Many people have heard about VoIP many times, but they know little or nothing about this fascinating communication technology. If you happen to be one of them, then read on to understand exactly what VoIP is and how it works.

VoIP stands for Voice over Internet Protocol. It’s a communication technology, which allows you to convert standard analog telephone signals—the kind you hear when you talk on phone—into digital signals that can be transmitted over the Internet. VoIP allows you to place free phone calls by using certain software to bypass the phone company completely.

As a revolutionary technology, VOIP has the potential to transform the world’s phone systems completely. For some time now, VoIP service providers like Vonage have been around and are becoming more popular due to the increasing acceptance and adoption of the technology, especially by businesses. In addition, some major telephone carriers are already introducing VoIP calling plans.

Though unique as the idea of VoIP might seem, the technology is actually a ‘reinvention of the wheel’. But it has the potential to replace traditional phone system completely. One of the most fascinating things about VoIP is that it presents many ways to place a call. These include using an ATA, using IP phones, and using computer-to-computer method.

a. ATA

Using an ATA (analog telephone adaptor) is the simplest and commonest way to use VoIP. With the ATA you can connect a standard phone to your computer or internet connection for use with VoIP. The ATA simply converts analog telephone signals to digital signals for transmission over the Internet. Some VoIP service providers offer ATAs free with their VoIP service.

Setting up an ATA is easy. You simply bring the ATA out of the box, plug the cable from your phone that would normally go into the wall socket into the ATA, and you can start making VoIP calls right away. Some ATAs may come with additional configuration software to be installed on the host computer; but in any case, setting up an ATA is very straightforward, and you don’t have to be tech expert to understand that.

b. IP Phones

IP phones are specialized phones that look just like normal phones with a handset, cradle, and keypad. But they are different in that they have an RJ-45 Ethernet connector instead of the standard RJ-11 phone connectors. You can connect an IP phone directly to your router. IP phones have all the hardware and software necessary for handling IP calls. There is a special type of IP phones, called WiFi phones. These allow you to make VoIP calls from any WiFi hotspot, thereby eliminating the need for wired connections.

c. Computer-to-computer

Though it doesn’t offer the mobility advantage, this is the easiest way to use the VoIP technology. With this option, you don’t have to pay for long-distance calls. This makes it the cheapest way to use VoIP.

To set up a computer-to-computer VoIP system, you need a configuration software package (several companies offer this for free or very low cost), a microphone, speakers, a sound card, and a strong Internet connection like the one you would get through a cable or DSL modem. When using a computer-to-computer VoIP system, you pay only your monthly ISP fee; there is no usually no charge for computer-to-computer calls, regardless of the distance.

So, if you want to give VoIP a trial, setting up a computer-to-computer system is the easiest way to do that. Just check the web for some of the free VoIP software available, download it, and you can set up your computer for VoIP within a few minutes. Then send the software to a friend or get him or her to download it, too. Once your friend sets up his or her system, you two can start communicating with VoIP to get a feel for how it works.

Now, let’s look at what happens during a typical VoIP telephone call, but this time using VoIP over a packet-switched network:

How VOIP Business System Work

  • As you pick up the receiver with the aim of making a call, the receiver sends a signal to the ATA.
  • The ATA receives the signal and sends a dial tone, which confirms that you’re connected to the internet.
  • As you dial the phone number of the person you wish to talk to, the ATA converts the tones into digital data, which it stores temporarily.
  • The phone number is sent as a request to the call processor of the VoIP Company. This processor validates the number.
  • The call processor determines to whom to map the number. This mapping involves converting the phone number into an IP address. The soft switch connects the two devices on either end of the call.
  • One the other end, a signal is sent to your friend’s ATA, telling it to ask the connected phone to ring. Once your friend picks up the phone, a session is established between both your computer and your friend’s. The normal Internet infrastructure handles the call just like any other over-the-web data transfer process.
  • During the conversation, your system and your friend’s system transmit data back and forth when there is data to be sent. These data packets are converted by the ATAs at both ends into the analog signals that you hear.
  • As you hang up the receiver after the call, the circuit between your phone and the ATA is closed. And the ATA terminates the session by sending a signal to the soft switch connecting the call.

