VoIP, or Voice over Internet Protocol, is a method of sending audio voice signals -- or, more specifically, telephone signals -- as data packets over the Internet. By taking advantage of the different charging structure of broadband services, the cost of telephone calls can be drastically reduced.
The legacy of the analogue telephone system
The early telephony systems were, of course, entirely analogue and used a network of copper wires to carry the signal current over a one-to-one connection between two telephones. The legacy of this system creates a huge degree of physical inertia to change: although all major telephone backbones between exchanges are now digital and carried by fibre optic, microwave and satellite links, the local loops between the exchanges and the home or business still use the many miles of existing ‘analogue’ copper wiring.
Broadband technology exploits the maximum possible capacity of the old wiring to run digital signals over these copper connections. Of course, broadband data links aren’t limited to these copper wire connections, but are also available over cable or, in some cases, satellite links.
The old PSTN (Public Switched Telephone Network) telephony system of point-to-point connections provided by a monopoly service provider (British Telecom in the UK) supports a line rental plus a charge-per-call payment model, with rates set by the monopoly provider at what it feels the market will bear. By contrast, broadband is an ‘always-on’ system with multiple competing service providers that connects to the Internet, where data packets travel by diverse routes: this means that the charging structure is quite different, and VoIP calls generally cost less.
VoIP call charges
Often touted as a ‘free calls’ telephone system, in reality VoIP calls can be divided into three types, which attract different charge rates. These are: calls between two VoIP phones; outgoing calls from a VoIP phone to a PSTN phone; and incoming calls from a PSTN phone to a VoIP phone.
Calls made between two VoIP subscribers using the same service provider are treated as normal Internet traffic and costs are covered by the users’ broadband connection fees. These are often regarded as ‘free’ calls.
Calls to PSTN numbers are charged for by the VoIP service provider since they must pass through a VoIP-to-PSTN gateway maintained by the service provider.
Incoming PSTN calls to a VoIP phone are charged to the caller at a rate that depends on the type of conventional number assigned to the VoIP phone. National rate numbers are usually assigned by the VoIP service provider at no cost to the VoIP subscriber. The VoIP service provider then pockets some of the call charges paid by incoming calls. Incoming calls to these numbers cost the caller around 4 pence per minute. Alternatively, the VoIP subscriber can opt to pay a fee for a local code number, in which case incoming calls are charged to the caller at local rates.
Dialling a number with a VoIP phone
The complexity of actually placing a call with a VoIP phone varies, depending on the nature of the required connection. Calls made between VoIP phones using the same service provider can be placed by simply dialling the service provider ID number for the destination phone.
Calls between service providers can be made by dialling the destination ID plus the service provider domain. Inter-service connections are limited at the moment, with each provider only supporting calls to a select number of other services. Inter-domain calls become a bit tricky if you're using only the phone keypad to enter the text in the domain name.
Calls to PSTN numbers can be dialled just like making a normal phone call, with the caveat that the number must always include the full area code.
In theory it’s also possible to dial another VoIP phone using its IP address. However, since most VoIP phones will be connected behind a firewall via a gateway that's using NAT (Network Address Translation), this usually isn’t practical.