1. VoIP Phone Systems Introduction

Voice over the Internet commonly known as VoIP (Voice over Internet Protocol) represents the latest in phone system technology. With it, regular voice calls are sent over a computer network instead of traditional phone lines.

VoIP has been touted as “coming soon” since the first PC-to-PC telephony applications were introduced in 1995. In recent years the audio quality has improved drastically, technology has gotten cheaper, and business adoption has started to spike. According to industry analysts Frost & Sullivan, worldwide revenues for IP PBXs (industry terminology for a VoIP phone system) are expected to grow from $1.96 billion in 2003 to $9.08 billion this year

There are two basic varieties of VoIP. In its simplest form, VoIP requires a regular phone, an adapter, broadband Internet service, and a subscription to a VoIP service. When you place a call, it is sent over the Internet as data until it nears the recipient’s destination. Then the call is translated back into a more traditional format and completes the trip over standard phone lines. Also known as Internet telephony, this allows for extremely cheap long-distance and international calls.

This Buyer’s Guide covers only VoIP phone systems – equipment installed at your business that routes internal calls over your computer network. With VoIP, you can unite multiple offices on a single phone system. No matter how remote the locations, a VoIP phone system can completely eliminate long-distance calling charges between them. However, it does not replace your existing phone service to the outside world.

Today you can purchase either “pure” IP systems that have evolved from the developments of IT companies like Cisco or converged solutions that have been developed by the leading manufacturers of telephone systems and allow you to use both the legacy networks of the telephone Carriers (e.g. PSTN, ISDN…) while also managing voice and data applications on the one network using IP technology. In this Buyer’s Guide I will refer to both technologies as VoIP phone systems or IP PABX’s although traditional telephone system dealers tend to sell and service the converged solutions while data resellers sell and service pure IP systems.

VoIP phone systems can work for the smallest offices and the largest enterprises. IP PABXs are replacing traditional phone systems for medium to large customers as pricing is similar and benefits to these customers is significant, With prices continuing to fall, in the next couple of years IP PABX’s and IP key systems will be the prime offering for smaller customers as well .

2. How does Voice Over IP Phone System Work?

The premise behind VoIP is fairly straightforward. Instead of using “circuit-switched” technology, where a dedicated path from caller to receiver is reserved for their entire conversation, VoIP phone systems treat voices as data, turning your words into tiny packets of information that are sent over data networks. As these packets arrive at the other end of the call, the data is turned back into audio.

To set up a business VoIP system, you need several components. A central device manages the calls like the central controller used in traditional phone systems. This can be a dedicated piece of hardware such as an IP PABX, a regular PABX with specific IP cards, or a server running specialized software. You will also need phones and a data network. In some cases, you may be able to use your existing digital phones and computer network, although you may need to upgrade some of your network hardware to deliver the Quality of Service necessary for high quality voice calls.

Depending on your setup, internal calls are routed over your existing phone network or your computer network. Calls within the same office will typically be conveyed over your phone network, while calls to other company locations get routed over your computer network. Calls to external phone numbers get sent through the network to a gateway, which connects to the public telephone network. All of your calls connect seamlessly to any phone user – there are no compatibility issues to worry about. 

3. VoIP or Legacy Phone System?

The buzz around VoIP phone systems has been enough that many businesses are diving in without really understanding their benefits. Contrary to the assumption many potential buyers start with, a VoIP installation is not a guaranteed way to save money. And unless you have the specific requirements discussed later, the new features alone of IP phone systems are not reason enough to upgrade. However, there are some specific situations where VoIP can make an immediate positive impact on your business.

If your company has multiple locations – branches, telecommuters, remote sales offices – that are already connected to a company Local Area Network (LAN) or Wide Area Network (WAN), you are a prime candidate for a VoIP system. You can share the full features of your phone system across all your locations. In addition, even if you have one office in Melbourne and one in Perth, VoIP allows calls between them via extension dialing, making it a zero cost call. For businesses with hefty monthly long distance charges due to calls between locations, that can be a very attractive reason to upgrade.

A VoIP phone system can also save money as you are setting up a new office – you will not have to run separate cabling for your phone system. However, if you are setting up a new data network anyway, adding a parallel voice network at the same time is relatively cheap so the cost savings here might not be as large as you expect.