10 Benefits of VOIP for a Small Business

More and more businesses are turning away from traditional phone systems in favor of the Voice Over Internet Protocol (VOIP) system. According to a VOIP statistics report by Point Topic Ltd, there are currently more than 30 million VOIP subscribers in the united states alone.

VOIP is a fairly new technology that converts voice communication and multimedia sessions into digital format and sends them over Internet protocol (IP) networks. So, if you have a good Internet connection, you can have your phone communications delivered over the Internet rather than through your local telecom services operator.

Aside that VOIP services typically cost much less than traditional phone services, there are many other benefits that come with using VOIP services. But a lot of small business owners are overlooking some of the most valuable features that VOIP services can offer.

Are you a small business owner who has endlessly wondered why the demand for VOIP is booming? Or you are just not convinced that it’s time for you to switch over to VOIP? Then chances are that you are still oblivious of the various ways VOIP helps small businesses. Here are 10 benefits your small business can enjoy by using VOIP:

1. Mobility advantage

Traditional phones are meant to lie on the office desk, which means you have to be in the office to receive important calls. However, with VOIP mobile apps available, you can easily make and receive calls via the VOIP technology while on the move. So, you don’t have to worry about missing important calls and activities. Even when you make calls from a remote location, the caller ID registers it as a call from your office.

2. Toll free numbers

Many small businesses have reported that their user base and conversions increased after adding a toll-free number to their operations. This is because toll-free numbers boost brand credibility and provide customers with an easy point of contact. Many VOIP services provide toll-free numbers that come with no usage fees, but attract a low monthly flat fee.

3. Brand messaging

VOIP comes with Call Recording and Call Monitoring features that can help you train your employees to deliver a consistent message when interacting with customers and potential customers. Being able to listen to past calls and monitor existing calls can also help you determine how your customers and prospects perceive your products and services, allowing your business to tweak its offers appropriately.

4. Enhanced communication options

In addition to the freedom of making and receiving calls over the Internet, VOIP also offers other enhanced features, such as voicemail by email, online chat support, online calling records and so on. And you can easily manage your account online, adding and removing your services whenever you need to.

5. Establishing your “green” brand

More and more businesses are going green by adopting eco-friendly countermeasures to neutralize the environmental harm done by technology to Mother Earth. By adopting VOIP, you will be contributing to the global green campaign by replacing copper landline—which are harmful to the environment—with the harmless Internet.

6. Auto attendant

This is another awesome feature that comes with VOIP services. The feature allows your callers to interact with a menu to choose an appropriate extension. Your business will seem more professional and impressive. Call this feature a virtual receptionist and you’d be right.

7. Best face forward

Having a single traditional phone line means only one person will receive all calls that come in—regardless of whether they are sales enquiries or customer complaints. And if each department were to answer their own calls, you ill need to get multiple phone lines–one for each department.

However, with the auto attendant feature that comes with VOIP, you can easily split calls appropriately between your customer service, sales, accounting, and other departments without having multiple phone lines. This means calls will go to the right department and will be answered by the right person.

8. Brand promotion opportunity

With the Virtual Receptionist and Music on Hold features that come with VOIP services, you can include brand and product information that your callers need to know about before deciding which department of your business they wish to be forwarded to.

9. Faster business expansion

VOIP makes it much easier to add new employees to your business phone system. If you are adding a new location in another city, all you need to do is order additional phones and add extensions immediately. This drives home the point that VOIP was designed with business expansion in mind.

10. Improved communication and collaboration

With VOIP web conferencing becomes convenient and easy, which means your employees can conduct impromptu meetings with other employees or clients regardless of their locations. VOIP web conferencing also facilitates clear communication, improves employee collaboration, and speeds decision making.

