Is VoIP a good idea for small business?

Is VoIP a good idea for small business?

Summary: If you have doubts about the cost and reliability of VoIP phone systems read on says Tristan Degenhardt of Digium Switchvox.

Commentary--If you are like most small businesses, you are considering investing in a VoIP (Voice over Internet Protocol) phone system for your business, but are unsure of the costs and reliability.

You think you may experience some savings by reusing your existing company infrastructure, like network wiring, and may see a boost in productivity because of all the features that can come with VoIP, but you are not sure if you are ready to entrust your voice to the wild west of the Internet. We’ll explore ways to get the most out of an Internet-based PBX (Private Branch Exchange) deployment so that your calls are as cheap and reliable as you are willing to make them. And we’ll look at ways to help you decide how much risk your company can tolerate in the name of slashing phone bills.

Wait, but isn’t VoIP free?
Well, not exactly. If you make a call using VoIP to another user of the same VoIP network, then yes, this call could be free. This really depends on what the owner of that network has decided for their policy. If the owner of the network is you, as in the case of multiple IP PBX systems joined together, then yes, those calls are free. If you’re not calling another VoIP user, like in the case where a VoIP call is made to a cell phone, then the call needs to jump out of the VoIP network and “terminate” into the regular public phone network. That’s what you are paying for when you pay for VoIP service

The main reason your phone calls are less expensive when using a VoIP provider is because the provider is sending your calls as far as they can using VoIP and only sending it as short a distance as they can on the PSTN (public switched telephone network); in other words, they are saving by not sending the call long distance. An ITSP (Internet telephony service provider) with many termination points all around the world can have rates well below a traditional carrier for this reason.

Take, for example, a call from Los Angeles to someone’s regular home phone in Paris. If the VoIP carrier you are using has a termination point in Paris, you’re in luck and the call will travel across the distance just like any other Internet traffic. The call then goes from that termination point in a data center out to the public network in Paris, making it a local call, and therefore, cheap!

All this goes out the window, however, when you consider that most ITSPs are actually just reselling a larger wholesale carrier’s minutes. So shopping for an ITSP can just come down to shopping for the lowest rates. But buyers beware! Just like with anything else, you tend to get what you pay for. There are definitely bargains to be had, but it is important to know if the carrier you’re researching is reselling someone else’s minutes or actually has their own network. It may actually be better if they are reselling a larger carrier’s minutes because that large company has a lot of infrastructure, a worldwide presence and plenty of support staff.

On the other hand, you will get some frustrating answers from ITSPs that don’t own their own network if they experience an outage. Basically, there’s not much they can do about it.

If you choose an operator that resells rather than owns its own network, the best bet is to choose a carrier that resells several larger carriers’ minutes, instead of depending on just one.

Big impact: Routing calls wisely
The whole goal is to explore how routing your business calls through the right channels can impact your bottom line without forcing you to jump “whole hog” into VoIP at the outset. VoIP may be cheap but it’s typically no more reliable than the Internet, so balancing your VoIP calls with public network calls would be wise due to the government regulations placed on our old telephone network.

Here are a few scenarios:

Scenario one: Use VoIP to just call between offices
Whether you have remote employees or entire remote offices, deploying IP handsets and IP PBXs at each location enables all of your devices to talk to one another without intervention by an outside provider.

That is, they all speak the same language so no translation is necessary and there is nothing to pay for but bandwidth. Presuming you’ve moved from a traditional PBX to an Internet-based (IP) PBX and have simply unplugged your old analog lines from the old system and plugged them into the new system, you could still see pretty decent savings by deploying this way. You could consider this to be the “safest” way to roll out an IP PBX, but unless your company does a lot of branch-to-branch calling or has a lot of employees working from home, you could probably aim a little higher.

Scenario Two: Add in VoIP for select outbound calls
By adding a VoIP provider to the mix you can choose which calls will be handled by which route through a customized graphical user interface (GUI). Imagine your phone system, but instead of just having those old analog lines, you’ve chosen to sign up for service with a VoIP service provider. In the GUI, you can specify that for 911 calls the system will send the call over the analog lines, but when you call New York it will use the VoIP service provider’s route.

