VoIP Definition and Solutions

VoIP (Voice Over Internet Protocol) topics covering definition, objectives, systems and solutions.

What does VoIP mean and what does it do?

The term VoIP stands for voice over Internet Protocol. VoIP is related to the terms IP telephony and Internet telephony, which you'll be hearing more and more about during the next several years. VoIP has had a lot of buzz and hype behind it, though recently it has lost a little of its steam.

At the most basic level, VoIP technologies enable analog telephone communications to be digitally transferred and routed over data networks—whether it's a wide area network (WAN), a local area network (LAN) or the Internet. In theory, the two packets of communications—digitized voice and data—coexist peacefully and move all over a network. Of course, a third packet—video—has become a major network consideration for 21st-century organizations because it's a bandwidth hog. When combined on one network, data, voice and video offer boundless productivity opportunities for users, and potential telecom savings and efficiencies for organizations, but major headaches for IT networking staffers who have to "keep the peace" between the three demanding sets of network traffic. For their part, CIOs, burdened for so many years with legacy telecom and networking infrastructures, will have to spend a tremendous amount of resources on improving their network capability, reliability and flexibility to keep pace.

How does VoIP work?

Right now, there are three distinct ways that consumers and businesses are using VoIP technology. The first is by using a regular phone, some type of fast Internet connection and, for the consumer, an analog telephone adapter, or ATA. The ATA converts voice signals into a digital packet of data and sends it over the Internet. It's not too difficult to set up and use, and it is common in the consumer VoIP space. For businesses with many users on traditional phones, the ATA becomes a specialized server that can convert the analog voice signals into packetized data. For example, when an employee in a New York office calls a colleague in the Chicago office, the call is routed through a traditional PBX (or private branch exchange, which is the system that directs all the traffic) within the company's physical location, to the organization's in-house IP-based network, then converted to IP packets and sent via the Internet or the organization's WAN.


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A second way is by using a specialized VoIP or IP telephone, which resembles a standard landline telephone but connects to a router using an Ethernet cable. A specialized IP voice server in an organization's back office is able to route the calls over the network—from one VoIP-enabled phone to another. This option is becoming more popular, and vendors that specialize in managing this functionality, especially for small and midsize companies who rely on a broadband or DSL connection, have seen steady growth.

The third way is by installing software on your laptop, which acts as a "mobile telephone." All that's needed is a fast Internet connection, what's called a "soft phone" or a speaker, microphone and sound card, to make and receive the calls that would normally go to an office number—right from a PC. That's an innovative concept and ability for mobile knowledge workers, but in reality, it has yet to take off.

How does IP telephony differ from traditional telephony?

The traditional telephone experience, with the good old dial tone, is based on circuit switching. You pick up the phone, you get a dial tone, you dial the phone number, the other person hears a ring and picks up the phone, and a circuit connection, enabled over the carrier's network, is made on both ends. Then you talk. The decades-old system behind this form of communication is called the Public Switched Telephone Network (PSTN).

With VoIP and IP telephony, circuit switching is replaced with packet switching, and the "public" system enabling the transfer of the packets and the communication is the Internet. Because the dial tone has become so pervasive and dependable, VoIP systems have their work cut out for them. For example, if there's a power outage, you can't make VoIP calls unless you have a backup generator—one reason why many companies that have deployed VoIP systems still have analog lines for emergencies. Another difference is that the quality of your VoIP call largely depends on the quality of the network and speed of the Internet connection on which you are sending your digitized voice signals.

In terms of appearance, there's little difference between a 21st-century phone found in any businessperson's office today versus a VoIP phone. The main technical dissimilarity between the two is that a VoIP phone has an Ethernet port, and a standard telephone does not. According to In-Stat predictions, total IP phone shipments will grow from 10 million units in 2006 to 164 million units in 2010.

What are the advantages of VoIP?

Many organizations found that they can shave a lot of money off their monthly telecom expenses, for several reasons. The first, and probably the most talked about, is that with a VoIP system, organizations can save money on long-distance calls and those made on a WAN between intra-office staffers who work in dispersed locations.

The second reason is that organizations can reap savings by having data and voice traffic on one network, rather than having to manage and pay for separate data and voice lines. This makes network management, and telephony system updates and upgrades easier. With a centrally controlled IP telephony system, any changes network administrators have to make to the telephone system, such as adding a new employee, or when an employee moves seats, is much easier—there's no back-office wiring closet to visit or complex reprogramming of phones. Changes are made through a simple Web-based application.

