VoIP: A Primer for Small Business

If you’re a smart businessperson (and if you read Small Business Computing, you undoubtedly are), you’re always looking for new ways to maximize efficiency and minimize costs. One of the ways you may be thinking about is trying out Internet telephony and VoIP (Voice over Internet Protocol), which lets you use the Internet to make and receive phone calls.

Internet telephony isn’t a new technology (it’s been around for years in one form or another), but only fairly recently has it become reliable and ubiquitous enough to be a serious choice for business. While Internet telephony was once an oddity often plagued for garbled and dropped calls, these days a well-planned and implemented VoIP system can provide call quality and reliability that rivals mobile phone or landline calls.

The Benefits
VoIP offers benefits over conventional telephony, and they generally boil down to lower cost, less complexity and more advanced communication features.

The technology’s most noteworthy advantage (and the one that attracts the most attention initially) is the potential for savings on telecommunication charges. Conventional business phone service can be quite pricey when you consider the cost of multiple phone lines, additional charges for special features like three-way or conference calling, and the fact that most providers bill business calls by the minute (particularly for long distance).

VoIP lets you conduct your voice calls across the same data network you use for everyday applications like Web access and e-mail, eliminating the cost of dedicated voice lines. Even better, VoIP providers typically don’t charge extra for those added calling features, and most offer unlimited local and long-distance calling for a relatively low flat fee. (International calls often entail nominal per-minute charges.) It’s not hard to see how VoIP will usually result in lower and more predictable phone bills for business.

In addition to the lower-cost phone calls, VoIP imparts additional savings by reducing the complexity of your technology infrastructure. For example, when you eliminate dedicated voice lines, you no longer need to administer separate voice and data networks. Since each has usually has its own equipment and vendors, you’ll likely pay less for ongoing capital investments and support services. Many VoIP service providers offer hosted PBX services that let you take advantage of advanced VoIP features without buying or maintaining any in-house equipment.

Beyond saving you money, VoIP also has the potential to make you more productive by giving your communications a mobility it’s never had before. Mobile phones already let you keep in touch on the road, but what if, instead of a separate phone number, you could take your office line with you when you travel? Take a VoIP phone on the road, and you can place or receive calls as if you were sitting at your desk from almost anywhere. Moreover, since your phone number is mobile as well, you can make “local” calls back home or call around the globe without worrying about cell phone roaming or hotel surcharges.

How it Works
To understand how VoIP works, it’s helpful to compare it to how conventional phone calls operate. When you place a “regular” phone call using the Public Switched Telephone Network or PSTN (also known as POTS, for Plain Old Telephone Service) it’s known as a circuit-switched telephony, because it sets up a dedicated connection between two points for the duration of the call.

VoIP on the other hand is known as packet-switched telephony, because the voice information travels to its destination in countless individual network packets across the Internet. This type of communication presents special TCP/IP challenges because the Internet wasn’t really designed for the kind of real-time communication a phone call represents. Individual packets may — and almost always do — take different paths to the same place. It’s not enough to simply get VoIP packets to their destination — they must arrive a fairly narrow time window and be assembled in the correct order to be intelligible to the recipient.

To improve performance, VoIP employs encoding schemes and compression technology to reduce the size of the voice packets so they can be transmitted more efficiently. Audio signals are also digitally processed in order to accentuate the voice information and suppress background noise. To conserve bandwidth, VoIP systems stop transmitting during lulls in a conversation and even generate some “comfort noise” to forestall the eerie silence that might make you think the call was disconnected.

VoIP uses a number of compression standards that offer different balances between packet size and audio quality. Generally speaking, the higher the compression the more simultaneous calls you can have, but the lower voice quality will be.

The Right Foundation
To get the most out of VoIP, you’ll need an Internet connection that offers enough performance to accommodate an appropriate call volume for your company. A good rule of thumb is to have enough capacity for roughly one third of your employees. So, if you have 30 employees, you should have enough capacity to allow 10 of them to be on the phone at any one time.

Broadband Internet access is pretty common these days, and you may be wondering whether that super-fast cable modem or DSL connection you already have will work with VoIP. While cable and DSL connections are great for tasks like browsing the Web or streaming video, they’re not always the best choice for VoIP, because most provide with lots of downstream (to your network) bandwidth and relatively little upstream (away from your network) bandwidth.

