Businesses can now take advantage of a phone system that combines the Internet and standard phone service to accommodate growth and, in some cases, become more efficient.
Voice over Internet protocol (VoIP) is a phone system available from network providers and systems integrators using the Internet instead of the usual analog or digital phone on a public switched telephone network (PSTN). With VoIP, phone calls can be made within a company’s network, regardless of where an employee’s extension is located around the globe.
"VoIP solutions provide organizations the opportunity to take advantage of the economies of higher capacity telecommunication access services and leverage those capacities across their entire network," said James Savage, a consultant for Brookfield-based Concurrency, Inc., a business technology solutions firm.
A VoIP phone has its own IP address and can function on its own when plugged into a network, whether it is into a wall or right into an employee’s computer. An employee can plug the phone into any network outlet and have the same extension.
VoIP is currently used only office-to-office, or phone-to-phone within a private network, said Tom Dooley, president of TriTech, Waukesha. When an end-user picks up the phone to dial out of the office to an analog or digital phone, a voice communications box at the phone system or at the server has hardware that converts the call from IP and sends it through the regular phone line.
When the person at the other end picks up, the conversation is done through the PSTN through a service provider such as SBC Ameritech or Sprint.
VoIP can be beneficial to companies with multiple branches both locally and globally, those that have a high rate of internal movement, businesses with employees working from virtual or home offices and companies that have reached the maximum allowance of extensions on their phone system.
"VoIP is perfect for banks," Savage said. "Normally a bank would buy a T1 to connect their branch network to a central site, a branch PBX (private branch exchange) to manage voice communications, then proliferate POTS (plain old telephone service) lines at each branch to get them connected to the phone company. With VoIP, banks can eliminate both the branch PBX and the POTS lines. They can leverage a higher capacity PRI (primary rate ISDN) connection at their central location and route that access service through their combined voice and data network. They eliminate the branch PBX because the necessary call management functionality exists within their branch network routers."
The top three concerns of relying on VoIP for communication on a private network are quality of service, reliability and security, said Stefani Seidemann, a voice communications manager for Digicorp Inc., Milwaukee,
"The issue of quality of service in an IP telephony application is due to the process of compression of the voice signal into data packets," Seidemann said. "Not only does the phone equipment need to follow quality of service standards, but also the routing equipment. Businesses have to look at it from both sides of the network and sometimes pay the additional expense to ensure the highest level of quality. Because Voice is sensitive to delay (unlike data), a poor quality phone call can sound like a cell phone underwater."
VoIP has been implemented as a business solution for three or four years, but the market is just beginning to catch on, said Rocky Soper, vice president of CC&N, a solutions provider based in Pewaukee.
"We are actually currently in an inflection where the amount of money spent on IP is increasing and is now at a crossing point with the amount of money spent on digital solutions is decreasing," Soper said. "IP is going forward, where digital will possibly trail off in the next three to five years."
Soper said VoIP would definitely replace digital and analog phones in 10 to 15 years, depending on how the price is carried out to the customers.
"In my opinion, I don’t see VoIP becoming so massive it changes the telephone network, but as technology changes so fast that there is a point it is possible. I just can’t envision it," Dooley said. "The biggest hurdle is that PSTN has an extracting protocol that it follows, and anyone that has made a switch, or a phone, or a phone system, is to follow the standards that it operates on. In VoIP, everyone is doing things differently without a standard because in this case the VoIP phone was built first."
VoIP can save companies unspent money, which is an incentive if they are already considering the options between a different or additional PBX phone system and VoIP.
"In a typical small to medium sized organization, there is a $5,000 to $25,000 central site PBX and a $2,500 to $10,000 remote site PBX," Savage said. "VoIP can be implemented at the central site for roughly the same cost as the legacy PBX. The remote sites do not need additional branch PBX hardware because they communicate back to the central site through the data network."
When choosing a VoIP phone system, however, a company will have to replace all of the handsets with VoIP phones. Because the phone system requires the company to continue service with long distance and PSTN providers, local integrators and system administrators suggest the transformation only if a business plans to replace its phone system or if it has reached the allotted number of extensions available through its PBX.
"You need a robust network infrastructure to effectively support a VoIP solution," Savage said. "Especially when talking about larger scale implementations, the threshold for acceptable levels of data network availability has been increasing over time. With voice traffic on the same network, you are now doubly concerned with high availability."
Seidemann said she does not advise every growing organization to take part in VoIP where it is not necessary.
"VoIP is definitely where things are going, but I also think people should not necessarily assume that it makes sense for their organization,"
Seidemann said. "The traditional system will not go away completely. As technology improves, VoIP will be available to more people but it is not something we feel is the perfect fit for every client. In many cases, a hybrid system, one that blends traditional and IP technology, may be the solution."
"The economic opportunity can be attractive," Savage said. "If a business is building from the ground up or looking to replace its telecommunications infrastructure, then I would definitely suggest VoIP.
"If the existing PBX is functioning effectively, and there is no capacity concern, then wait. We don’t push clients that are fine with their current system, but if they are adding branches or hitting the maximum capacity of their legacy system, we will recommend it. Either way, we recommend they have a strategy in place so that dollars spent on network infrastructure today do not have to be re-spent tomorrow."
June 25, 2004, Small Business Times, Milwaukee, WI