Another purported benefit is new and more responsive forms of customer service. For example, "click to talk" (or "click to connect") has become a popular option for online retailers with hefty customer service operations. With click to talk, online customers who want to speak with a live customer service representative can click on a hyperlink and be connected (via VoIP) with the most appropriate rep for some human-to-human contact. For more on the advantages of VoIP, read "Is It Time To Connect VoIP Into Your IT/Business Strategy?"

All of these potential savings are critical for 21st-century organizations. That's because total telecom expenses, which in many companies are now IT's problem, are huge. According to Aberdeen Group, the average Fortune 500 company spends $116 million each year on telecom services (for mid-market enterprises, it's $26 million), and telecom costs, as a whole, have jumped into the top three line items for most companies. With VoIP implementations, many CIOs claim monthly savings of anywhere from $1,000 to more than a million dollars in the largest of enterprises that have heavy-duty call center operations or lots of geographically separated divisions that need to communicate via long-distance phone calls.

What are the disadvantages of VoIP?

Just as the list of potential advantages might make you think, "Why aren't we doing this?" there is an equal number of disadvantages and potential pitfalls that could make you (and your CEO and CFO) wonder, "Why are we doing this?" That will most likely happen when users experience network delays and poor-quality voice communications.

The first, and possibly most crucial potential disadvantage of a VoIP rollout is the fact that voice's network requirements are so finicky that any degradation in network quality will immediately and adversely affect your communications experience. The unfortunate consequence for those on VoIP-enabled calls is what is referred to as latency, jitter and packet loss, and the resultant "garble" or dropped calls are quite annoying.

That critical flaw for VoIP is in stark contrast to how data moves around on a network, where hiccups can occur with few short-term consequences. Put another way, in a Weigh In column on CIO.com, the authors write, "VoIP is a real-time application that needs to be treated as such—it does not have the same kinds of requirements as other enterprise applications that IT departments are used to managing." A robust, high-quality network environment is paramount for VoIP to work well. For many CIOs, that will be an expensive and time-consuming upgrade.

Second, some of those much-heralded big savings on long-distance calls will be realized only when a company's VoIP phones are connected on their network—in effect closing the loop on a network, and taking the carriers out of the equation. (If a carrier is still involved in your VoIP deployment at any point in time, expect that you'll still have to pay it something.)

Third, because VoIP is so hot, scores of vendors are flooding the market and promising short implementations (a month or two!) and relatively reasonable implementation costs (less than $150,000). Beware: Many CIOs and analysts have reported that VoIP rollouts will most likely take longer than anticipated, cost more than originally planned and require lots of training for users.

And lastly, VoIP depends on electricity to make it work. This means that power outages and VoIP don't mix well—no power, no VoIP service.

What does the IP telephony market look like?

The IP telephony market is poised for a lot of growth. Unfortunately, it's been stagnant that way for the last couple of years now.

There are many predictable issues that need to be ironed out before VoIP does, indeed, take off. The most critical one is all about perception: With VoIP, there still seems to be a steady undercurrent of skepticism—especially from businesses—that IP telephony does work well and that the quality is equal to what's offered from traditional carrier services. VoIP vendors have to get CIOs to buy into VoIP as a reliable, cost-effective and secure alternative, and dispel the FUD (fear, uncertainty, doubt) factor.

"Enterprises are being barraged by conflicting messages about the cost-effectiveness of adopting VoIP. These unclear messages surrounding sizable capital expenditures have made enterprises hesitant to deploy VoIP on a wide scale," according to market research firm Current Analysis.

Current Analysis predicts that the following near- and long-term market drivers will have a crucial effect on VoIP's adoption in enterprises:

  • Evolving standards: Session Initiation Protocol will continue to be developed by standards bodies, heavily marketed by companies supporting them and integrated into vendors' VoIP equipment as it displaces the H.323 standard. For mass appeal, support for as many protocols as possible remains necessary.
  • New applications: Enterprises are beginning to deploy (or plan the deployment of) a new breed of communications applications that takes advantage of packet-based communications. These include multimedia conferencing, video, presence management, IP-enabled call centers, and e-commerce applications such as "click to talk" customer assistance.
  • Reliability and security: Potential enterprise customers regularly voice concern for packet telephony's low levels of reliability and security when compared with traditional voice networking. Providing solutions that maximize the reliability of VoIP gateways is central to calming these anxieties. As such, improvements in both security and survivability have been the primary focus for many vendors.

The other significant factor for the VoIP market is how much more the carriers will enable VoIP services of their own. Carriers (AT&T, Verizon, Qwest, etc.) are making inroads into the market by offering hosted and managed VoIP services, especially to small and midsize businesses. "These new services offer enterprises a migration path from TDM to IP that enables them to maintain a hybrid environment for as long as necessary, provides operational expense savings, new features and flexible call management options," according to Current Analysis research.

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