When you send information across the Net, an e-mail for instance, it costs the same if you send it to your next door neighbor or your friend across the country, but the cost of making a phone call next door or across the country is different. If you could send voice as if it were data, then it wouldn't matter who you were talking to. VoIP packages phone conversations in the same way that data (an e-mail or a download for example) is packaged and then sends it across the same line.

Sounds simple, why isn't everyone using VoIP
Although the concept of VoIP is easily understood, the implementation and use of it is more complicated. In order to send voice, the information has to be separated into packets just like data. Packets are chunks of information broken up into the most efficient size for routing.

From there, the packets need to be sent and put back together in an efficient manner. This process is smooth in theory, but voice communications over the Net are not as seamless as they are over a traditional phone lines. While the technologies are improving, there are still concerns about the quality of voice communications over the Net.

VoIP isn't the only way to send conversations over a network like the Internet. VoIP is one of a group of technologies called voice over packet networks. Other network protocols like asynchronous transfer mode (ATM) can perform similar functions.

Should I be using these technologies at my office?
Analysts expect to see most offices using packet networks to send voice communications in the future. Originally VoIP and other voice over packet networks were expected to transform telecommunications. However, lack of high quality services and infrastructure costs have inhibited the success of these technologies.

Some companies are already starting to implement or test packet networks for voice communications. The Gartner Group predicts that by 2004 no more than 50 of the 1,000 largest public companies will send voice and data transmission over the networks (local area networks or LANs) at their corporate headquarters and largest offices. But it also predicts that by the same year more than 20 percent of enterprise voice traffic will be "packetized."

The Gartner Group notes that the cost savings of switching from traditional phone lines to VoIP or similar technologies is often exaggerated because the added stress that the communications will put on the existing data lines isn't taken into account.

Who offers these services?
At first, only a few companies like Cisco and Lucent offered VoIP services, but the large telecommunications carriers ¡ª such as AT&T and Sprint ¡ª are catching on.

VoIP is predominately used for personal instead of enterprise-wide use, but like everything else, as the technology changes so will the people who use it.

When Internet telephony first broke into public view in early 1995, it looked like a classic disruptive technology¡ªan invention that would leave the mighty sprawled in the dust while exalting the small and fleet. The story was especially dramatic because some true Goliaths¡ªthe traditional telecom carriers¡ªoccupied ground zero.

For all its trillion-dollar heft, the telecom sector seemed vulnerable because the price difference between the two types of telephony was obvious. Journalists writing at the time saw no apparent end to the destruction. Long-distance companies would lose their toll charges. Governments would lose the surcharges set aside to support universal service. All in all, the technology looked as if it was about to do major damage to the status quo.

During the few years following, however, carriers dramatically lowered the costs of national and international long-distance calls and the quality issues with Internet telephony turned out to be harder to tolerate than expected. While a real Internet telephony sector has taken root, it is clearly not about to push AT&T, MCI and their ilk into the grave.

But things continue to change. The quality problems of what came to be called voice over IP (VoIP) telephony disappear when voice packets travel through fast, well-managed networks. Accordingly, VoIP development has shifted from providing consumers with cheap calls over the public Internet to routing enterprise calls through LANs.

However, enterprises need to feel a high level of confidence before ripping up a vital function like telecommunications. What the technology needs is a big bet by a high-profile buyer or vendor, someone with a known commitment to call quality and a reputation to risk. Someone, in short, much like a telecom carrier.

Thus, carriers may be saved by the very technology that was supposed to kill them, while packet-based telephony may end up being legitimized by the same companies it was supposed to bury. If any story could make futurists humble, this one should.

Chuck Papageorgiou examines the ROI of a corporate VoIP investment.

I was trying to figure out why I was getting annoyed at my CIO friend Mark while he was making a valiant effort to convince me that voice over IP (VoIP) was the way to go to the desktop. I could understand the technical merits of VoIP, but I was still not convinced.

VoIP is one of those great technologies that people want to apply everywhere just because they can. Mark was absolutely convinced that if he did not deploy VoIP to the desktop, his company would be at a competitive disadvantage. We decided to spend some time asking and answering embarrassing questions before Mark went to the operating executives with his request.

Question: How would changes made to VoIP affect daily telecom operations?

Answer: Mark's company experiences a move, add and change (MAC) rate of 35 percent in its existing PBX phone system. (Each year, something is changed in 35 percent of the phones.) Half of the MAC activity is physically relocating station equipment or new construction. The rest is software-related, such as changing routing features, display names, call coverage, phone numbers and so on. The people managing the PBX have this down to a science. A user simply calls or sends e-mail to the help desk with her request. Right now, the service-level agreement calls for software changes within four hours and physical changes within 24 hours. Unfortunately, there are no procedures for handling MAC activity in a VoIP environment. Bottom line: We don't know.

Question: Once VoIP is implemented, what new devices will the users have on their desks?

Answer: The notion that a router and some data ports will provide the entire infrastructure required for VoIP to the desktop is simplistic at best. Until there is a universal workstation that can provide both voice and data capabilities and something that combines a PC and a telephone, we will need dual infrastructures. Users will continue to have both a computer workstation and a telephone workstation on their desks, whether regular or VoIP. Since we are not sure what the network impact will be, we will probably have two separate networks to support VoIP. In effect, we would have to replace the PBX infrastructure that is simple, in place and paid for, with VoIP cabling and hardware. Bottom line: We'll need two of everything.

