VoIP: Is It Right for Your Business?
Published January 31, 2008

Photo by: iStockphoto

The future of telephony, Internet calling offers low-cost service but questionable quality. Decide for yourself if the pros outweigh the cons.

By: MATT ALDERTON

A phone is a phone is a phone, right? Not anymore. In a world where landline phones are going extinct, and where mobile phones are getting smaller—not necessarily better—the thirst for another option is growing.

In fact, that option is already here. It's called VoIP—Voice over Internet Protocol—and it's giving small businesses in particular an affordable, accessible alternative to analog phones, cell phones and expensive private branch exchange (PBX) systems.

"With VoIP, you get the functionality of an expensive phone system without having to buy one," says small business owner Leo Bletnitsky, president of Desktop Valet, a Las Vegas-based IT consultancy. His company has been using VoIP for nearly two years with great results, despite some initial hiccups in call quality. "The features and capabilities are great, with a very small entry price tag."

Indeed, if it's affordable, feature-rich calling that they crave, small businesses should seriously consider hanging up the phone on traditional landline service. Many already have, as roughly 20 percent of U.S. businesses are using VoIP today, according to a 2007 study by In-Stat, a Scottsdale, Ariz.-based market research firm. By 2011, it projects, that number will rise to two-thirds of all U.S. businesses.

There's no denying that VoIP is the phone of the future; it's not a question of if your business will board its bandwagon, but rather when. Before you decide if the time is now or later, carefully consider both the costs and the benefits, lest your business lose its dial tone entirely.

How It Works

VoIP makes it possible to make local, long distance and even international telephone calls over the Internet instead of the traditional circuit-switched phone lines used by traditional phone companies.

"The Internet protocol allows voice bits or data bits to be broken up into many thousands and millions of pieces and distributed across a line," explains Brent Cobb, vice president of product management and product development for Cbeyond, an Atlanta based VoIP service provider. "Your voice is broken up into little packets and, much like your bloodstream, there's different cells in there going to different places."

Because VoIP uses the Internet as its bloodstream, a high-quality broadband connection is essential, Cobb points out. In the way of equipment, however, that's about all that's required. While there are high-end VoIP phones available, consumers can just easily make calls from their PC with a low-cost headset, or with the speakers and microphone that are already built into most machines.

Because VoIP as an industry is so new, it is not yet subject to the same taxes, fees and regulations as traditional phone companies. For that reason, and because VoIP service providers are tapping into an already existing Internet infrastructure, VoIP is many times cheaper than traditional phone service, particularly when long distance and international calling come into play. In some cases—with Luxembourg-based provider Skype, for instance—it's even free.

First-Class Calling

Of course, price isn't the only thing drawing callers to VoIP. Even more attractive are the useful features that VoIP providers can offer, according to Enrico Noseda, director of telecom business development for Skype.

"Saving money is just the start," he says.

Once super cool, now-standard phone features like call waiting, voicemail and caller ID are decidedly unimpressive, Noseda points out. Because VoIP providers deliver their service via high-capacity broadband connections, however, they can offer truly unique features and benefits. Among them:

• Mobile calling. As long as you have a broadband connection, you can take your phone—and your phone number—with you, to your home, to another desk in your office, to a coffee shop down the street, or to a hotel room in another city or country. "I was in Mexico recently for a week and plugged into the hotel network," Bletnitsky says. "My partner, who was in another room, spent $700 on cell phone bills; I spent nothing."
• PC calling. Not near a handset? Not a problem, as most VoIP providers allow you to access your phone system from your desktop.
• Voicemail to e-mail. If you hate listening to long phone messages, you can have them delivered—along with faxes to your voice line—straight to your e-mail inbox as text messages. Users can also have their e-mail messages "read" to someone's voice mail.
• Simultaneous ringing. If you're not in your office, or if you don't know where you'll be, you can have your calls forwarded simultaneously to your office, your cell phone and your home phone; the call will be connected to whichever line you pick up first.
• Conference calling. While many businesses have to rely on a separate vendor to provide them with conference calling services, those who have VoIP often enjoy built-in conferencing capabilities, including videoconferencing.
• Selective call acceptance. If you're expecting an important call, providers like Cbeyond allow you to set your phones to accept calls only from certain callers, and to send all others to voice mail. Similarly, if you're getting unwanted calls, you can use selective call rejection to refuse calls from pre-determined callers.

• You have options. VoIP can come in the form of an on-premise solution, which requires you to purchase and install your own VoIP hardware, or a hosted solution, which you can access via your Internet connection. While on-premise solutions are most reliable, hosted solutions tend to be more convenient and cost-effective for small businesses. Not all are created equal, however, according to Cobb. For the best quality, he says, you should look for hosted providers that connect calls via access to their own private network rather than the public Internet.
• Test your connection. Because service quality relies on broadband connection quality, make sure that your Internet connection has enough bandwidth to support VoIP. You can test it online at sites such as TestYourVoIP.com and MySpeed VoIP. Even if you think you've got a good connection, ask your provider for a trial run before committing to a service contract. "Don't take the word of your Internet service provider on how good your Internet connection is, unless you've got a T1," Bletnitsky says. "The last thing you want as a business is someone calling you and you not being able to hear them, or them not being able to hear you. It really diminishes your professional image."
• Consider security. A final consideration for new VoIP customers is security; because VoIP uses the Internet, its susceptible to hackers, who could theoretically intercept calls. Another concern is 911 emergency services, which some VoIP users have trouble accessing on their systems.