Is your business ready for VoIP

Voice over IP can slash phone bills for some companies, but not all. Here's how to decide if it's right for you.

The concept is straightforward: VoIP systems transform analog voice calls into packets of data, then send the data over broadband computer networks instead of traditional phone lines, to be translated back into voice at the receiving end of the call. From its roots as a free service that allowed only computer-to-computer calls, VoIP has matured into a stable, mainstream solution appropriate for businesses and consumers.

There are two ways VoIP can impact your business. The simplest is VoIP service. This subscription-based service routes your outgoing calls over the Internet, converting the data back to an analog signal and transferring it to the existing telephone network to allow a VoIP call to connect with any regular phone, anywhere in the world. Right now, the bulk of VoIP service is consumer-based, with dedicated VoIP providers like Skype and Vonage being joined by telcos AT&T, Verizon, and Qwest in offering VoIP as a replacement for home telephone service.

However, with service levels improving, standards being settled, and more big-name companies getting into the act, VoIP service is becoming more viable as an option for businesses. Hosted VoIP solutions provide all the features of a PBX, including auto-attendant, forwarding, conference bridges, and extension dialing - without requiring you to purchase a PBX. Getting these features without the hardware cost of a traditional phone system is great for small businesses, and when combined with the free or low-cost long distance fees, it means that VoIP service is becoming more attractive as a business solution.

More typical for medium to large business are VoIP PHONE systems. In this case, VoIP equipment installed at your business routes internal calls over your computer network, allowing you to unite multiple offices on a single phone system. However, it does not replace your existing phone service to the outside world: your internal VoIP network will still need a connection to the public telephone network.

If your business is spending big bucks on toll calls between locations, you are a prime candidate to upgrade to VoIP right away. No matter how remote your locations are, a VoIP phone system can completely eliminate long-distance calling charges between them, resulting in immediate cost savings. A VoIP system also allows even the smallest branches - including employees working at home - access to the full features of the corporate phone system.

Here are some points to consider as you plan for an eventual upgrade to VoIP.

• Network not working? Upgrading your data network now can pay off for VoIP later. Many companies are surprised to find that the data network that has been adequate for computing is woefully congested for the real-time requirements of voice communications.
• Keep an eye on the FCC. Right now, the agency closely regulates traditional phone companies yet gives cellular service providers free rein in many ways. The FCC has already met to discuss future regulations for VoIP - their rulings could have a big impact on the industry.
• Be ready for wireless VoIP. Already undergoing wide-scale testing in Australia, wireless VoIP could eventually supplant cell phones. The combination of VoIP phones and expanding wireless networks will soon provide a new option for cheap, portable voice communications.

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