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VoIP and the Next Age of Telephone Service: What You Need to Know - by Guest Blogger Rachel Greenberg

May 28, 2013

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Chances are good that somewhere along the line, you have heard mention of VoIP. However, if you are like most people, you have used VoIP already, even if you don’t know what it is.

VoIP is a technology that allows customers to make free and cheap phone calls entirely over the Internet. Despite the fact that many people today use VoIP today, (some expect that by the end of this year, there will be 288 million worldwide users) many people still don’t know what VoIP is or why they should care, so for starters:

Why You Should Care About VoIP

VoIP is the cheapest option available today in calling service. In fact, it is largely agreed upon that by the year 2018, the PSTN (public switched telephone network, the system behind analog telephone service) will have been largely dismantled. This means that for most Americans, VoIP will be the most easily available service in telecom.

In fact, for many people who continue to use analog telephone service, it is likely that they are in some part using VoIP switches or VoIP systems, as many providers have already converted large parts of their internal structures to VoIP. This has led to some debate in parts of the country as providers would like to be able to convert their entire customer base to VoIP, but legislators worry that this systems overhaul will be unfair to certain customers that are not well-equipped to deal with technological changes like elderly people and people in remote areas.

And why are providers so antsy to switch to VoIP? VoIP is the cheapest option available in phone service for customer and providers. And for providers that also provide Internet service, it is fairly intuitive to consolidate service into Internet and VoIP services only.

The more providers can save on their systems, the more of those savings they can pass on to their customers. It is very likely that within the coming years, there will be few states that do not use VoIP, at least in some part of their service. In fact, some states have already seen proposed legislation that would move subsidies away from analog telecom service and toward high speed Internet services instead, which would open up many new customers to VoIP for the first time.

So, How, Exactly, is VoIP Different from Legacy Phone Service?

“Legacy” refers to the phone systems that you probably grew up with: all of those copper wires, telephone poles, and towers that span the country to keep people connected with analog phones.

Legacy phone service sends voice messages as electrical pulses. To send those electrical pulses, legacy phone providers need lots and lots of copper wire to connect every phone location to each other. This leads to a complicated phone system that is expensive to maintain.

The copper wire system also leads to higher in-house costs for customers using legacy service. If you want to use a legacy phone plan, you will need to have a technician visit your home or office to manually install your phone lines. And if in the future you want to change or move any lines, you will need to pay for additional visits from the technician.

With VoIP, phone calls are sent as binary data between IP locations. Your VoIP provider uses IP addresses in practically the same way you would use a house address: to find the right location for the sent phone call. However, it is very easy to send binary data over long distances without the message degrading in quality. This means that unlike legacy service, VoIP service does not require a physical wire for transporting data. This makes it easy to set up an internationally connected system for a very low cost. VoIP providers can send phone calls to any phone number in the world without encountering high long distance and international fees because it is almost as easy to send a phone call with VoIP as it is to send an email.

For the end user, the experience is the same with VoIP as with legacy service. You can call any phone number, whether it is carried by a legacy provider, a mobile provider, or another VoIP provider, without issue. You can even port the phone numbers you have now. You can also incorporate an IP faxing service into your VoIP plan.

The Legacy PBX

If you are looking at office phone systems, you will also need to consider PBXs. A PBX is a private branch exchange, or the switchboard that connects all of your office phone lines to your provider. Old PBXs were large switch systems that needed to be housed on-site and manually operated.

While some people still opt for in-house legacy PBXs with manual operators, VoIP PBXs are the obvious choice for anyone looking to save money and time.

VoIP customers can choose between hosted PBXs that are managed entirely by the VoIP provider (for about $20/extension each month) and in-house IP PBXs with SIP trunking plans (for about $10/outbound port per month, without the cost of hardware). Either of these service options can lead to savings in the thousands or even tens of thousands each year for anyone switching from legacy service.

In Short...

The point of all of this is that at this stage of the game, no one should be unaware of VoIP. If you haven’t looked into switching to VoIP, you are almost certainly spending too much money on your landline phone service.

With VoIP, you can get great features, unlimited calling in the US, and extremely cheap international calling, all for an average monthly fee of around $20/extension each month. When you compare all of your options, there’s really no other way to go.

Rachel Greenberg is site editor for VoIP Review. She writes about VoIP and all of the latest news in telecom service.

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