Q: If VoIP technology is better, why haven’t more companies taken advantage of this service so far?

Larry Barker, President & CEO, Aptella

Adoption of VoIP has taken longer than analysts initially projected, but it is steadily growing as small businesses become more aware of the capabilities and cost savings that hosted VoIP solutions can deliver. In addition, the service provider community has significantly matured. Today, solutions are of a much higher quality compared to what was available a few years ago, with vendors offering phone service that is both feature-rich and very reliable. Finally, Broadband providers are delivering higher speed services at much lower costs, allowing small business owners to consider and take advantage of these advanced technologies. All of the above combine to deliver a clear message to SMBs—VoIP is a viable, powerful tool that will help increase their presence and grow their business. If a small business owner hasn’t considered VoIP before, now’s the time.

Bryan Martin, Chairman & CEO, 8x8 Inc.

Actually, a significant number of businesses have migrated to VoIP telephony and many more are expected to do so in the coming months and years. According to market research firm Gartner Inc., more than 80% of companies are currently undergoing trials of IP telephony and, in three years, a majority of companies will be using it. During the first quarter of 2 009, 8×8 added a record number of new business subscribers to our hosted IP telephony service and we now have over 16,000 businesses using our service. Many of these companies were initially motivated by the cost savings inherent in VoIP technology but then quickly came to realize how IP enabled features and capabilities helped their business operate in ways they never expected. Customers like these are helping to fuel additional market growth by evangelizing the merits of the service to other businesses through invaluable referrals and testimonials.

The appeal of VoIP is particularly strong for people who want to make international calls without incurring huge telephone bills.

The traditional names in telecom have always charged a premium for US callers to reach friends and family abroad, but people are quickly adapting VoIP calling plans to save. Researchers at Telegeography estimate that VoIP subscribers have nearly tripled from 6.5 million in the middle of 2006 to around 16 million at the end of 2008.

By 2011, Telegeography’s figures suggest one in five of all phone calls in the United States will be transmitted over the internet.

Quality is Key

World Discount Telecommunications has certainly seen subscriber growth on its VoIP platform, ALLVOI. Since 2008, WDT entered into VoIP with the launch of ALLVOI which is short for All Voice Over Internet.

Roman Talis, CEO of WDT and ALLVOI explains that not all VoIP services are created equal. “To provide an international service that is equal in sound quality to a regular phone, a VoIP provider needs to have a combination of its own robust IP network as well as agreements with first class carriers from around the world.”

Talis explains, “We don’t only use the public internet for our VoIP service, like a lot of other companies, so our customers are getting better quality than on PC to PC VoIP products. Once customers experience our high quality, they truly appreciate the savings of our unlimited international plans that offer 65 unlimited destinations for less than $25 per month. Many customers drop their home phone service to save $360 per year and only use ALLVOI. We also have plans which include up to 3000 minutes of calls to India per month”.

Home and Away

An added bonus of VoIP technology is it works wherever there is a broadband connection. ALLVOI’s customers can take their adapter with them anywhere in the world and can make international calls even if they are on another continent. Their friends can dial their US number, and the phone will ring anywhere they are in the world.

In addition, as Talis points out, “Calls between people on our network are always free so our customers could take their adaptor and call any ALLVOI customer for free. Or they can use our free soft phone and make a call that starts on a computer and ends up on any land line or cell phone in the world,” he says. “We also allow customers to use our network from their cell phone to drastically reduce the cost of calling international numbers compared to excessive mobile rates charged by most wireless carriers for international calls. Any cell phone can be used to dial our many US access numbers. ALLVOI recognizes the caller’s cell phone and anyone can directly dial an international number at ALLVOI rates.

Many savvy customers also buy the entry priced plan for $3.99 per month and give the plan and the phone adapter to their family that lives overseas. The overseas family only needs to have internet access to use ALLVOI. Once they connect the adapter, ALLVOI treats the overseas family member as if they lived and called from the US. US callers can call the family member’s US number and the phone rings in the foreign location. The call is free to the caller and to the family member overseas.

The world is affordable. Call just because you want to…

It will come as no surprise that in the current economic climate VoIP providers specializing in the small and medium business (SMB) market are finding more than ever that, while companies appreciate the features and flexibility the technology affords, the primary motivator for adoption is price.

