Voice over Internet Protocol (VoIP): Transforming Telephony with Technology

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Before humans can read or write we express ourselves with sounds. Telephones – the current technological conduit of audible communication – are so fundamental to modern life that any significant change to their functionality is viewed warily. However, the Internet and advances in computer technology offer a new paradigm: Voice over Internet Protocol (VoIP). This paper examines the viability of VoIP as an alternative to traditional communications solutions and explores the opportunities and obstacles it presents.

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Voice over Internet Protocol (VoIP): Transforming Telephony with Technology

  1. 1. © Matthew A. Gilbert, MBA Page 1 of 6 Voice over Internet Protocol (VoIP): Transforming Telephony with Technology Matthew A. Gilbert, MBA MatthewAGilbert.com mttglbrt@gmail.com (661) 513-3370 Abstract Before humans can read or write we express ourselves with sounds. Telephones – the current technological conduit of audible communication – are so fundamental to modern life that any significant change to their functionality is viewed warily. However, the Internet and advances in computer technology offer a new paradigm: Voice over Internet Protocol (VoIP). This paper examines the viability of VoIP as an alternative to traditional communications solutions and explores the opportunities and obstacles it presents. I. Introduction Vocal expression is the cornerstone of human communication. Since 1876, the telephone has been the primary paradigm through which people communicate. However, advances in computers and growth of the Internet offer a new paradigm: Voice over Internet Protocol (VoIP). Transforming telephony with technology, VoIP is “voice delivered using Internet Protocol,” (TechTarget, 2003a, p. 1). Hardware providers such as Cisco and 3Com developed VoIP to “promote the use of ITU-T H.323, the standard for sending voice (audio) and video using IP on the public Internet and within an intranet,” (TechTarget, 2003a, p.1). Further, according to TechTarget (2003a), “Internet Protocol (IP) is the method…by which data is sent from one computer to another on the Internet. Each computer…on the Internet has at least one IP address that uniquely identifies it from all other computers on the Internet,” (p. 1). Essentially, VoIP standardizes IP telephony (Internet Protocol telephony), which includes “the technologies that use the Internet Protocol's packet-switched connections to exchange…forms of information that have traditionally been carried over the dedicated circuit-switched connections of the public switched telephone network (PSTN),” (TechTarget, 2003c, p.1). Internet telephony began in February 1995 with a basic PC-to-PC phone system (International Engineering Consortium, 2003, p.2). Today, software developers offer gateway servers with voice-processing cards that allow users to communicate over great distances by standard telephone while avoiding the high costs of a long-distance connection (International Engineering Consortium, 2003, p.2). It’s truly the best of both worlds.
  2. 2. Voice over Internet Protocol (VoIP)… © Matthew A. Gilbert, MBA Page 2 of 6 II. Functionality VoIP solves many voice communications needs, “from a simple inter-office intercom to complex multi-point teleconferencing…environments,” (Applied Technologies Group, 1998, p. 5) and includes applications such as: PSTN Gateways A device integrated into a PBX (private branch exchange) – a system within an enterprise that switches calls between internal users while allowing them to share external lines (TechTarget, 1999) – or a separate device that interfaces the Internet and the PSTN. Internet-Aware Telephones Phones designed to access the Internet and provide normal telephony as well (now a reality with some cell-phones). Directory services could also be accessible via the Internet by submitting a request by text of voice and receiving a response by either means. Remote Access from a Field Office Using VoIP, a remote facility or an employee who is working at home may access their organization’s main voice, data and facsimile system using the corporate Intranet. Voice Calls from a Mobile PC via the Internet Employees can call into their offices using a PC connected to the Internet. This could be useful for a traveling salesman or similar type of employee who may incur a great deal of expense on long-distance phone calls to clients and colleagues. Internet Call Centers Consumers can connect with service or help centers when browsing an organization’s Web site. This is already happening on several retail Web sites and is a great boon to e-commerce operations. Facsimile Transmission (FoIP) Most fax machines are still limited to a 14.4 Kbps dial-up connection over traditional PSTN infrastructure. VoIP presents an attractive, much faster alternative to this outdated model. III. Applications According to Applied Technologies Group (1998), “The immediate goal for VoIP service providers is to reproduce existing telephone capabilities at a significantly lower ‘total cost of operation,’” (p. 4). As outlined by Applied Technologies Group (1998), some potential benefits of VoIP include: Cost Savings While the actual reduction of long-distance telephone costs is debatable, flat rate pricing via the Internet can yield a considerable savings. Shared data and voice networks increase efficiency and reduce operational needs. TechTarget (2003a) comments, “VoIP and Internet telephony…avoids the tolls charged by ordinary telephone service,” (p. 1).