In many cases, the best solution will be a converged IP system that uses existing phone wires within the main office and VoIP for calls between locations. While converged systems support IP handsets, sticking with the phone system’s digital handsets internally will save you money, as well as increasing the overall reliability of your phone system. Vendors can also set up systems that use only traditional lines and extensions at first, but support later expansion to VoIP.

4.  Features and Benefits of a VoIP Phone System

The single biggest advantage of a VoIP Phone System is for businesses with multiple locations. With VoIP phone systems, any and all offices on a LAN or WAN can get the benefits of having a common office phone system, including extension dialing, seamless call transfers, and other features. In addition to making it easier to communicate, this sharing of features can enhance collaboration as employees at different locations can truly feel like they are part of the same organization. Plus, if they are on the company network, the phone calls are free – even if your offices are located thousands of miles apart. Simply looking at your current phone bill for calls between far-flung offices can give you an idea of how much you can save.

There are other cost savings that stem from the streamlined network infrastructure and improved administration. For network administrators, VoIP systems mean they only have one network to maintain instead of two. There is still separate phone system hardware to maintain – but only one network. The Move, Add, Change (MAC) process also is greatly simplified, because almost all VoIP systems are configurable through a web interface that can be managed by the administrator. This means lower ongoing costs -- you will not need to call your vendor for every relocation of an internal phone or change in call diversions or other simple administrative change in your phone system . And because multiple offices are seamlessly connected, they can share a single receptionist, auto-attendant, and voice mail system.

Another significant benefit is for employees on the go – the classic ‘Road Warriors”. If your remote users connect to the company network via a Virtual Private Network (VPN), a VoIP phone system allows them to make phone calls from the road at no extra charge. One salesperson on an extended trip can save hundreds of dollars in cell phone or hotel long-distance charges. All the user needs is a “soft phone,” (software that lets a laptop function as an IP phone), a PC microphone, and speakers.

Other familiar and essential phone system features like caller ID, call forwarding, simultaneous ringing across multiple phones, and other features you would find in traditional phone systems are available in most VoIP systems. VoIP phone systems can also support advanced Computer Telephony Integration (CTI) applications, such as call center management.

5. VoIP Phone Systems Potential Drawbacks

The two main drawbacks to VoIP systems are the limitations of your company’s internal data network for high quality voice traffic and the generally poorer reliability of data networks compared to legacy voice networks.

A. Internal Data Network Limitations

One challenge to maintaining call quality is bandwidth required for high quality sound. The technology to compress audio and to reconstruct it has been improved to the point where VoIP sound quality over a high-bandwidth connection is as good as or better than that of regular phones. However some networks that are fine for data are not up to the demands of VoIP.

Computer networks are designed to handle data that is not time sensitive like voice. Data packets may arrive out of order or even lost, but in most cases the data being sent can easily be reconstructed before it is needed. For voice conversations, each packet of sound has to arrive in the correct order because they are being sent in real time – and if packets are lost or out of the correct sequence, the conversation sounds distorted, choppy, or falls off all together. This is why VoIP services that rely on the Internet to transmit calls can have uneven voice quality.

If your company is routing calls over its private data network, then subject to the bandwidth available for the voice traffic then you can generally avoid of this potential problem with voice quality. The expensive frame relay networks are ideal for voice, but standard Ethernet networks that have been dimensioned to accommodate the voice traffic and are supported by Quality of Service (QoS) applications are also excellent for voice.

QoS maintains a dedicated amount of bandwidth for voice calls by giving voice data a higher priority as it is trafficked through the network. If there is network congestion, VoIP data is routed through first so call quality does not suffer. QoS applications are built in to some VoIP systems, as well as some routers. They can also be purchased separately as upgrades.

If you have a WAN that routes data between sites over the Internet, you cannot control the packet priority and therefore cannot guarantee voice quality. This set up is unusual with most larger companies using VPN’s (Virtual Private Networks) provided by carriers to deliver data between the major company offices

B. Outages

Unlike regular phone systems that get set up and basically forgotten, VoIP systems require more attention. Like any software application, your VoIP server will require occasional upgrades and maintenance. Company data networks also tend to go down regularly bringing the IP PABX and all communications with the outside world down as well. Additional redundancy may be required to be built into your data network to safeguard your company’s voice communications.