This is particularly true for companies that are ditching an old analogue public exchange (PBX) in their office and opting for a hosted VoIP solution, where the box handling the digital switching and routing of calls is hosted and maintained in a safe and secure data center. This saves the company the upfront cost of buying a new exchange and will normally come with unlimited calls in North America.

Bundled Savings

For businesses that have been used to paying for calls and calling features, such complimentary inclusions are a welcome relief and offer triple savings, according to Debbie Jo Severin, VP of Marketing at 8×8. “There are three main areas of savings for businesses with VoIP,” she explains.

“There’s the massive upfront cost of not having to buy, install and maintain a PBX (private branch exchange) in the office and then there’s also the large savings of running voice over the same IP network as data, saving on the need to maintain and run two separate networks. There’s also the call savings which come with unlimited North American calls as well as greatly reduced cost of international calls. In addition, there are the bundled features, such as caller I D, call waiting, three way conferencing and ‘find me’ and ‘follow me’ services which companies would normally have to pay for separately.”

Severin notes that switching to a hosted VoIP provider instead of replacing an analogue PBX represents a 90% upfront savings following by a monthly phone bill reduction of around 50% for most companies.

Flexible Locations

Once they have gleaned the savings, the next major benefit most companies find using VoIP is improved flexibility, according to Severin.

“Normally if you moved your office, you’d have to unplug the phones, set up a new network somewhere else and then get new numbers and extensions,” she says.

“With VoIP you would just plug in the phones in the new office and you’d be up and running immediately on your normal numbers. This flexibility is great for companies that support home working because it means employees can plug their phone in wherever they have broadband and they are reachable on their office number. T o the outside world it looks like they are in the office.” This can be great for business continuity if employees can’t get to the office. Back in 2005, companies who used the 8×8 system were able to ensure that they could keep doing business during Hurricane Katrina via people utilizing VoIP technology in temporary locations away from danger.

It is this flexibility which is key in the current economic climate as businesses look to either amalgamate offices or scale up or down a facility with minimum disruption. A t them same time, the promise that a company never needs to miss a call is a very attractive proposition for directors looking to maximize profitability.

“Ultimately VoIP helps you perform better and keep your customers happier, naturally this is good for any business,” comments Larry Barker, CEO of business VoIP provider, Aptela.

“Companies can have their number find them on whatever phone they are on so they never need miss a call again; it’s great for ‘road warriors’ or any staff that need to spend time away from their desk. A car service company which uses our service is assured because it means their staff can be reached when they are away from the airport desk. They probably make an additional twenty to forty rentals per week” Barker adds.

The simplicity and relative low cost of adding or removing an employee from the phone system is another bonus which VoIP offers. This feature accounts for it being popular with companies that serve a seasonal market.

“A great example are tax specialists in the run up to tax day, they need to add a great deal of capacity for a short time. VoIP allows them to do that without having all those extensions sitting around doing nothing for much of the rest of the year,” Barker says. “It’s the same for holiday companies and pool cleaners, with VoIP you can scale up and down to suit your market conditions and you only pay monthly, you’re not tied into extended contracts that force you to guess how big you’re going to be in a year or two’s time.”

Bandwidth

One proviso that reputable business VoIP providers lay in front of a potential customer is that the voice service they receive is only going to be as good as the bandwidth they have available. Companies considering making the switch are best advised to establish whether they have the capacity to handle voice on their existing broadband line (typically a DSL or T1 connection is a prerequisite). If not, a VoIP provider will suggest an upgrade to boost bandwidth to facilitate the transition to optimized service.

“With VoIP you would just plug in the phones…and you’d be up and running immediately… This flexibility is great for companies that support home working because it means employees can plug their phone in wherever they have broadband and they are reachable on their office number. To the outside world it looks like they’re in the office.”

Getting the Space Shuttle onto the pad, launched and then landed is a technological feat that requires close teamwork on the ground as well as in the air. Streamlined communication is key when coordinating a task as daunting as launching the space shuttle. It requires a sophisticated single voice system which can interconnect all the operations personnel plus patch in multiple external audio sources, such as fixed line and mobile phones radios, audio feeds from the net and public address systems at multiple locations.

While the complexity has not gone away, the emergence of Voice Over Internet Protocol technology has simplified the design of such communication systems. VoiP allows multiple voice streams to be handled over the same network as other mission data, such as flight telemetry, closed-circuit video sources, range safety condition, payload health status and even every- day internet communications as well.