How Much Does Business VOIP Cost?

The rate at which businesses are switching over from the traditional telephone systems to VoIP can make anyone think VoIP comes at no cost. And this line of thinking can be further thickened by the crazy pricing claims from business VoIP service providers. Make no mistake, VoIP can be a huge money saver for your business in the long term.

But migrating over from a traditional phone system is not free; it involves a cost. So, as far as VoIP is concerned, there’s really no free lunch. In this post, you will get real pricing information on that can help you make a well-informed decision about business VoIP installation. So, if you have been looking to construct a cost-benefit analysis of a VoIP system for your business, this post will take care of the cost aspect.

Part A: VoIP equipment costs

While VoIP will drastically reduce the amount of hardware and equipment you will have to handle and manage at your business premises, some hardware switching costs come with migrating to VoIP that you have to think about.

  • VoIP Phone Cables

Essentially a computing device, a VoIP phone needs a data cable for each location. If you will be doing your VoIP communication over computers, wiring shouldn’t be a problem. But if you need to place phones in warehouses, kitchens, and other sections of your business, you will need special wiring. The cost of wiring is approximately $75 to $250 per cable run.

  • Hosted PBX phones

Switching over from to VoIP from a traditional phone system means you will have to buy new phones. A hosted PBX telephone costs between $50 and $750 depending on many factors. These include brand name, number of buttons, type of screen display (color or grayscale), and added features.

Even though some VoIP providers will advertise “free” telephones, this offer will be attached to other conditions (which means you will pay for the phones indirectly). Other providers will milk you of the money by charging an increasing monthly phone bill. In reality, there’s no such thing as a free phone.

  • Phone power

Whoever told you that VoIP phones don’t require power definitely knows little or nothing about them. VoIP phones need power. In fact, unlike what obtains with traditional phones (which power up after being plugged), VoIP phones need a separate power line.

You can provide supply to each VoIP phone by simply replacing your Ethernet switch with a new unit that provides POE (Power Over Ethernet). Individual power supplies range from $10 to $20 and POE switches cost between $200 and $500 depending on brand, size, and features.

  • VoIP Router (Gateway)

You must have an internet connection router that is VoIP capable. That is, your router must be able to pass VoIP phone calls reliably, without dropouts or one-way audio. Such routers cost between $100 and $1,500 depending on your requirements.

Part B: Set up costs

After purchasing the hardware and equipment need for your VoIP system, you will need to set up the whole system, which involves the following:

  • Setting up and connecting PBX phones
  • Recording greetings
  • Programming the patterns of call flow
  • Moving phone numbers to the VoIP service provider.
Total installation costs

Installation costs can vary widely depending on many factors such as your employees’ phone requirements, average call volume, and cabling needs. Typically, a small business with 25 employees or less will spend anything between $2,500 and $15,000 on VoIP installation.

Part C: Monthly costs

Aside the cost of purchasing hardware and setting up your VoIP system, your provider will charge you a monthly fee for using their VoIP service. Each VoIP service provider has their own pricing model, so prices may vary. However, some components typically go into monthly VoIP service bills. These include the costs of unlimited calling, metered calling, international usage, calling bundles, and toll-free calls.

Payments for equipment and enhanced 911 services, surcharges and taxes, and regulatory surcharges also go into monthly bills. Since monthly costs vary from provider to provider, you can visit the website of any VoIP service provider to know how much they charge monthly for their VoIP plan for businesses.

Bottom line

Even though switching over from a traditional phone system might be cheaper in the long term, the cost of setting a business VoIP system could be very high. However, VoIP systems come with many benefits, which include reduced cabling costs, centralized servers, audio conferencing, ease of modification, increased employee turnover rates, fixed mobile convergence and do on.

In addition to the quantifiable benefits of VoIP, there are many “soft dollar” benefits to consider, the most common being increased employee productivity. For example, with VoIP, employees can quickly read voicemail or listen to email even when on the move, making it possible to get instructions easily and act faster.