VoIP: How It Works and What It Can Do for Your Business

Chris Bjorklund: You’re listening to the AllBusiness podcast. I’m Chris Bjorklund. If you’re getting this through iTunes and RSS feed or an online streaming-media player, you can hear interviews with other experts at AllBusiness.com.

Bjorklund: Have you ever heard what a phone call using VoIP, voice over internet protocol, sounds like? Listen to this: “Hey, I want to give you a heads up. I’ve got a demo this morning and the new conference bridge is up and running and collateral will be on the website today.” “Excellent and I’ve got several customers who’ve been asking about that.” In this AllBusiness podcast, we’re talking about sound quality with VoIP, along with everything else. My guest, Andy Abramson, is our expert. He writes a blog called VoIP Watch and he’s a co-host for the World Technology Roundup, a technology webcast. Let’s get started now with some basics.

Andy Abramson: Well let’s talk about what VoIP isn’t first. VoIP isn’t anything really that different from a regular telephone call other than the fact that what wire and really who gives you the bill. So voice over IP, the IP part of it, which was, you know, voice over IP, which we all use the shorthand vernacular of the acronym VoIP, means that voice goes over internet packets or internet protocol over the internet. So VoIP may happen in your home, it may happen in your office but your call may get turned into VoIP when it gets transmitted through the internet to go from place to place before it ends up terminating in some far distant land or location. So people may be using VoIP and not know it. I’ll give you an example. A company called MobyVox lets you call local access numbers and then make international long distance calls simply by speaking to an IVR system and then the calls go internationally or wherever you want to be called and the time they hit the MobyVox call center switch, the call is converted from circuit switch calling to voice over IP. The same thing happened to a company called Trufone that helps you save money internationally when roaming over WIFI. The same thing happens with a company called Maxroam. It helps you save money when you’re roaming with Maxroam SIM. All these companies use voice over IP and the customer using it may not even know it. So that’s an example of how VoIP exist without people knowing it. Other ways that you could have a VoIP company like AT&T Call Advantage, Vonnage, Earthlings TruVoice, BroadVoice, maybe digital voice from your cable company and that starts out as a VoIP from the minute you pick up the handset and after it gets translated by the telephone adapter from analog to digital and then it gets converted into packets and they go whizzing across the internet. So that’s what VoIP is and also what VoIP isn’t but even when it isn’t, it could be because of how the carrier, the telephone company handles the call.

Bjorklund: I see, well that’s interesting. Well is Skype VoIP?

Abramson: Skype is certainly VoIP.

Bjorklund: I mean, many people have heard of that.

Abramson: Yes, Skype is certainly VoIP, Chris. Skype, GizmoProjects, SiteSpeed, they’re all VoIP.

Bjorklund: So the big question that we’re trying to address here is when does VoIP make sense for my small business? Help us with that.

Abramson: Well for your small business, VoIP probably makes a lot of sense because you’re going to save money from the very start. Depending on how small small is, I mean a small business can be a mom-and-pop shop and they’re going to save money because VoIP packages are usually unlimited calling versus you know some type of fixed rate. Anyone who’s making a lot of long distance calls is going to save money in business. But where you start to save money is in also in all the applications and custom features that can be developed for you that just don’t exist in the old analog world.

Bjorklund: Such as?

Abramson: Oh very advanced conferencing calling that sounds like you’re all in the same room from a company called High Speed Conferencing. That’s the APPS and they’re high desk stats, I mean conferencing. Applications from companies like Ifbyphone that make it easier for you to click on a link in an email so somebody can call you. Click to call applications. Services like GrandCentral which is now owned by Google where you can have one phone number that rings on five different devices, five different telephones in five different places. Things like that all happen today because smart people are using the power of a computer network and server technology to drive the delivery of calls that you couldn’t initially do because of the cost of deployment. Remember, when the phone company wants to give you three-way calling, it’s not just you Chris Bjorklund who has to get it, it’s everybody in the entire area where you live. Well, a voice over IP company can deliver a service just you, it’s all about you. It’s very special. So small businesses can get very customized services from companies like Zhazinga, Junction Networks, another company called Phone Fusion. They’re all rolling out products or have products out today that are highly scalable, meaning you can grow with them, that are really customizable and where you can pretty much pick and pay for what you need and not be paying for things you don’t need.