Question: What's the total cost of ownership (TCO) for VoIP?

Answer: That is the CFO's favorite question. We found plenty of cost analysis models for the backbone network but very little information for the desktop. Even something as simple as electricity to power the phones was not included in any of the models we looked at. Using the conservative estimates of Paul Rodecki, a telephony industry consultant in Palm City, Fla., the cost of powering 2,500 VoIP phones for a year will be around $65,000. Today's cost of powering telephone sets, with the exception of powering the PBX itself, is nothing. Another TCO issue that confuses many executives is long distance. Mark's cost for long-distance transport is less than 8 cents per minute and dropping. Since his company does not have a large private network connecting its locations, calls have to be routed through a carrier's network. So implementing VoIP will not save him any money. Bottom line: We don't know, but the TCO for VoIP looks higher than that of today's phones.

Question: Are there any existing features in the current telephony environment that will be lost by going to a VoIP configuration?

Answer: Call-detail recording is the first thing that comes to mind. Mark's company has a strong cost accounting methodology for controlling telephony cost. How will call records be kept in a strictly VoIP environment?

Another major concern is the company's call center. Many industry analysts talk about the flexibility of using VoIP telephones in a call center environment, and I agree from a technical perspective. However, we could not find any applications to support call center integration to the CRM initiatives Mark's company recently initiated. Bottom line: We will lose some features that we currently use.

Question: Are there any existing corporate obligations that would make adoption of VoIP difficult?

Answer: Industry consultant Tom Brophy from NetPlus in Parsippany, N.J., points out that most corporations have long-term agreements with their long-distance carriers. That's the case with Mark's company. Bottom line: There are some contractual issues that we don't know how to resolve.

Clearly, there is too much we don't know about VoIP. Given all the unanswered questions, why deploy a new technology to replace an existing one as reliable and critical as the telephone? VoIP to the desktop just isn't ready for prime time.

Advertisers

Voice over IP (VoIP)
A technology that provides voice transmission services over the Internet.

Asynchronous transfer mode
A network technology that organizes digital data into units and transmits them over a physical medium using digital signal technology. ATM is a key component of broadband ISDN.

Internet protocol
A protocol commonly used with the higher-level Transport Control Protocol (TCP). IP is the network layer of the TCP/IP suite that specifies the format of packets and the addressing scheme.

The CIO 35 Cent Consultant, Derek Slater, offered answers about VoIP.

What do you think about voice over IP? We don't see the appeal¡ªwhy would we want our phone system to be as flaky as our Internet connection?

Ah, simplicity.

Give me a good clean Web design any day. You can tell that a big company has put some thought into efficiently building its website when the homepage fits entirely on one screen (and I'm not talking about a silly Flash splash-screen that says "click here to enter site.") Similarly, couldn't we take a year and focus on tightening up the code in Windows and Office instead of making them more complex? Those programs are sprawling out faster than suburban shopping plazas. Windows had more lines of code than MVS last time I checked.

But I digress. (And badly at that.)

What I'm getting at is that VoIP makes sense. Why have a jumble of different wires running around the company? If you can just run a redundant pair of Ethernet wires everywhere and be done with it, that sounds like an elegant setup which might be cheaper and easier to maintain.

However, the simplicity stops at your company's firewall. When you start running voice (or any other) traffic out over the Internet, I agree, you're asking for unpredictable quality. My family has tried Internet videoconferencing, and now my parents think their granddaughter is a pixilated blob out of the movie Tron. Consider running VoIP inside the corporation only, where various tools can help you prioritize traffic and ensure that the quality remains acceptable.

Here's a nice VoIP case study done by Network Magazine:
http://www.networkmagazine.com/
article/NMG20010823S0002

When over 600 IT executives were asked in 2002 about VoIP implementations:

14% had completed or were in the process of completing a VoIP rollout.

43% were considering or piloting VoIP projects.

43% had no answer or no plans for VoIP.

SOURCE: FORRESTER RESEARCH

Sounding Board Magazine
http://www.soundingboardmag.com/
Sounding Board Magazine is a publication geared to those in the IP communications field. The companion Web site offers archives of past issues and current features free of charge.

Pulver.com
http://www.pulver.com/
Pulver.com is considered to be the "Voice of the IP Communications Industry". This site offers job listings, original research reports, events and news pertaining to VoIP.

IPxStream
http://www.iptelephony.org/
frame/pulse.html
IPxStream offers free, easily accessible, market intelligence and news centered around the IP telephony/fax industry and related technologies.

VoIP from About.com
http://telecom.about.com/
cs/voip/index.htm
Your About.com guide to Telecom provides information about VoIP along with the latest news, research and developments.

Voice over IP
http://www.itpapers.com/
cgi/PSummaryIT.pl?paperid=8069&scid=6
This Technology Guide examines recent advances in the infrastructures, equipment, and embedded systems that are needed to successfully enable VoIP and discusses the major issues currently facing product developers.

VoIP 101: Behind the Technology
http://www.8wire.com/
articles/index.asp?AID=1588
A clear and understandable article about VoIP basics from 8wire.com.

What is VoIP?
http://searchnetworking.techtarget.com/
sDefinition/0,,sid7_gci214148,00.html
Learn the basics of VoIP with this brief entry in the TechTarget encyclopedia.