See what we did there? We used VoIP because it’s cheaper to call long distance using VoIP, but we used the analog lines when we didn’t care about cost and just wanted the most reliable call possible.

With some of today’s leading VoIP providers you can be as specific as you want in defining types of calls (any long distance call, any call to Los Angeles, any call to 555-234-9090, etc.) so you can route them the way that makes sense for your business. By using several VoIP providers, you can save even more money. If you have multiple providers, you can set the GUI to use the provider that gives you the best rate for the call – for example, use Provider A to call China but Provider B to call Dallas.

If you have multiple providers you can get really fancy and stack the routes up as much as you like. For example, use Provider B to call Dallas but if that fails, use Provider A, and if that fails, use the standard non-IP phone network. These fail-over routes can be put into place wherever it makes sense for your business. Do you want to spend $30 on a five-minute phone call or would you rather your employee give it another shot in five minutes when the outage has (hopefully) passed.

An even more granular level of control is to define the routes used not just by which number your employee is dialing but by who the employee is. Perhaps you don’t want your tech support team to be able to call out using the analog lines unless it is a 911 call. Maybe the CEO should be able to use the Public Switched Telephone Network (PSTN) fail-over route when she’s trying to call China but the VoIP connection is unavailable.

Hidden Savings: Remember that local calls over your analog lines are probably free. Check with your carrier and set up your local calls to route over those PSTN lines. This is one of those rare times when VoIP is almost never cheaper than the PSTN.

Scenario 3: VoIP inbound
In the previous scenarios we’ve discussed outbound calls but it is also possible to use VoIP for inbound calls. A direct inward dial (DID) phone number (or as many as you need) can be procured from many VoIP service providers.

It is often cheaper to get a DID than a PSTN phone line that comes with a phone number, making it is an attractive option for many businesses trying to squeeze out the most cost savings from their new IP PBX.

What many businesses fail to consider, however, is that they will often pay for outbound and inbound calls with this new number. With your old analog lines, you probably didn’t pay for inbound calls.

For example, if John calls Jane using a regular phone line, he pays for the call based on how long he’s on the phone. Jane doesn’t pay a dime. With VoIP, unless you’re signed up for a plan that is a flat fee for both outbound and inbound, you pay both ways. Another point to consider when evaluating moving your numbers to VoIP DIDs is number portability. Unless your VoIP service provider can transfer your numbers, there is generally some cost associated with changing your businesses’ phone numbers -- printing new business cards, informing your clients, updating advertisements or Web sites, etc.

Hidden Savings: Look for a VoIP IP PBX solution that comes equipped with reporting tools so you can constantly evaluate your inbound and outbound call patterns and make adjustments accordingly. During the first few months of installation, check your peak inbound call volume. It may turn out that your old PBX had eight phone lines plugged into it, but with your new call routing system using VoIP for many of these calls, you’ve peaked at three inbound calls. It may be time to call up the phone company and cancel four of your lines. Score one more for VoIP cost savings!

Another reason for businesses not to consider an IP PBX for inbound calls is the reliability factor. If that inbound call can’t reach the IP PBX it is a far worse thing for most businesses than if an outbound call fails.

Think of it this way: if you’re sitting at your desk trying to call your customer in China and the call fails, you’re going to hang up the phone and try again in five minutes. If your customer, on the other hand, tries to call you and it doesn’t work, who’s to say they are ever going to call back? Ouch.

The bottom line is to be cautious when assuming you need to switch all of your numbers to DIDs. A far more common way to deploy VoIP DIDs is to use them as back-up numbers in case all of your analog phone lines are full. Making sure you’ve got enough PSTN lines to handle your inbound call volume is important, but if you find that one day your company has been covered in The New York Times and your phone is ringing off the hook, you can at least roll over to your DIDs.