  3. 3. Voice over Internet Protocol (VoIP)… © Matthew A. Gilbert, MBA Page 3 of 6 Simplification An integrated system promotes standardization and optimizes bandwidth. TechTarget (2003c) suggests, “IP telephony is an important part of the convergence of computers, telephones, and television into a single integrated information environment,” (p.1). Less is more. Consolidation A decreased need for physical resources leads to a lower need for human resources. With the integration of VoIP, the responsibilities of IT and telecom staff can be combined into one team. Advanced Applications Although early uses of VoIP have replaced (or in some cases complement) traditional telecommunications needs, the potential for new tools with improved utility is promising. IV. Benefits According to Applied Technologies Group (1998), “The immediate goal for VoIP service providers is to reproduce existing telephone capabilities at a significantly lower ‘total cost of operation,’” (p. 4). As outlined by Applied Technologies Group (1998), some potential benefits of VoIP include: Cost Savings While the actual reduction of long-distance telephone costs is debatable, flat rate pricing via the Internet can yield a considerable savings. Shared data and voice networks increase efficiency and reduce operational needs. TechTarget (2003a) comments, “VoIP and Internet telephony…avoids the tolls charged by ordinary telephone service,” (p. 1). Simplification An integrated system promotes standardization and optimizes bandwidth. TechTarget (2003c) suggests, “IP telephony is an important part of the convergence of computers, telephones, and television into a single integrated information environment,” (p.1). Less is more. Consolidation A decreased need for physical resources leads to a lower need for human resources. With the integration of VoIP, the responsibilities of IT and telecom staff can be combined into one team. Advanced Applications Although early uses of VoIP have replaced (or in some cases complement) traditional telecommunications needs, the potential for new tools with improved utility is promising.
  4. 4. Voice over Internet Protocol (VoIP)… © Matthew A. Gilbert, MBA Page 4 of 6 V. Challenges Despite the many advantages VoIP offers, CIO (2002) cautions, “there are still concerns about the quality of voice communications,” (p. 2). According to Applied Technologies Group (1998), possible problem areas include: Delay When a round-trip delay lasts more than 50 milliseconds, an echo can emerge, making it difficult to understand either party. Talker overlap becomes an issue when the delay is greater than 250 milliseconds. Jitter (Delay Variability) Jitter is the result of the variation of inter-packet arrival time due to variable transmission speeds. Packets arrive sooner than others, which renders a choppy, non-fluid presentation of data. Packet Loss As data from a transmission is broken into small packets for delivery of the Internet, it becomes vulnerable to dropping (disappearing completely). This is especially problematic during times of high peak use. Cost is also a significant problem. Fogarty (2003) explains, “only 5% of network architects polled…had completed VoIP installations. The biggest barrier cited? Cost of implementation…in the case of VoIP, you have to spend money – a lot of money – to save money,” (p. 1). Additional costs of operation include the electricity needed to power all of the servers and systems. Based on conservative estimates, “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,” (p. 6). Erlanger (2002) argues, “the tradeoff – less-than-perfect voice quality and reduced convenience – was not worth the small savings,” (p. 1). Surprisingly, VoIP telephones re incapable of dialing 911. According to by VOIPWatch.com (2003), this is a significant detriment. Survey results indicate that 26.53 percent of survey respondents listed 911 incompatibilities as the biggest obstacle to widespread VoIP usage. Another 26.53 percent listed voice quality as a reason for avoiding VoIP phone systems. Clearly safety precedes quality. VI. Conclusion: Telecom of Tomorrow While imperfect, “VoIP’s biggest boon is increased functionality…companies with VoIP systems are 25% to 35% more responsive to customers…the productivity of their employees…rose by the same,” (Rendon, 2002, p. 1). Higher customer satisfaction and increased productivity mean more revenue. Of course, cost ultimately may be a deciding factor. An option for some enterprises is to slowly integrate VoIP into their current systems to minimize cost and interruption. This also may provide a more integrated solution in the long run for companies who might prefer to capitalize on the strengths of both systems.