Bjorklund: I love that term, pick and pay. Video conferencing, can you do video conferencing and video email through VoIP?

Abramson: Absolutely, absolutely. Well basically the voice part of video conferencing is clearly VoIP especially if somebody likes using something like Sight Speed which is based on the SIP standard. The SIP standard is what most VoIP is these days. Yes, it’s an old legacy, H.323 and there’s some mega code for it and around but for the most part, all VoIP is SIP other than Skype for it’s being used in the masses. And because SIP is the standard that everybody follows, I’m not going to get too technical as this a business show, but it’s the equivalent of like 12-volt batteries in your car. Everybody has a 12-volt battery. So SIP is that standard that everybody follows. That’s why it’s so easy if your battery runs, no matter where you are, if someone can put a battery in your car to keep you going. Well SIP is the standard protocol and it follows all the right conventions that are necessary for calls to move over voice over IP so video conferencing that’s based on SIP also makes it easy where the signaling is done, at the signaling layer and it immediately travels to the pure layer which means it’s very personal and not a lot of waste.

Bjorklund: Let’s get back to a couple of basic questions now Andy and that is, what about the quality of service with VoIP? There’d been problems with that in the past.

Abramson: Well, let’s start with there’s problems with call quality with even your cell phone today.

Bjorklund: True. True that, yes.

Abramson: Why would a phone company like AT&T have an ad that says, Fewest Dropped Calls. Does that mean they still have dropped calls or why do you have dropped calls? You know the whole Verizon thing where I’ve got my network behind me. So cellular companies have problems too with call quality but VoIP…the problems with VoIP and quality usually reside not in the idea of the technology but how the technology is deployed by the carrier itself. If someone like a Vonnage doesn’t deploy the same level of technology that an AT&T does, they’re not going to sound the same. When AT&T came out with Call Advantage, the service we use in our home office, it blew away Vonnage and everybody else in just how the call sounded.

Bjorklund: What about some of the words that I’ve seen come up in the articles I’ve read about VoIP are latency and jitter?

Abramson: Okay, so you have things like packet loss, rebuffering, latency, and jitter. Those are all the evils of data transmission. They occur for a variety of reasons. One, your network may be under powered. Two, it may be too crowded. Three, there’s too much traffic going through the switches and they can’t handle it. Four, it’s being dumped into the public internet, not running over private networks where quality is maintained at 5-9. So a good VoIP provider, someone like a Junction Networks or a Cbeyond, they actually build their own networks inside the big internet so the calls travel over preferred lines. I refer to that as the high-speed lane on the highway versus the public internet which is everybody on the street, you know, driving where the stop lights, people cutting in and cutting out. So if you think of how it is to drive at HOV lane in California or any other part around the United States, you pretty much have clear sailing especially if you, you know, just pick it while there’s not a lot of traffic. It really flies. It’s like smooth ice. I used to be in the hockey business when I was younger and I always talked about smooth ice. When you first hit that ice, after the Zamboni comes off and you go skating across it. There’s nothing smoother. Well, a well-managed private network by a company like Junction Networks is a business great voice provider. You’re able to have that smooth-as-glass high-speed lane experience compared to someone who’s simply giving you a voice over IP system, plugging it into your office, connecting it into your internet network, and there’s no private network behind it, you’re going out into the open network. Well that’s like going down Market Street in San Francisco at 5 o’clock trying to get to the freeway. You’d never get there and even when you get on the freeway, it’s all stop and go. That’s what happens when you dump traffic into the public internet. There’s no quality of service. There’s no reliability. There are no guarantees how fast it’s going to get there. It’s the equivalent of third class mail.

Bjorklund: What about security? Is that something that you should be thinking about or asking about with VoIP if you’re looking for a provider?

Abramson: I think that security is something you usually think about with any internet-related business. You have to practice the same rules that you would for protecting your files, for protecting your computers, VoIP is subject to the same types of things that for the most part, there has been very little intrusion to VoIP systems to date.

Bjorklund: What about systems you’ve mentioned that you can save money if you’re a small-to-medium-sized business? Are the systems actually coming down in price?