So, how do you implement this scenario? Your PSTN provider probably has an option available that will forward inbound calls to another number if all of your phone lines are busy. Give them your VoIP DID and tell them it is the number where calls should be forwarded. The PSTN doesn’t even have to know it is a VoIP line since it looks just like a telephone number to them. If you are going to deploy this way, it is a good idea to look for a provider that will allow multiple inbound calls over the same DID. That way, you’re pretty much guaranteed not to “ring busy” when your customers call on the busiest day.

Scenario 4: All VoIP, all the time
Sometimes IP PBXs are deployed as the office phone system without any analog lines. One way this happens is when a VoIP service provider doesn’t route your business’s calls over the Internet, but instead uses a private network. These types of providers can offer data as well as VoIP service and provide SLAs (Service Level Agreements) that other VoIP providers cannot.

The service provider is then in charge of what happens to your calls, rather than trusting them to the Internet. These types of providers can also offer QoS (Quality of Service) options that prioritize your voice packets over your data packets, ensuring that your phone calls sound perfect. A common myth about VoIP is that it sounds bad. This is not true. It actually sounds better because it is digital, but what can sound bad is the network the call is on.

Calls that travel over the Internet sometimes sound choppy or robotic because they’re sharing the “information superhighway” with a lot of other traffic. QoS ensures a clear path for voice traffic from start to finish.

The cheapest but riskier way to do an all-VoIP system is to get a regular VoIP service provider account and a DID (or two). You will want to make sure you have a plan for dialing 911 (some VoIP providers support this, others do not). You may have great luck with this or you may curse the day you ever tried it. For this reason, it is recommended that you work up to this gradually rather than jumping in feet first and having to scale back and make adjustments to cope with trouble.

Balancing Act: The Best of Both Worlds
With all of this talk about failures and outages, you might be asking yourself just what you’re getting into. Fear not! As outlined above, VoIP can be deployed in such a way to improve your call sound quality, save you money and have rules in place to keep your company’s communication running smoothly.

Tristan Degenhardt is the product line director for Digium Switchvox, a leading provider of IP PBX software for small, medium and large businesses.

Topics: Unified Comms, Mobility, Networking, Telcos, SMBs

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  • Another option...

    We have an Asterisk box running our PBX.

    We have some PRI cards from digium. What we do is run a T1 PRI line into the box. We have split it up 50/50 between 12 DIDs and the rest is data.

    So, we have VOIP inside the office, with the reliability of a PSTN network. (We are primarily an inbound call center.)

    The cost savings, to us, was the 'Free' internet. 'Free', as we nolonger required the services of our ISP. The phone company that sold us the PRI is now our ISP and they bundle the voice/data much cheaper than you'd think.

    That, and the incredible functionality that Asterisk provides. We have multiple queues for sales and customer service - a task that was impossible to figure out on the old AT&T pbx.

    FYI - Red-Fone sold us the Linux box with Asterisk configured, Polycom telephones, plus their expertise to get it all up and running for around $5K. The At&T PBX that was replaced was $15K several years ago.

    Hope that helps someone - We couldn't be happier with our Asterisk / Polycom system. We've had it for two years now.

    • So Many Options...

      I really think that this illustrates one of the reasons that VoIP has so much momentum and is just picking up more. Because PBX solutions are increasingly based in software rather than hardware, there's more than one way to solve problems. This lets small businesses tailor their voice systems for specific purposes. And when you're using Asterisk, the effect is magnified because there are so many people with unique situations working on and contributing to the project. Great stuff!
  • RE: Is VoIP a good idea for small business?

    Excellent article - I enjoyed reading the migration options as part of the article. I often use papers like this to justify expenditures to organizations; to have details like that written right into the article as opposed to my awkward attempts to put them in layman's terms is a huge plus. Kudos!
  • Things to keep in mind

    I work in VoIP business development. One thing that I have noticed when it comes to business deployment of VoIP is that the quality of service is almost entirely dependent upon the internet service provider (ISP). I found out today, in fact, that Verizon has a connection reset function on their DSL accounts that actually cuts long duration connections in order to cut down on torrent downloads. As you can imagine, this can cut off long phone conversations and bring grief to a VoIP customer. Typically we are finding that if we supply a data T1 and the hosted PBX phone service we can cut out many of these types of issues. What is even more amazing is that we have 3.8 (out of 4.0) mean opinion (MOS) call quality on a hosted PBX model using a dedicated data T1 across the public internet without utilizing any sort of long-haul QoS.