Case in point: cable and DSL typically offer download speeds of several megabits per second, but most provide a mere fraction of that (sometimes as little as 128kbps) for uploads. This type of asynchronous connection is fine for the kinds of tasks cited above because they primarily involve one-way communication, but making calls over the Internet is quite different. For VoIP, upstream bandwidth is every bit as important as downstream, particularly if you plan to use more than just one phone.

While a cable or DSL connection with sufficient upstream bandwidth might be acceptable for a telecommuter, home office or sole proprietor, larger SMBs — or those that anticipate a lot of call volume — will want to consider a high-speed synchronous Internet connection like a T1 line. Although they can be a bit more expensive and offer somewhat slower download speeds than some business-class cable or DSL service, at 1.54 Mbps in each direction a T1 offers ample bandwidth to satisfy the requirements of both data and voice traffic.

Henry Kaestner, CEO of Bandwidth.com, a telecom service provider for SMBs, says that organizations considering VoIP for critical communications should obtain their Internet connection and VoIP service from a single vendor, and look for one that makes a quality-of-service (QoS) pledge backed up with a Service Level Agreement (SLA). Businesses should only consider providers “that will pay you money if they don’t deliver,” says Kaestner.

Kaestner’s company offers a free online test to help determine an Internet connection’s suitability for VoIP. It estimates how many concurrent VoIP calls your network might be expected to accommodate by measuring its bi-directional bandwidth (which may be significantly less than the network’s raw upstream bandwidth) as well as latency (delivery delays that packets experience in transit). The test also checks to see if your network connection allows VoIP protocol traffic like SIP (Session Initiation Protocol) and MGCP (MultiMedia Gateway Control Protocol) to pass through it.

Preparing for VoIP
The key to success with VoIP ultimately comes down to proper planning. The scope of a VoIP implementation can vary according to an organization’s needs and desires, ranging from the relatively straightforward — using VoIP for local and long-distance calls or to communicate between a company’s multiple offices — to more complex deployments like call centers.

In most cases, saving money immediately with VoIP won’t require you to purchase any additional phone equipment or jettison what you already have, because devices called Media Gateways let conventional phone equipment (ranging from individual phones to an entire PBX) interface with your Internet connection. Taking advantage of VoIP’s most cutting-edge features (like the ability to have your calls follow you as you travel) typically require specialized VoIP phones or other equipment and/or a hosted PBX service.

Since many firewalls automatically block the TCP/IP ports used by SIP and MGCP, you may need to add a device to your network to remedy this problem. These devices also improve VoIP performance by prioritizing voice packets over more mundane types of traffic so your calls aren’t queued up behind, say, an e-mail upload.

Bandwidth.com’s Kaestener says that companies too often don’t consider the impact that their local network performance will have on their VoIP experience. Since all VoIP traffic calls originate or terminate on the LAN, bandwidth-hogging applications or inappropriate equipment (using hubs instead of switches) should be identified and corrected before they can negatively impact VoIP performance.

Numbers Game
People cheered when phone number portability for mobile phones finally became a reality last year. After all, having to forgo an established phone number can be enormously inconvenient for an individual. For a business however, losing a long-held phone number known by your customers is nothing short of disaster.

Switching an existing business phone number to a VoIP provider is possible, but the time frame for doing so can be measured in anything ranging from minutes to months. Check in advance to see whether your existing phone company has a number transfer agreement with your prospective VoIP provider. It can streamline the process considerably.

Joe Moran spent six years as an editor and analyst with Ziff-Davis Publishing and several more as a freelance product reviewer. He’s also worked in technology public relations and as a corporate IT manager, and he’s currently principal of Neighborhood Techs, a technology service firm in St. Petersburg, FL. He holds several industry certifications, including Microsoft Certified Systems Engineer (MCSE) and Cisco Certified Network Associate (CCNA).

Do you have a comment or question about this article or other small business topics in general? Speak out in the SmallBusinessComputing.com Forums. Join the discussion today!

Must Read

Get the Free Newsletter!

Subscribe to Daily Tech Insider for top news, trends, and analysis.