Abramson: Systems are coming down in price, minutes are coming down in price but features are coming out which is in turn the money that you’re saving, you’re picking up the ability to have greater new features, different types of call capabilities, voice matchups with databases, all kinds of cool new technology.

Bjorklund: So you’re back to your pay and pick, or pick and pay.

Abramson: Pick, you’re back to pick and pay.

Bjorklund: And what about a hosted solution?

Abramson: I think hosted solutions are the way to go. I really do, Chris. Do you own a car?

Bjorklund: Oh! Several.

Abramson: You own several. So you went to the dealer and you bought that shiny new car recently. What’s the last car you bought?

Bjorklund: Oh I bought a 2002 Volkswagen Passat.

Abramson: Okay, so you bought a 2002 Volkswagen Passat and you took it home and it goes in your garage or it sits in your driveway, right?

Bjorklund: Yes.

Abramson: Okay. You didn’t bring the mechanic home with you to sit there and keep it running all the time, did you?

Bjorklund: No, I wish I could.

Abramson: Well, in voice over IP, a host of PBX solutions is just like you owning your Passat and you only need the mechanic when something breaks or when you bring our car for service, they know what to do. You don’t have to tell them. A hosted solution does all the work for you. You don’t have to update software, install new hardware, move things around. The hosted VoIP provider does all that. Junction Networks is an example of that. Cbeyond, Call Tower…those are companies that all provide a hosted voice over IP solution.

Bjorklund: What about VoIP and Mobile? Where is that going?

Abramson: VoIP and Mobile is a very good question. It’s going in the direction of convergence. So companies like TruFone, Out of the UK, Ice Good which is based just down the road from you in Silicon Valley. Companies like that are finding ways to develop applications that can work in the mobile environment. So TruFone has their solution that works over WiFi. Ice Good takes a different approach. They’re the technology that powers the Skype phone that’s being used in the UK and other parts of the world. And they also developed a connection to Nokia series 60 handsets like the N series and the E series phones. Well, what they have been able to do is bridge calls so that they go over the circuits with cellular network, hit the Ice Good switch inside the carrier’s lock, get converted to voice over IP and then could connect to a Skype user or another Ice Good user. So you’ve got that. Then with TruFone, their software works differently. It’s a WiFi solution. So whenever you’re in a hot spot you think you’re logged onto, you can really make some calls over TruFone versus over your cellular network or if you’re in a tall building…ever go in a tall building and cell coverage just drops off like there’s no tomorrow?

Bjorklund: It’s gone.

Abramson: Completely. Well, when you’re on a WiFi hot spot with TruFone, you have cell phone coverage. T Mobile is doing the same thing with their at-home service. So it’s a very interesting time and then at the same time, in Mobile, you‘ve got companies like MaxRoam who are developing, you know, country neutral SIMs so that you don’t pay an arm and a leg when you’re roaming. That’s why people either buy local SIMs or you buy a MaxRoam SIM. You can get a number in the US. You can get a number in England and 46 countries around the world. I’ve got a bunch of numbers on my phone. I’ve a US, a UK, a French, and a Spanish number so when I’m in those countries, the people I deal with can call me but then when I’m not there, I forward that number to where I am for free. So it’s a big way to save money. So between TruFone and MaxRoam and Ice Good and then MobyVox with their interactive voice response platform. Under 2-cent-a-minute calling there’s a lot of VoIP going on in Mobile. It’s just not from the big brands like Verizon or AT&T or Sprint. Other than T Mobile, who have you asked?

Bjorklund: Not yet, maybe.

Abramson: Not yet. And we’re not sure when.

Bjorklund: So let’s wrap this up with your advice since you’re the expert on how to choose a VoIP provider?

Abramson: Well first, make sure they’re going to be in business for a while. Call them up, get some recommendations from customers, that’s first. Number two, make sure that the kind of company that meets your needs in the sense of if you’re going to have a host provider, do they provide 24/7 tech support? Are they reachable? Are they able to give you advice on what voice endpoints, what telephones to use? Are they able to advise you on what type of what type of bandwidth you need? So, if you’re going to have, you know, ten people working. You’re going to need a couple of T-1s to handle that.

Bjorklund: Many thanks to Andy Abramson for joining us today. His blog can be found at VoIP Watch, VoIPWatch.com. I’m Chris Bjorklund, thank you for listening.