What is a VOIP service? How does VOIP work?

VOIP Phones have come of age from being a simple free PC-to-PC communication tool for geeks to a mainstream solution appropriate for businesses and consumers.  The concept is simple. Analog voice calls are digitized, broken into packets of data and sent over computer networks instead of a wired phone line. At the destination these packets are assembled and translated back to voice.

Advantages of VOIP phones:

If you are setting up a new office, have multiple locations with large toll charges, or have an aging PBX that needs to be replaced, business VOIP phones could be a great solution for you.

• A VoIP Phone service is a cheaper alternative to expensive PBX systems. VOIP phones offers all the features of a PBX, including auto-attendant, call forwarding, conference calling, call transfer, caller id, simultaneous ringing across multiple phones, and extension dialing. All on a budget.
• Depending on the service level, long distance and international calls are generally much cheaper using a VOIP phone than the traditional phone service.
• If you have relatively new telecom equipment, you may implement partial VOIP phone systems by connecting multiple locations but continuing to use traditional phone service (or PBX) for calls within a location.
• A small business can use a hybrid business phone system. Calls to the outside world are routed over traditional phone lines. A VOIP phone service is used to route internal calls over the computer network. VOIP phones unite multiple offices over a single phone system thus eliminating toll charges.
• With VOIP phone systems, even a small remote office can enjoy as many features of a PBX, as enjoyed by the larger locations.
• Since the VoIP phone service is carried over data network, businesses do not need to run separate cabling for phone service thus adding to the savings.
• If you get VoIP phones, your network administrators have to administer and maintain one less network since both data and voice now run over the computer network.
• A compelling feature of VoIP phone systems is the ease of integration with CRM applications, resulting in major boost to employee productivity.
• If your employees travel, they can take the VoIP phone service with them on the road thus saving cell phone or expensive hotel long distance charges. They just need to install a soft phone on a PC that is equipped with a speaker and microphone.
• Depending on the bandwidth of your computer network, VoIP phone systems allow videoconferencing, a great alternative to face-to-face conferences, thus saving on business travel and gas mileage.

Disadvantages of VoIP phones:

There are a few drawbacks to VoIP phone systems.

• Voice call quality is highly dependent upon the available bandwidth. Voice calls are carried over the same network that is used to carry email, transfer files, and access databases. If a co-worker starts to use substantial part of the bandwidth to say transfer a large file, there could be a sudden deterioration in the quality of voice calls. This problem may be avoided if you purchase Quality of Service (QoS) applications that maintain a dedicated amount of bandwidth for voice calls.
• Unlike regular phone systems, VOIP phone systems are prone to outages. If your building looses power, your phone system will go out of service immediately unless you have a battery backup.
• A VOIP phone service is network dependent. If your data network goes down, so will your VOIP phone. To reduce network dependence and to add some redundancy, many businesses opt for hybrid systems with a mix of digital and VOIP Phone systems.
• Like any software application, a VOIP server will require upgrades and maintenance and will have to go off line occasionally, thus causing a temporary phone outage.
• Some common business devices such as fax machines, credit card processors and security systems do not run over VOIP and need traditional analog phone lines. Make sure your VOIP service provider is aware so that you can keep these devices running.

How much does VOIP cost?

Before you commit to a VoIP phone service, evaluate your current phone charges and then do a cost benefit analysis of switching to a small business VOIP system. Invest only if you think you will increase productivity of your employees while saving money. Costs vary by VOIP service providers, service location, number of extensions and the advanced options. It is best to first understand the benefits of VOIP and then compare price quotes from leading VOIP companies before selecting the right voip phone service for small business. Initial investments in VOIP phone systems can be higher than traditional PBX and hybrid Key Phone systems but the higher costs are offset by increased business productivity and lower maintenance costs.