Can You Hear Me Now?
New Web-based phone systems let you say goodbye to the phone company forever.
Published November 2004
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COMMENT ON THIS ARTICLEPaul Hollen has been in business for more than three decades. He's managed an industrial parts distributorship and worked as a stockbroker, and currently serves as executive vice president and chief operations officer for Southcoast Community Bank, which he helped found in 1998 in Mount Pleasant, S.C. The higher he's ascended the career ladder, the more the phone company has let him down. No matter which company he was dealing with or what the problem was, Hollen felt he was charged an arm and a leg for service that never failed to disappoint. The final straw came when he learned that he could not move a loan officer from one side of his bank to the other without calling in a technician. He began taking steps to get the phone company out of his life once and for all.
It wasn't difficult to do. Hollen simply purchased a PBX, or premise-based exchange -- industry lingo for a phone switching system -- that works with both the regular phone network and emerging voice over Internet protocol, VoIP, technology. Now, rather than going over the phone lines, most of Southcoast's calls take place over the bank's high-speed Web connection. Hollen uses a mouse to drag-and-drop employee phone numbers, making rearranging the office a cinch. If he needs to spend the day working in one of the bank's six branches, he can have his regular phone number follow him there -- again with the click of a mouse. Because the bank needs fewer phone lines, Hollen has shaved thousands of dollars a year off his phone bill. But even without the savings, he'd still be sold on VoIP. "The main business case," he says, "is the flexibility VoIP allows me to have in my system."
Entrepreneurs attracted to Internet phone systems to save money are surprised by the superior features.
If you know about voice over Internet protocol, it's probably because you've heard how much cheaper it is than regular phone service. But entrepreneurs attracted to Internet-based phone systems to save money are finding that the ease of use and superior features are what keep them coming back for more.
VoIP technology takes phone calls and turns them into digital files, which are broken into packets of data, sent through the phone network, and then converted back into voice calls on the other end. It's similar to how the Web handles e-mail. The advantage of breaking voice calls into digital packets is that you no longer need a phone line to make a call -- you simply use your broadband connection. It also means you can treat your phone calls like data files, which lets you fine-tune your phone system.
VoIP has made significant inroads among consumers eager to trim their long- distance bills. But businesses are catching up. Already, 20% of companies with fewer than 99 employees either have some sort of VoIP service or expect to purchase it in the next 12 months, according to Access Markets International, a New York City-based research firm. As the size of the company expands, so does interest in VoIP, with 39% of all firms with 100 to 1,000 workers expressing interest in or making plans to purchase the technology, AMI found. "There's definitely a transition going on," says Robert Benhabib, the firm's senior vice president.
Steve Fleury began making the shift three years ago. Fleury, president and COO of Cambria Bicycle Outfitters, a bike retailer and mail-order firm in Cambria, Calif., dumped his phone and data provider after huge headaches resolving billing questions. He signed up with a VoIP company called GoBeam (which has since been acquired by Covad Communications Group). Monthly savings have been about 30%. But equally important is that Fleury now gets a bill he understands. "Instead of a 60-page invoice with all sorts of weird crap on it," he says, "I get a bill that says you owe this much and here's what you used." New employees can be trained to use the system in less than an hour. Fleury also likes that he can save voice mails as files on his computer. Sure, there are some downsides. He misses the ability to redirect calls automatically when people are on the line, a feature he had with AT&T. But he likes VoIP well enough that he's finally selling his old PBXs, which he had kept just in case the new system didn't work. "We live and die by the phones, but VoIP's been pretty darn solid," he says.
VoIP is not for every small business. Some of the software systems have a hard time accommodating more than 10 users. And there's a flipside to VoIP's low costs. The service is so cheap largely because it runs over the public Internet -- which means it can suffer from service hiccups. "VoIP is not perfect," concedes Bryan R. Martin, CEO of 8x8, a Santa Clara, Calif., maker of VoIP software. But Martin says many of his small-business customers see the gain in features as enough reason to accept a small drop-off in reliability.