Power problems can also be an issue with VoIP phone systems. Most legacy telephone systems have options to keep the system working in the case of a power outage. This can be as simple as having a small number of power fail telephones to keep limited contact with the outside world in the event of a power failure or else a battery back up or UPS arrangement o keep the system working for a defined time period in a blackout. As most VoIP phones need to be plugged into a power socket to work, unless you have a strategy to keep all the power to the site up (e.g. a generator) you will be off the air for both voice and data for the duration of the power outage.

Converged IP PABX’s with a mix of digital and IP phones have an advantage over pure IP systems in a power blackout as if there is a system in place to keep their PABX running, then all the digital phones within the main office will continue to operate even if the data network is unavailable. 

6. How to buy your VoIP Phone System

The rapidly maturing business VoIP phone system industry means that there are many manufacturers with feature-rich systems that may be enticing to small firms.

A. Sales channels

As for traditional telephone systems, buying a VoIP phone system from a local reseller or dealer is the best choice for most businesses. However data resellers tend to offer only the pure IP phone systems such as those provided by Cisco while the telephone dealers usually restrict themselves to the converged solutions. Checking that the dealer or data reseller has manufacturer support is particularly important --  this can be critical as upgrades are released or problems crop up.

If you strongly prefer a pure IP phone system, we recommend you get a quote for a converged IP PABX or key system as this will probably meet your needs at a lower cost. Also watch out for vendors that simply add a VoIP system to your existing network whether or not it is fully ready to support voice traffic. They may later charge you for upgrades if you decide the call quality falls short of your expectations. Make sure you get a thorough analysis of your current network and the impact VoIP will have on it to get a true sense for your phone system costs.

Whatever you do, do not be tempted to do it yourself – setting up and maintaining a business phone system of any type requires specific expertise. There are many dealers, resellers and service firms that customize, install, and maintain VoIP phone systems – use our free quoting service to find two or three in your area to begin the purchase process.

B. Choosing a system

Once you have decided that VoIP is right for you, the next step is to determine what of your existing telecom equipment you can keep. Many PABXs can be IP-enabled with software upgrades and minor hardware additions, and you may be able to use digital phones you already own. The potential cost savings are significant, and you can also increase the overall reliability of your phone system.

When comparing phone systems, make sure you investigate the details carefully. Many systems say they include “everything” but may not include the specific features you require. Exactly what makes up a “complete” system varies from vendor to vendor, so be sure you are comparing equivalent systems.

You may also want to learn whether the phone systems are built on open standards. While all VoIP systems use the industry standard Internet Protocol (the “IP” in VoIP) to route calls, some use proprietary technology for administration or integration features. Having a system run entirely on open standards can allow for greater flexibility in integration and customization. However, you may not be as concerned about flexibility as long as the features and costs match your requirements. The technology used in a particular system may impact whether you can leverage your existing equipment, so be sure to inquire about compatibility issues.

Lastly, remember that some common business devices require analog phone lines – notably fax machines, but also credit card processors, some security systems, and other devices. Make sure your vendor knows and accommodates these types of uses when planning your phone system.

7. VoIP Phone System Buying Tips

 Evaluate the potential savings of toll-free calling between all locations. If it is only $200/month, think twice before making such serious investment. Do not buy just for the sake of having the latest technology.

 Plan for the future. The cost difference between including extra capacity at the beginning of a project and adding more hardware later is significant – build in room for growth.

 Detailed analysis of impact of VoIP on your Data Network. This is critical in determining the actual cost of upgrading to your new VoIP system

 Investigate your vendor. Just as for traditional phone systems, the most important consideration in choosing a IP PABX dealer or reseller is the stability of the business and their product expertise. On purchase of a telephone system, you are entering into a long term business relationship with the dealer or reseller that with ongoing service and add ons to the system as you grow and your business needs change, should extend for the life of your new telephone system number and perhaps the life of your next system! So spend some time looking at the dealer’s operations, company structure and history to make sure they are right for you. See Telephone Systems Buyers Guide – Purchase Process