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VoIP Telephones – Using Your Internet Connection for Your Business Phone Service

This article, written for financial services professionals but useful for other professions too, will help you determine whether VoIP is appropriate for your business.

From Wikipedia, Voice over Internet Protocol, also called VoIP, IP Telephony, Internet telephony, Broadband telephony, Broadband Phone and Voice over Broadband is the routing of voice conversations over the Internet or through any other IP-based network. 

VoIP has become enormously popular in 2006 as consumers, having tested residential-based services such as Vonage (NYSE: VG), asked for VoIP in their workplaces. Large Financial Services companies such as the New York based public broker / dealers have been large-scale early adopters of VoIP telephones. Tech industry heavyweight Cisco is a proponent of VoIP telephones and routing gear in this multi-billion dollar VoIP telephone movement.

How Does VoIP Work?

VoIP phones replace your traditional office telephones. Instead of using telephone wires to route your phone calls, VoIP shares the same Ethernet that your computers are connected to. You plug your VoIP phones into your Ethernet wiring, power them up, and that’s pretty much it – you’re ready to make and receive calls. Under optimal circumstances, it’s really that simple, and the call quality is nearly as good as what you’re used to from a traditional office phone. But as with most new technologies, it’s not always that simple – keep reading.

Will Using VoIP in My Office Save Money?

The short answer is no. Retrofitting an existing office with new VoIP phones and potentially doing some rewiring is a large capital expense. A good VoIP desk phone costs $200 - $300. Some cost much more if they have extensive features.

You will need a service provider who can route your incoming and outgoing phone calls. The service provider’s monthly service charge may be about the same or less than what you’re paying now for traditional phone service. However, these charges are generally negotiable since VoIP services are still unregulated. But most vendors seem to add lots of useful features and this drives the monthly service fee toward parity with what you now pay. As with traditional service, long distance is generally bundled in or competitively priced.

Why Would I Switch to VoIP Phones if I Don’t Save Money?

The main reason why businesses would switch to VoIP phones is that the added functionality offered by VoIP is compelling. This appears to be one area in technology where the vendors worked hard to figure out what was important to businesses and built those features into their service offerings. Let’s look at a couple of the features and why they are so useful.

a)      Auto-Attendant Answering with No PBX – If you don’t already have a PBX, here’s your chance to get full-featured auto answering and call routing without any capital expense. You get a world class level of service that’s easy to change and keep updated. Everything works via a web interface, making it easy for you to make modifications.

b)      Intelligent Call Routing for Office Mailboxes Such as Customer Support – VoIP systems can be setup to easily route calls to the first available person from a list of potential assistants and staff. These assistants and staff can be working from the office or home.

c)      Find-Me Call Lists – Using a web interface, each person can program a series of phone numbers where their office extension rings. For example: first ring me at my office desk phone, then my cell phone. If you’re working from home that day, you can easily reprogram your find-me list for that day to first ring at your home office phone, then your cell phone.

d)      Multiple Dial-In Phone Numbers – You can have local phone numbers in more than one state, or you can even have a local number in a foreign country, so that your clients can more easily call you.

e)      Voice Mail Arrives in Your Email – You can receive electronic copies of your voice mails in your email inbox. Just click on the embedded file and your message will play on your computer’s speakers. There’s no need to call in to your service provider’s voice mail system to listen to the message, although you will still need to go there to delete the message.

f)       VoIP Phone Mobility – Generally speaking, you can take your office phone and plug it into any good Internet connection and begin using it. It’s no problem if you want to bring your VoIP phone home and plug it in there.

g)      Improved Features – Many features that are only available on very high-end PBX systems or available only upon payment of an extra charge to the phone company are usually offered by default. Are you tired of paying $7.50 per month per life for Caller ID? It’s always free with VoIP phones. Easy conference calling, call transfers, and much more are all included in business VoIP service.

h)      Fewer Regulatory and Other Fees – In recent years our phone bills have introduced all kinds of regulatory and other fees. You will find fewer of these on your VoIP service provider’s invoice.

i)        911 Does Work from VoIP Phones – The VoIP service providers have been obligated to comply with FCC rules for 911 service.

j)        Get More Value from Your Internet Connection – If you have a good-quality Internet connection at your office, switching to VoIP phones lets you better leverage your Internet connection to help you get more value from what you’re paying for.

Does VoIP Service Work Well, Well Enough, or Not Well Enough?

This is where things get tricky. It’s a difficult question to know the answer to. Let’s address problems the author has experienced and other potential issues.

a)      Calls Sometimes Don’t Sound Clear – You have probably already experienced this at least once – you called someone or they called you and the call sounded like a bad cell phone call. There are many possible reasons for this, and we know some companies that have bought VoIP and spent thousands of dollars trying to improve the sound quality of their calls. That shouldn’t be necessary. The best way to make sure your calls sound as good as possible is to have a very good Internet connection. Presently Verizon FiOS offers the best value. If it’s available in your area, you should look into whether you can get it at your business.

b)      Calls Don’t Route to Your VoIP Phone – Under some circumstances, a call to your office phone may not appear and ring your VoIP phone. If you have your cell phone as the next phone in your Find-Me list, your cell phone will ring and you can take the call there. This has happened to me a few times. The service providers know this is an important problem that they must put behind them, so I’m confident that within a year it won’t occur at all.

c)      Service Outages – No question about it, there will be service outages from time to time as the VoIP service providers go through growing pains. These may result in minor annoyances such as not receiving fast notification of a voice mail to the unacceptable complete loss of service for a brief period of time. Once again, the service providers know this is an important problem that they must put behind them, so within a year I expect this problem will be resolved.

d)      Some VoIP Service Providers are likely to Go Out of Business or Get Bought Out – This industry is moving quickly and is still mostly in its infancy. It’s hard to imagine that today’s service providers will be around for years; it seems much more likely that they’ll get swallowed up or go out of business. Because phone service is so critical to a business, it’s likely that you won’t ever experience a complete loss of service when this occurs, but your fees may go up, the services offered may change, or both.

What Will Your Clients Think?

I have had good and bad reactions from people who call into my company’s VoIP system. Some of the more technically inspired callers liked my system so much they immediately wanted to know how they could get the same kind of system for themselves. Other callers resented that they are asked to announce who they are before the call is routed to me. It’s the equivalent of having an assistant who answers your call ask the caller: “who may I say is calling” before the call is routed to you. My clients like the fact that I’m more available through the Find-Me calling tree, no matter where I am. If you want to retain a system where your office phone is always answered by a live person, that can be easily implemented.

What is the Future for Traditional Phone Service and VoIP?

Based on my conversations with service providers and other vendors, VoIP adoption is happening in residences and businesses at an extremely rapid pace. This is causing a massive diversion of attention away from traditional phone services toward VoIP. This means that the service quality and feature set of traditional phone service is probably at its peak now. The service quality for traditional phone service will eventually erode as it becomes starved of resources. Internet based telephony, VoIP, is capturing all of the market’s mindshare. Today’s technical problems and limitations will gradually be reduced and eliminated. Five years from now, it seems likely that almost 100% of new phone installations at businesses will be VoIP.

Addendum - 2006-10-13

A client of ours just went through a difficult VoIP transition. Their problems were related to a faulty T-1 circuit. The T-1 had high packet loss, causing dropouts during calls and terrible audio quality. The T-1 is being provided by a well respected vendor but the vendor's upstream partner is not satisfactory. We shouldn't be surprised; VoIP seems to have numerous ways to "teach" us new things.


Call 212-542-3144 to experience True Blade's VoIP phone system.

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