There’s a revolution brewing in the telephone industry. It’s a new, yet proven, technology that lets you talk with anyone over the Internet for next to nothing.

 It’s called VoIP (Voice over Internet Protocol) or broadband phone, and it lets you use your standard telephone to dial and talk to anyone using the Internet as your "channel" of communication. Instead of dialing through your phone suppliers copper wires, you make calls through your DSL, wireless or cable Internet service provider.

This technology not only saves you heaps on your monthly phone bill, both on calls and on line rentals. It also provides a host of services the phone company can only dream about. When a VoIP system is working well you’d never know that the handset you’re picking up isn’t connected to a POTS (plain old telephone system) or has a VoIP connection.

Where are the huge cost savings coming from?

• The advantage of the VoIP call is that the majority of it is free, and it’s only when the border between the Internet and the phone system is crossed that the majority of the call costs are incurred. In fact if this border is never crossed, calls are usually free, ie a VoIP phone calls another VoIP phone on the same service provider's network irrespective of where they are located are usually free calls.
• Telephone lines are virtual, you don't need a physical set of wires for each telephone line, they are just internet addresses. This can enable a small business to reduce their physical lines down to perhaps just one, while maintaining many concurrent conversations. This reduces the monthly line rentals costs to a minimum.

There’s nothing new in this approach. Discount cards for international calls at cheap rates have been available for years, and do a similar thing, but it’s the increasing availability of fast broadband connections that has given rise to VoIP for small business. The savings to your business can be enormous and it is not unusual for VoIP to pay for itself in a few months.

The calls that aren’t extremely cheap on VoIP are those made to mobiles and some special numbers. However, since the majority of these calls are conducted over internet gateways the actual call costs are usually cheaper than those offered by your phone company.

What you need

There are two main categories of VoIP: Hardware-based and software-based VoIP. Software VoIP works through your computer with a software program and your computer speakers and microphone. The major disadvantages of the software VoIP is inferior voice quality and you have to use your computer to make the call.

Hardware services are again divided in to several types, those that require a converter box that connects your standard POTS (plain old telephone system) phone to your broadband modem or router, and VoIP phones which connect directly to your broadband router via ethernet. A flexible application of VoIP requires only one additional piece of hardware, an ATA (analog telephone adapter). An ATA is an analog-to-digital converter which connects your traditional phone to your Internet connection. You can either buy your own ATA or use one supplied by the VoIP provider. We recommend purchasing your own ATA (we supply Linksys, Netcomm and ZyXEL ATAs) as in many cases the adapter you get from the VoIP provider will be locked or password protected to only allow it to be used with that service provider.

A second hardware-based option is an IP phone, which is similar in appearance to a standard telephone but includes a built-in ATA adapter. It can be either a desktop IP phone that connected via ethernet wire or a mobile model that uses wireless LAN technologies (802.11b/g) to your data network.

Another excellent solution is to purchase an all-in-one ADSL modem/router with a built-in ATA which has QoS (Quality of Service) features to give improved voice quality.

These solutions are available in three different standards: MGCP (Media Gateway Control Protocol), H.323, and SIP (Session Initiation Protocol). SIP is the way to go, and this is quickly becoming the industry standard.

Pros and Cons of VoIP

Aside from the obvious cost benefit, you can do some neat tricks with your VoIP service.

UPs

• A "virtual phone number" means that your phone number is not linked to a physical wall socket any more, it can be moved about by you, just by unplugging your VoIP phone, moving somewhere else and connecting it into the Internet again. You then receive calls as if you were still at the first location. This can give great flexibility unknown with POTS. It's almost like having a semi-mobile phone without any of the high mobile cost charges.

• Most VoIP providers allow you to have several phone numbers in different area codes. Even if they don’t, you just buy another service from the same or a different VoIP provider in another city or country and divert all calls to your main phone. You could choose to have a second number in a state or even another country where you have a branch office or where most of your relatives live. That would allow them to call you for a local call fee and they don't have to be using VoIP.

• Business travellers can avoid high-cost hotel phone bills by taking their ATA adapter and/or laptop with them on travels, as long as there is access to high-speed Internet.

• Features include unlimited calls, caller ID, call waiting, call return, call waiting disable, call waiting ID, caller ID blocking, call forwarding, three-way calling, online billing, online voicemail, do not disturb, choose your own area code, anonymous call blocking and for an additional fee, some offer video phone.

DOWNs

As with any introduction of a new product, there are a few potential drawbacks to VoIP.

• The biggest issue is Quality of Service (QoS). Because VoIP uses a packet-based communications (IP) over the Internet that has no guarantee of data transmission and reception within a specific time span, real-time applications like VoIP have real issues with being able to reassemble all the packets in a reasonable time-frame to give a clear crisp two-way voice conversation. In reality the underlying Internet protocols were never designed for such time demanding applications as two-way conversations.
  Large parts of the circuit you will use you have no control over the QoS and it depends largely on how good your broadband connection via your ISP is. A VoIP session also neads at least 64kbps both directions and we do not recommend using an ADSL broadband any slower than 512/128 kbps and higher speeds and synchronous (eg 512/512) is much more reliable.
  You can however control somewhat the QoS on your local LAN from competing computer communications by utilising a router with in-built QoS features which gives priority to the VoIP sessions.

• Emergency calls made through VoIP service may not send the correct Caller ID details and in case your Internet Connection is disrupted or power is unavailable, it is recommended that a standard POTS phone line be retained or a mobile service available to handle 000 calls. Some VoIP ADSL routers have a POTS fallback which enables emergency and any other calls you want to specify to use the voice channel in the ADSL line.

• You will need to specifically request your VoIP phone number to be added to the White Pages and there may be a charge, but in Australia you should be able to get it listed.