VoIP does present a few challenges over circuit-switched technology, including the need:

  • to employ labor and consulting services to install and maintain your VoIP network if you don't have the talent in-house;
  • for continuous support, hence the added cost of labor administer the system;
  • to write-off or write-down your existing telecommunication equipment since you've purchased new VoIP telecommunication hardware and software; and
  • to protect your connection in case of a power outage with a battery back-up system.

Stay Tuned

There are a few things in the works in Washington D.C. that will affect the future of VoIP. The Federal Communications Commission (FCC) recently ruled that DigitalVoice, an Internet telephony service provided by Vonage Holdings Corp., is not subject to state tax regulations. It also declared that other IP-enabled services, including VoIP, are not governed by traditional state public utility regulations. With more providers jumping into the fray and attention being paid to the technology by the FCC, it looks like VoIP could replace traditional telephone services in the next few years. What do you think?

Derek Johnson is the Director of Business Development for Embee Technologies, a systems integration firm that specializes in wireless LAN/WAN technologies. He may be reached at djohnson@embeetech.com.
Luke Slymen is the Chief Technology Officer of Embee Technologies. He may be reached at lslymen@embeetech.com.

Last updated: Nov 1, 2004




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