Voiceover IP, or VoIP, is a technology that allows telephone calls to be made over local area networks or the Internet. VoIP systems convert analog voice signals into digital data packets and supports real-time, two-way transmission of conversations using the Internet Protocol (IP).

A small business considering transitioning to VoIP should carefully weigh its upside with its downside before committing.

VoIP calls can be made on the Internet using a VoIP service provider and standard computer audio systems. Alternatively, some service providers support VoIP through ordinary telephones that use special adapters to connect to a home computer network.

VoIP services convert your voice into a digital signal that travels over the Internet. If you are calling a regular phone number, the signal is converted to a regular telephone signal before it reaches the destination. VoIP can allow you to make a call directly from a computer, a special VoIP phone, or a traditional phone connected to a special adapter.

A Little Technical Background

This section briefly describes some of the technical-side characteristics of VoIP. It’s provided just to enrich your understanding of how it differs from a traditional phone system.

For a conventional phone call, each analog call is set up and delivered from a pair of dedicated copper wires from the caller to the called party. This creates a dedicated physical connection for a single call with extremely good quality. The technology is sufficient to carry one call at a time over the pair of dedicated copper wires.

VoIP does it a little differently. VoIP encapsulates the audio data into data packets. These packets are then sent to the network. The same copper wire is now capable of carrying significantly more than one conversation. The same device used to send voice is also capable of sending other packetized information simultaneously like data, video and instant messages. So at the very least VoIP is a much more efficient medium to transport voice, and at the very best, will produce a much richer experience for the user when one considers the enhanced features of video and instant messaging.

Moreover, VoIP can be deployed with little or no cost, or can be an elaborate application designed with your specific needs in mind. You either are looking for a new telecommunications system or you want to enhance the one you have. Additionally, VoIP can coexist with a PBX installation and provide an industry-standard means for transporting audio.

VoIP systems typically operate on a LAN, which permits you to utilize your existing network infrastructure for telephony. It does differ from legacy PBX systems, which usually work when power goes out because they are simple to back up and all of the telephones get their power from the PBX. In a VoIP system, to get that type of redundancy, you need back up power for all of your LAN equipment, plus consider how you will power the IP telephones during a power outage.

The Pros & Cons

When it comes to Web based applications, few hold more promise than VoIP. VoIP allows businesses and consumers alike to save enormous amounts of money on their phone bills by routing phone calls over the Internet. But, as with all things, there is a downside as well. A small business considering transitioning to VoIP should carefully weigh its upside with its downside before committing.

First, we’ll describe the advantages. There are quite a few.

The Advantages

Where to begin?

First, is the cost savings. Understand that there are different flavors of VoIP installations, and some will save you more than others. Some VoIP systems will only allow you to make calls to others who are running VoIP, while other VoIP systems will allow you to call anyone who has a phone. Typically, PC to PC VoIP calls are free, aside from the initial cost of the software and a possible monthly service fee. PC to phone calls typically cost more than PC to PC calls, but are still a mere fraction of the cost of phone to phone calls.

Another advantage VoIP provides is portability. A VoIP phone has an address built into it to the devices. This means that in most cases, you can take your VoIP phone with you and use it anywhere that a broadband Internet connection is accessible.

You don’t necessarily need a VoIP phone to get portability, though. Some providers of computer based VoIP services offer a Web interface. This interface allows customers to log in and place calls from anywhere in the world, as long as a broadband Internet connection is available. This should be a serious consideration if you have employees that frequently travel and make frequent calls from remote locations

Computer-based VoIP services are compellingly versatile. These environments are highly collaborative, meaning that that tend to support rich media applications like video as well (think Skype). Computer- based VoIP systems often also allow you to share data and / or applications with the person that you are talking to, thereby supporting useful interactions that go far beyond voice calls.

Finally, VoIP services are very simple to use. Placing a VoIP call over a VoIP phone is usually no more complicated than placing a normal phone call. And VoIP capabilities can be easily added to conventional phones by using an adapter.

Interested In Finding VoIP Pricing and Feature Information: Major VoIP Providers

The Disadvantages

The biggest potential disadvantage to a VoIP phone system is its sound quality. This, of course, isn’t always the case: with sufficient bandwidth and good equipment, it is possible to get fairly good sound quality from a VoIP system. In other scenarios, however, the audio can be very uneven.

Why is this? As we described earlier, VoIP converts voice into digital data, which is then placed into packets and transmitted over the Internet. As with any other type of data, these packets may or may not be in the correct order when the recipient receives them. The recipient’s VoIP system can reassemble the packets regardless of what order they arrive in. However, the real time nature of voice conversations means that if the packets arrive out of order, then it could result in a second or two of silence while the data is reassembled.

This latency issue can cause some major issues for VoIP systems. Data must be able to travel to the recipient quickly enough that it can be reassembled before a noticeable delay occurs. This problem is being remedied by the decreasing bandwidth requirements for new-generation VoIP systems. The less bandwidth required, the less likely delays will occur. The bandwidth requirements are shrinking because of the use of new sophisticated data compression algorithms.

Test Your Internet Connection For VoIP Readiness: VoIP Speed Test

Another strike against VoIP is a lack of standards. No compatibility standards currently exist for PC to PC VoIP calls. And some VoIP systems are proprietary, meaning they communicate with only users using the same device or software.

Finally, unlike your land line, VoIP doesn’t work without electrical power. Traditional phones continue working through power outages because the phone company transmits electricity over the phone line. This electricity is used to power the phone (cordless phones being the exception). Conversely, a VoIP phone system requires both power and an Internet connection.

One last caveat: Dialing 911 in an emergency doesn’t work on a VoIP phone. When you dial 911 using a conventional phone, your provider looks at either your phone number (if you are using a land line) or the cell tower that you are communicating through, and uses that information to put you in contact with the nearest 911 dispatcher. VoIP systems don’t allow their calling locations to be identified in these ways.

So there you have it. VoIP has plenty of upsides, but with a few issues that may make you take pause. In any case, it is a technology worth examining closely, and could impact your bottom line in a severely good way.

Have a question about VoIP? Connect with a SCORE mentor online or in your community today!

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