As the mobility, flexibility and cost effectiveness of VoIP technology gains familiarity, more and more chief communications officers and small-business owners alike are opting to make the switch from traditional telephony. VoIP — especially VoIP networks built on increasingly popular hosted PBX systems — is carving out a greater chunk of the telecom pie each year across several industries with no slowdown in sight.
Voice Over Internet Protocol
Commonly called “Internet phone” or “Internet calling”, VoIP is defined by the FCC as a system that allows calls to be made over a broadband Internet connection, as opposed to over an analog phone line. It operates by converting the user’s voice into “packets” that contain digital signals, which travel over the Internet before being converted back to a regular telephone signal. Although rudimentary versions of the technology had been tinkered with for years leading up, companies such as Skype made VoIP familiar not just to businesses, but to the general public in the early- to mid-2000s.
There are good reasons that the popularity of VoIP escalates each year among both individuals and businesses. Virtually all upgrades are handled through simple software uploads rather than through buying, installing and maintaining phone lines and expensive, complicated hardware. VoIP requires less than one-sixth the bandwidth to transmit (10 kbps one way for VoIP vs 64 kbps for phones) and many VoIP providers offer extra services like call waiting and call forwarding at no extra charge. The biggest and most obvious incentive, however, is cost. VoIP-to-VoIP calling doesn’t cost anything, and fees for calling landlines or cellphones are minimal and charged by the minute. Standard lines, on the other hand, come with expensive contracts that require monthly payments, often with roaming or long-distance charges and international rates that vary by company and country.
As VoIP steams forward, however, there are contrarians who remain committed to the traditional public switched telephone network, or PSTN. A commonly cited reason for landline loyalty is connectivity. By the nature of how VoIP providers connect — converting analog waves or vibrations into digital “packets” — VoIP is open to issues with reception, clarity and stability. For enterprise businesses, this is, of course, unacceptable. Corrupted or missing packets, bandwidth limitations and digital compression used to limit bandwidth, can all result in echoes, delays, choppy or stuttered reception and even dropped calls. Advocates of PSTN extoll the virtues of the technology for a reason. Traditional wired telephones are incredibly reliable and provide unrivaled clarity and reception. A VoIP system reliable enough for businesses can require a significant investment in bandwidth, software and infrastructure.
VoIP Built on Hosted PBX
Private branch exchange, or PBX, was developed to allow companies to save money on internal phone calls by switching the circuits themselves locally at a time when human operators still ran switchboards by hand. Even though data networks and packet switching traveling over the Internet has replaced manual systems, the familiar acronym is still used — even when the branches aren’t private and nothing is being exchanged. Through hosted PBX, businesses can still handle internal calls locally, but take the onus off of themselves by outsourcing the systems management to a third-party “host.” The host owns, operates, secures and maintains the hardware, which is expensive and complicated. Instead of constructing their own PBX, businesses rent someone else’s so they can focus on their core competency.
Many businesses are realizing that by shedding the hardware requirements of both PSTN and PBX infrastructure at the same time, they can save money and dramatically dwindle their IT requirements. With a cheaper, more customizable VoIP network built on the framework of a hosted PBX system, voicemail, conference calling, touchtone menus, automated greetings, call waiting and call forwarding are all much cheaper or free. Both have very low startup costs and more than one person can be reached through a single number as PBX routes, holds and transfers VoIP calls.