Better Response

Quintron, the leading provider of sophisticated audio communication systems used by NASA, United States Government agencies and major corporations, has been immersed in the world of VoiP for several years and found that it opens up many opportunities. David Wilhite, General Manager at Quintron points out that one of the most interesting aspects of using VoiP is that by combining data and voice networks on the same IP system, companies and government agencies can incur large savings on sophisticated, integrated voice services. According to Wilhite, this opens up a new market that could greatly improve coordinated official responses to disasters as well as to improve corporate security operations.

“We’re currently in talks with large corporations and starting to approach government departments about how they could use this new technology to improve communications and situation response,” he says.

“Government departments and emergency services would welcome a system which allows multiple agencies to talk to one another through the same system. They then can update one another on current conditions and one person or agency can take a lead in organizing several teams in different parts of the country for response to an emergency situation.

Corporate Gain

It is a similar story for corporations who could improve security operations With a single system to interconnect the current separate systems for radios, fixed line, VoiP, cellular phones, plus alarm and public address systems.

“It would mean people could hear one another and communicate over the same system whether they’re on their cell at home or on a radio patrolling a company’s grounds or a college’s campus,” adds Wilhite.

“The beauty is because it’s centered on VoiP you can program the system to respond automatically to a variety of scenarios, such as who should be alerted if there’s a particular alarm. Since we can hook up to radios, landlines and cell phones, you could have a head of security getting an emergency call at home and speaking directly to a guard out in the field on his radio, all while the local police or fire department are also being patched into the call as the have crews arriving at the scene.”

This level of sophistication has been available from Quintron for several years but cost has meant it has mainly been used within the space industry. However, the power of VoiP and the wide availability of good quality broadband connections mean Space Shuttle technology is on the verge of trickling down in to more mainstream security and emergency situations. Eventually this will allow all necessary personnel to achieve a faster, more coordinated response in an emergency situation.

It is a testament to the quality and reliability of VoiP that internet telephony Companies are now revealing the features and deals which customers talk to them about rather than the technology itself.

Just a couple of years ago the idea of making calls over the same IP network that brings broadband to a home was relatively new. Today, though, that curiosity has largely been replaced by reassurances from friends and family who have made the switch and are enjoying unrivaled value and new features.

Good Times

“When we set up four or five years ago people didn’t always know what VoiP was and how good it would be,” explains Srinath Narayan, VP of Consumer Markets at Lingo.

“Now people have tried the technology, or they’ve got friends who have, and they know it works fine, they’re not so much interested about how the call is made or why that means they make huge savings and get new cool features; they just want to get them.”

“It puts it in perspective when you see that we can offer an unlimited north American calls package for half the price of a leading analogue provider, but we also throw in thirty international countries. People love that value and they also love not having to pay extra for features such as caller ID, call forwarding and call waiting.”

Now the technology is proven and Narayan believes the way to win customers is to offer the best calling rates, while still carrying those calls on a top quality network. Innovation is also key, such as allowing customers to use their home calling plan on a mobile phone so calls are either free or very inexpensive, even to multiple international destinations.

Telephony providers believe that the simple truth about the growing popularity of VoiP in the residential market is that it is a proverbial ‘no brainer’ to make the switch. Once people realize they can use their current broadband connection to virtually cut their bills in half, an upgrade to VoiP in the home justifies itself.

This is because the efficiency of using the broadband connection for both data and voice allows savings to be passed on to consumers with call plans that will often include unlimited north American landlines and, for a small premium, multiple international destinations. Even if these packages are not taken, calling long distance and internationally will still cost much less than a conventional analogue call.

Feature Rich

Once people make the switch and start to enjoy the savings, there are multiple features which then keep customers hooked, as Donny Graber, VP of Sales and Marketing at ITP VoiP, a U.S. based service provider, explains.

“People love the features we can offer such as additional numbers,” he says. “It means spouses or kids can each have a number. Often people will set up a number with the same local area code as relatives who live abroad so they can make and receive local rate calls and drastically cut down on the cost of staying in touch. Then the really clever part is when people start using the features which means they need never miss a call again. You can set the system up to ring three phones at the same time to reach you, it might be the home phone, the cell or the phone where you’re staying for the weekend or you can have the system try four different phones, one after the other, to find you.”