    All in all, it really comes down to who your internet provider is and the expectations that were given to you pre and post sale. No, VoIP, will not guarantee 100% uptime, but really, neither can POTS (Plain Old Telephone System). With a business class VoIP softswitch I can give triple 9 reliability. All rates, savings, and features aside, can your local POTS provider guarantee that?
  • RE: Is VoIP a good idea for small business?

    I am considering a VOIP system as I currently have a POTS
    system with a Panasonic Digital phone system, but what I
    have not seen with VOIP is a good cordless phone. Does this
    exist? I haven't even seen one on the digium website to go
    with their system. Is that something you sell Tristan or does
    anyone else here have any knowledge about it?
    • Cordless VoIP

      Lyncsys make a nice cordless phone for VoIP.

      Also with a VoIP - Analogue adapter (can't think what they are called - but you get the drift) any analogue/cordless phone can be used on the VoIP network (within the limitations of the Phone of course)
      • re: Cordless VoIP

        There are a number of vendors who make WiFi VoIP phones, but they suffer from some usability issues such as poor battery life.

        If you are looking for mobility in conjunction with an IP PBX, I would suggest using an ATA tethered to a traditional 5.8GHz wireless phone. Alternatively, there are several manufacturers offering DECT based wireless phones that work with SIP based IP PBX systems. Aastra and Polycom have DECT based wireless handsets that offer superior battery life, ruggedized build and are a better choice for business use IMO.

        Also, Nokia "e" series mobile phones offer SIP support and can be configured to work with many SIP based IP PBX systems.

        Cory Andrews
  • RE: Is VoIP a good idea for small business?

    I have a homebased business and I have VOIP plus an extra line for far I have been happy with it. I think it is a cost effective way for home based businesses. It is a new startup and I have not reached a high volume of calls yet, but all the calling features are included in the price unlike the POTS you get nickeled and dimed for every feature. I kept my home line on POTS, but I am thinking about switching to VOIP.
    The disadvantage to me is my desk is cluttered with modems. If I convert my home line to VOIP...another modem to clutter my desk.
  • RE: Is VoIP a good idea for small business?

    The good thing about VoIP and ip-pbx is the flexibility of the applications so as the hardware being used. The beauty of open-source applications, which are used in these modern communication infrastructure, are its ability to transform and improve for the better as time passes and technology develops. I'm a small business owner and has several remote offices. Past hardware I used were too pricey and to be able to use them without static and any disturbances, its either you have to buy an echo-cancellation version of the hardware or buy a separate echo cancellation module. Cheaper alternatives such as cards i got from nxtvox can be equipped with echo cancellation software which pretty much does the same job as an echo cancellation hardware does. Lastly, I'd like to point out one thing that I consider a gift from God -- softphones! I really like the concept of having less hardware as possible and this pretty much removes the messy clutter on tables.
  • RE: Is VoIP a good idea for small business?

  • RE: Is VoIP a good idea for small business?

  • RE: Is VoIP a good idea for small business?

    one word TRIXBOX
  • The dreaded lag

    If one thing characterises VOIP to me it's delays. When I hear that delay on a phone call, I must admit I think I'm either going to talk to a call center or someone too cheap to get a decent telephone line.

    This may improve in the future, but I don't think it does much for your business image.
  • RE: Is VoIP a good idea for small business?

    How does this compare the the Cisco IP Phones?

    <p><a href="">wireless headsets</a></p>
  • RE: Is VoIP a good idea for small business?

    thanks for the such a informative and concise article.

  • Finding Business VoIP Providers

    We are starting to offer our customers Business VoIP service, so we'd like to tell your website/article visitors about our new VoIP finder service:

    Thank you,