Internet Phones

Word's around that you can save a lot of money by switching your company's phone service to the Internet. That got your attention fast. But before triumphantly flipping off Ma Bell, you should know a few things about using VoIP for business.

You’ve decided to ditch your company’s land-lines because this new thing, VoIP, is supposed to save a ton of money. James Gaskin thinks you’re a smart cookie.

“Eighty percent who don’t examine it are just wasting money,” says the author of Talk is Cheap: Switching to Internet Telephones (O’Reilly Media, 2005, $19.95).

VoIP, or Voice over Internet Protocol, isn’t all that new, but some analysts are saying it’s now seeing the kind of growth that could give Ma Bell the willies.

In a 2006 report by New Paradigm Resources Group, the Chicago-based consulting firm estimated that VoIP will grow from nearly 9 million users now to about 24 million by the end of 2008.

And while companies like Vonage, Sunrocket, Packet8 and Skype have enjoyed the highest name-recognition among VoIP providers, other familiar names – Microsoft, Google, Yahoo! and AOL – are getting into the game.

What is VoIP?

The Federal Communications Commission defines VoIP as “a technology that allows you to make voice calls using a broadband Internet connection instead of a regular phone line.”

The FCC handily explains that certain VoIP providers may limit you to calling only people using the same service, but others open it up to anyone with a phone number – local, long distance, international and cell.

You might also be limited to making and taking calls only through your computer or a special VoIP phone, as it was early on. But some services now include VoIP adapters for use on regular phones.

For Business, There’s More to Know

Since 2003, Eric Laughlin, CEO of Colorado-based, has helped more than 3 million visitors learn about VoIP providers through the website, which compares hundreds of residential and business providers.

“We launched the business section because we kept getting inquiries about it,” Laughlin says. “Business VoIP is more complex. There are things to consider like how to transfer and automated attendant. Businesses need and expect a lot more.”

Big Savings, but ‘Hiccups’

Cost savings of more than 40 percent is a huge argument for VoIP, and so is the fact that voice and data can run on the same network. But “hiccups” can be expected when it comes to managing new technology, as Craig Clausen, NPRG senior vice president, found when his business began using Internet phone service.

“Not all routers are created equal,” Clausen says. At first, there were echoes on the line, and some signal delays – both easily fixed, he says, by adjusting the compression rate. Clausen advises getting close to your ISP (Internet Service Provider) so you can work through any glitches together.

Know It Before You Buy It

A lot of small companies that don’t have a grip on VoIP are really paying for it, author Gaskin says. He gives the example of a Dallas company paying Ma Bell for 36 individual lines, all of which it had connected to a VoIP network: “They were getting screwed on one end and cheated on the other.”

The lesson is to thoroughly school yourself on VoIP before making the change from traditional phone service. Gaskin also recommends that a business switching to VoIP should keep one land line for backup. Unlike VoIP, it won’t go down in a power outage.

Picking the Right Provider

Thoroughly research customer experiences with the providers you’re considering. Both VoipReview and BroadbandReports organize user reviews into three categories: Smooth Ride, Mixed and Unhappy.

Then be sure your choice offers the features you want. At home that might include voicemail and call waiting; for business, all that and more.

Expect to pay about $20 or less a month for residential VoIP service, and at least $50 a month for a small business, depending on how many phones and what services are included.

You’re Not (Quite) Alone

Only a reported five percent of small and mid-sized companies now use VoIP as their primary telephone service.

But with its significant cost advantages, increased flexibility and portability, proponents like Gaskin say VoIP should be given serious consideration by any business.

Do it, he says, and you’ll never look back.

Alice Rhein is a StartupNation contributing writer.

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