Being digital, residential VoiP packages also allow faxes to be sent and received. Customers can also install software on a laptop so they can make and receive calls using their home number anywhere in the world, as there is an internet connection available.

Wireless phones have long given employees the flexibility to walk around the office chatting and taking business calls away from their desk, but now voice over internet is adding a new dimension.

The latest VoiP wireless handsets are allowing employees to remain productive and keep in touch whenever they are in an area offering wi-fi connectivity.

“Pretty much wherever you are when you’re away from the office you should still be able to remain in contact on your work wireless phone,” says tony Clayton, Worldwide Sales Manager at All Star Networks. “Whether it’s your office, a client’s facility, Starbucks or an airport lounge, your phone will connect to the net and offer voice, web browsing, text and email just as it does in your office.”

This means co-workers can keep in contact without the cost of landline or mobile phone calls, and with the latest handsets, they can even provide video conferencing.

“We get a lot of interest from companies and education institutions that are spread across a wide campus or several offices who want staff to call one another for free. these people find buddy lists and availability statuses really useful,” Clayton adds.

MEDICAL IMPLICATIONS

“Another area of interest in wireless VoiP is within the medical field. There are no mobile phones allowed in hospitals, yet healthcare professionals have to move around a large building while maintaining communication. We’re getting considerable interest here in the three-way video conferencing phone we’ll be distributing from July onwards as it will allow doctors to teleconference with video images of a patient.”

In essence, wireless VoiP handsets are combining the cost benefits of internet telephony with the flexibility to make calls or video conference wherever there is Wi-fi.

It’s clear that the recession is at the top of everyone’s mind these days. As we look for cost-effective ways to position our companies for the next growth cycle, and balance our checkbooks at home, I invite you to consider some information and communications technology (ICT) industry solutions.

Voice over Internet Protocol (VoIP) provides cost savings—to both businesses and home users. Companies using VoIP also can benefit from improved productivity that Unified Communications (UC) provides, allowing messages received in one format to be retrieved through another.

Because VoIP does not require circuit-based switching, service providers entering the market can offer deep discounts because they do not have to maintain expensive networks. Additionally, cable companies are able to offer VoIP as part of bundled services with attractive monthly rates.

Let me share some specific details gathered from TIA’s just-released 2009 ICT Market Review & Forecast:

• In 2008, the average VoIP subscriber paid $28 per month for telephone service, well below the $48 per month average for circuit switched lines.

• Average monthly VoIP spending of $57 in 2008 was little more than a third of the $150 average for business circuit-switched lines.

• TIA’s analysts predict that the overall residential VoIP market will rise from 17 million subscribers in 2008 to 31.5 million in 2012, growing at a lively 16.7 percent compound annual rate.

• By 2012, we predict VoIP revenue will total an estimated $36.9 billion for a compound annual increase of 16.9 percent compared with 2008.

As economic conditions improve and as cost savings become less of a factor, we predict the VoIP market will continue to grow. F or home users, enhanced features such as caller ID, voice mail and call forwarding, standard with VoIP subscriptions, will keep the market surging. Improved call quality also factors in. VoIP calls over managed networks are virtually indistinguishable from calls made over traditional circuit-switched networks.

Concerns about VoIP connections to the emergency networks have also been addressed. Enacted last July, the New and Emerging Technologies 911 Improvement Act of 2008 gives VoIP providers the right to interconnect to the 911 network and provides the liability protection enjoyed by circuit-switched and wireless operators as long as they offer automatic connectivity to a Public Safety Answering Point. The F CC also ruled that VoIP traffic can be given priority over other Internet traffic.

Investment in broadband and network infrastructure will also benefit VoIP and UC technologies that run over broadband. More than $7.2 billion have been allocated for broadband stimulus in the American Recovery and Reinvestment Act of 2009, which will help to serve consumer demand for more bandwidth and faster downloads for data and video at work, at home and on go.

The ICT industry is an engine for growth. VoIP and UC are proof of that. As president of TIA, I foresee a vibrant and brilliant future. Not many other industries can even point to areas such as VoIP and UC where things are clicking now despite the recession. Investment in broadband will help to maintain ICT growth and enable other industries to take advantage of future cost savings and new applications as these technologies and others in development grow more robust to meet next-generation demands.

For home users, enhanced features such as caller ID, voice mail and call forwarding, standard with VoIP subscriptions, will keep the market surging.