VOIP BASICS

DEFINITION

VOIP (which stands for "Voice-Over-Internet-Protocol") describes technologies designed to deliver voice information using the Internet Protocol (IP). Generally, this means that voice information is sent over the Internet in discrete digital "packets", rather than over copper telephone lines of the public switched telephone network (PTSN).

VoIP ADVANTAGES

VoIP offers your small / home business several advantages over "traditional" telephone services. Assuming you choose a solution that allows you to use phone numbers in exactly the same way as you did before (read more about this or compare to the other alternative), you can count on:

Lower cost. Setup fees are typically very low and savings can be felt after only one month of service. Many VoIP providers offer "flat-fee" "all-you-can-eat" plans that don't carry any per-minute charges except for international calls which are significantly cheaper than with traditional phone companies.
Obtaining more control over your phone services. Your VoIP service can often be configured and managed via extranet web sites; you can examine the log of phone calls, archive messages in the digital format; change account set-up directly; receive billing information, and so on.
Gaining more flexibility in physical location. Because VoIP does not "tie" you to a particular location, you can relocate anywhere where you can get reliable Internet access without any disruptions to your phone service. You can keep your number and work from your office, home, hotel, etc in the same way.
Improving business processes and increasing sales There are tools to make you more flexible and more accessible to your customers. You can utilize call routing to take calls on your cell phone when your main number is not available. You can also order "alternative" phone numbers with almost any area code for your VoIP line and thus allow your customers call you on a "local" number.

VoIP DRAWBACKS

It wouldn't be fair not to mention several drawbacks that are currently associated with VoIP deployment:

Call quality depends on your Internet connection. If your Internet connection is not reliable, you may experience drop-outs and sound distortion. (With that said, most cable and DSL lines are adequate for VoIP).
Unclear regulatory environment. As of the time of this writing (Nov 2003), the U.S. government still hasn't decided on whether or not VoIP is going to be regulated as tightly as phone services are. Ouside the U.S., several foreign governments, fearing the loss of tax revenue from incumbent providers, outright banned use of VoIP in their jurisdictions.

MAIN STANDARDS: H.323 and SIP

There are two main competing standards that are used in VoIP services - H.323 and SIP (Session Initiation Protocol). For more information on these two standards and for in-depth comparison, we recommend visiting

http://www.packetizer.com/iptel/h323_vs_sip/

In addition to these two, there are several proprietary, "non-standard" standards that are utilized by some VoIP providers, most notably, Skype.

CONNECTING TO PHONE NETWORK

Strictly speaking, VoIP can be utilized with or without the phone network. What does that mean? It means that depending on your chosen service/configuration, you may be able to place calls to "regular" phone numbers, receive calls at a your personal number, do both or you may not be able to do either. (The latter doesn't render VoIP useless - it simply means that your party has to utilize the same type of connectivity as yours. Read more about connections that are not compatible and compatible with phone networks).