For almost all businesses today, what matters most is the Internet: even the smallest business needs a Web site and an email address.  But the World Wide Web and email services are just two applications that use the Internet.  VoIP, which stands for Voice over Internet Protocol, is simply another type of Internet application that allows telephone traffic to be carried over data services. 

VoIP (some say it like “voype” but most simply say “vee - oh - I - P”) uses Internet Protocol to carry voice signals over the same technology that brings you email and access to web services.  But a recent Harris Poll indicated that only about one-third of consumers are familiar with VoIP.  As with any new technology, small business owners need to understand VoIP before making a purchasing decision.

Different VoIP Varieties

In one of its simplest forms, VoIP is like an instant message service with microphones and speakers.  Instead of typing in a message from your keyboard, you talk into a microphone on your computer.  This is called peer-to-peer communication: the equipment on the receiving end of your connection is very similar to yours, and the signals of your voice are never routed to the highly-regulated public switched telephone network. 

There are also VoIP systems that use special equipment and computer software – these systems will allow you to connect to the “regular” phone system and call virtually any other phone number.

Then there are VoIP systems that don’t even use the Internet.  Internet Protocol is simply a set of computer control systems, so if you are operating a small business network, you could connect all your phones together like an intercom system without ever having to take the signals off your property – and then reduce the number of telephone lines you buy for outside use.

Advantages and Disadvantages to VoIP

Cost is one of the key factors that makes VoIP attractive; the service is normally charged at a flat rate for unlimited use of the local and long distance calling.  For a small business, this brings both cost-savings and cost-control advantages. Also, a VoIP connection can be flexible – as with email, you can access a VoIP number from any computer connection, which means that moves, adds, and changes become much easier.   New companies, like Vonage and Skype, have pioneered VoIP services, increasing its reliability.  And many other companies, like cable operators Time-Warner and Cox, and Internet Service Providers like AOL, and even regular telephone companies, have been successfully rolling out new VoIP services. 

But VoIP isn’t like the regular, highly-regulated phone system.  In case of emergencies, VoIP phones don’t necessarily connect to 911 systems. While recent federal regulations are addressing this need, right now, the systems aren’t quite there.

Also, businesses are used to very reliable telephone systems, and are quite intolerant of telephone outages.  With VoIP, your phones are only as reliable as the Internet service – and these systems don’t typically have the same level of “up time” as we are used to with standard phone service.  Even during a power outage, a traditional telephone line will work, but that is likely untrue for your Internet Service even if managed by a good computer programmer on your staff.

Is VoIP Right for Your Business?

It seems that if your business is not in need of a 100% reliable phone system, and you believe you will never have need for 911, then VoIP might be right for you immediately – and you’ll probably save some money.  But many businesses are taking their time to convert their phone systems to VoIP.  Rest assured, the industry is moving the technology forward with great speed, and it is likely that within the next few months that many of the current disadvantages of VoIP will be resolved.  Eventually, we will all be using some form of VoIP, and have more control on our telecom spending. But for now, do your homework, and ask the hard questions of providers, before you decide to jump into the hype of VoIP.

Trainor is the President of Frontier Trail, Inc. a communications technology consultancy based in Monrovia, CA.  She can be reached at Trainor@FrontierTrail.com.