  5. 5. Voice over Internet Protocol (VoIP)… © Matthew A. Gilbert, MBA Page 5 of 6 Erlanger (2002) believes small business might be the key VoIP growth area. “VoIP means a lot more than cheap calls. It means getting all of the features (and more) of PBXs, key systems, and Centrex services for much less money by creating a phone system using existing in-house data networks,” (p. 1). In summary, the potential for VoIP is impressive. According to 3COM (2001), “the market is expected to grow from $213 million during 2000 to $3.9 billion in revenue by 2005,” (p.1). Further, Helfrich (2003) claims, “anywhere from 50% to 85% of new telephony equipment sold today is IP- based,” (p.1). References 3COM. (2001, Feb. 27). 3Com Secures 74% of the Fast-Growing LAN Telephony Market Continuing Its Leadership for the Second Consecutive Year. Downloaded Jan. 29, 2003 from http://www.3com.com/corpinfo/en_US/pressbox/press_release.jsp?INFO_ID=7455 Applied Technologies Group, Inc. (1998). Voice over IP (VoIP). Natick, MA. CIO. Voice over IP: Executive Summaries. CIO Magazine. Downloaded Jan. 29, 2003 from http://www.cio.com/summaries/communications/voip Erlanger, L. (2002, Dec. 24). Dial IP for Business. PC Magazine. Downloaded Feb. 3, 2003 from http://www.pcmag.com/print_article/0,3048,a=33849,00.asp Fogarty, S. (2003, Jan. 1). Editorial: The ROI of VoIP? It’s an oxymoron. Downloaded Feb. 3, 2003 from http://searchnetworking.techtarget.com/originalContent/0,289142,sid7_gci877342,00.ht ml. Helfrich, D. (2003, Jan. 13). Raising voice-over-IP. Telephony. 244 (1), 40. International Engineering Consortium. (2003). Voice over Internet Protocol. Downloaded Feb. 2, 2003 from http://www.iec.org IP Telephony Overview. (2003). What is Internet Telephony? Downloaded Jan. 29, 2003 from http://iptel.org/info Rendon, J. (2002, Oct. 18). Analyst: VoIP offers more than cost savings. Downloaded Feb. 3, 2003 from http://searchnetworking.techtarget.com/originalContent/0,289142,aid7_gci857902,00.ht ml. TechTarget. (2003a). VoIP. Downloaded Jan. 10, 2004 from http://searchnetworking.techtarget.com/sDefinition/0,,sid7_gci214148,00.html. TechTarget. (2003b). Internet Protocol. Downloaded Jan. 10, 2004 from http://searchnetworking.techtarget.com/sDefinition/0,,sid7_gci214031,00.html. TechTarget. (2003c). IP Telephony Downloaded Jan. 10, 2004 from http://searchnetworking.techtarget.com/sDefinition/0,,sid7_gci212388,00.html
  6. 6. Voice over Internet Protocol (VoIP)… © Matthew A. Gilbert, MBA Page 6 of 6 VoIPWatch.com. (2003). VoIP Surveys. Downloaded Jan. 30, 2003 from http://www.voipwatch.com/pollBooth.php3?op=results&pollID=12. Publication Credits Gilbert, M. (2004). Voice over Internet protocol (VoIP): Transforming telephony with technology. In Alkhafaji, A., Biberman, J. & Gardner, C. (Eds.), Business Research Yearbook, Vol. XI (pp. 260- 264). Saline, MI: McNaughton & Gunn.

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