Years ago, companies that did a lot of business in another city or region would buy an FX (Foreign eXchange) line from the telephone company. Customers in the distant city could dial a number local to them, but it would ring at the company's offices, even thousands of miles away.
FX lines were expensive. With cheap long-distance and toll-free lines, they made less and less sense. But there is often still a big benefit, especially for small businesses, in having a local number in a city where you don't have an office.
You get a local presence without the cost of establishing a local office.
Providing a virtual local presence is just one of the advantages that voice over Internet providers like Vonage, 8x8 and others offer small businesses. They also claim to have overall lower service costs.
And there are other potential applications for small businesses. A virtual company with employees or partners in different locations could all have Vonage numbers from the same area code and eliminate long distance calling between the locations.
If you have a supplier or customer overseas, set them up with a Vonage service and eliminate high overseas long distance costs.
What's the Catch?
We set out to find out, testing basic service from Vonage. We were pleasantly surprised it works better than expected, though not perfectly all the time. In a future article, we'll look at new small business services coming from 8x8.
Note that in order to use these services, you must already have high-speed Internet access DSL, cable or wireless. If you don't have it and don't need it for Internet access, the economic case for voice over Internet (define) becomes questionable at best.
The second point to keep in mind is that with these services, the digital voice signal travels at least part of the way over the public Internet. We'll explain in a minute why this could be significant.
Here's How It Works
Vonage subscribers choose to have a number assigned from among scores of available area codes in the U.S. and Canada. They can also have additional numbers with different area codes that ring on the same phone.
The service provider sends the subscriber or the subscriber picks up from a retail outlet a device called a voice gateway. Several manufacturers make them. They're no bigger than a hardback book, often smaller, and weigh only ounces.
You plug a standard phone into the voice gateway and, once it's connected to your high-speed Internet service or office network, it works like any other. It rings, you hear dial tone when you pick it up and you dial, for the most part, as you would with any other phone.
The voice gateway's function is to digitize the analog audio signal from the telephone's microphone and format it in IP (define) packets to send over the Internet. It also converts voice packets coming in the other direction into an analog signal the telephone can reproduce.
You connect the voice gateway to the high-speed Internet service in one of a few ways. If you only have one computer connected to the Internet service, it's simple. Plug the Ethernet wire from the high-speed modem directly into the gateway and then use the provided Ethernet cable to connect the gateway to your computer.
If you have a local area network in place, there are two possibilities. You could plug the cable from the modem into the voice gateway and an Ethernet cable from the voice gateway into the network router, gateway or bridge.
Or you could leave the network set up the way it is, with the cable from the high-speed modem plugged into the network device, and simply plug the voice gateway into the same router, gateway or bridge assuming there's a port available.
The Vonage manual doesn't actually mention this latter option. We called technical support before attempting to set the service up and were told it could be done.
The recommended method offers a theoretical advantage, but one that in practice makes little difference, we were told. When you're making a phone call and also downloading files from the Internet or exchanging files on the local network, the Vonage gateway will give priority to voice packets. We'll see in a minute why this could be important.
The Vonage gateway is made by Motorola, but other voice gateways offer the same packet prioritization functions.
We opted to use the second method. Set-up was a breeze. It took less than 30 minutes. And the service worked flawlessly first time.
To ensure a trouble-free set-up with Vonage, you do need to follow the set-up and activation procedures to the letter including waiting five minutes for automatic over-the-Internet activation before picking up the phone for the first time.