3 Reasons Why Companies Choose VoIP

VoIP is an acronym for Voice over IP or broken down even further, Voice over Internet Protocol, yet calls don’t have to run over the internet at all.

Essentially, VoIP is a way to transmit voice telephone calls over a data network using the protocol, or set of rules and standards, that the internet was based on – the internet protocol.   VoIP takes your voice as spoken into a telephone handset or headset and converts that voice into a format that can be transmitted at high speeds over a data network previously reserved for data such as internet searches and FTP.

While the internet is certainly the largest and most popular data network in the world, VoIP can also be transmitted over private data networks owned and managed by a single carrier such as AT&T or Verizon, or even or a private LAN or WAN maintained by an individual company with multiple locations.

So why is VoIP becoming so popular among enterprises and receiving so much press in trade magazines, internet articles and telecom industry trade shows?  The answers lie in the subject of this blog where I will attempt to summarize the value proposition in just 3 reasons.

Reason 1 – Cost

Comparing the cost of operating with VoIP telephony for phone calls vs. traditional circuit switched telephony offers several cost advantages. VoIP calls consume a certain amount of bandwidth on a data network only for the time that the call is connected. When that call is not connected, that bandwidth can be used for other things such as internet or file transfers. There is not a one-to-one relationship as in the circuit switched or Time Division Multiplexing (TDM) world where one call consumes one 64 kbps channel on a T-1. In a circuit switched network, if you have 24 voice channels that are not being used for phone calls, those channels sit idle and cannot be used for anything else. Using VoIP and a converged voice and data network, enterprises can obtain just the right amount of bandwidth needed for peak voice and data traffic and leverage that bandwidth for both purposes.

Additionally, certain compression techniques can be utilized to force calls to use an even smaller amount of bandwidth than a ‘normal’ VoIP call, saving money on overall bandwidth needed and purchased through the provider.

Reason 2 – Flexibility/Scalability

Flexibility and scalability are big advantages for enterprises and small businesses over traditional voice communications.  Since VoIP calls can share the data network bandwidth, then overall bandwidth can be easily changed due to cyclical changes in call volumes and can be flexed up and down often without additions to new connections. For example, under traditional telephony where a single T-1 has 24 voice call paths or channels, if you hire an additional 2 agents and now need 26 simultaneous call paths available during peak times, you must purchase another T-1 with 24 call paths effectively over buying voice capacity.

In VoIP communications, adding 2 additional agents would require roughly 180kbps (and as little as 70 kbps using compression) which may already exist based on current voice and data combined usage. If not in existence, enterprises can often contact their ISP and increase bandwidth on an existing port which becomes only a software change completed in a few days vs. a complete provision and install of a fiber or copper circuit which take 45 days or more and often requires a minimum 12 month term.

Reason 3 – Integration

Finally VoIP telephony opens the door for much integration, not only with telecom providers but also vendors, suppliers and other applications in your environment. VoIP can facilitate computer/telephony integrations, presence information (so others know who is available or on a current call before trying that party), and integrates at-home agents seamlessly with agents or business users working from headquarters.

Other benefits exist in a VoIP environment, but these three stand out as being primary drivers why businesses make the transition from traditional telephony to Voice over IP.  According to Gartner, communications as a service (hosted IP telephony) will grow from a $250 million a year industry to $2.5 billion by 2011.

These advantages do not make VoIP right for every company and every situation. I still see many situations where traditional T-1 delivery makes the most sense for businesses today for reasons that may include size, maturity, existing infrastructure or certain security concerns.

inContact offers many  choices for telephony and has skilled engineers that will consult with customers and prospects on which options best suit the needs of the organization.