IP Telephony vs. VOIP — What’s the Difference? What’s It Mean to You?
Although it is helpful to distinguish between the terms “IP Telephony” and “VOIP”, they are often used interchangeably.
IP Phone System — What Is It?
Let’s start by describing the new type of phone system that businesses are now using to replace traditional phone systems in their offices. An “IP Phone System” (sometimes called an IP PBX) uses the technology of “IP (Internet Protocol)” to carry the voice conversations in your office. This does not necessarily mean it uses the public Internet. An IP Phone System uses IP technology within the private data network of a business in a single location or across a private network.
The same cabling that a business uses for its data network is used to carry the voice traffic of the phone system. In some ways they are totally independent and just sharing the same cabling. In one way they affect each other.
They are independent in that if the data server goes down, the voice will still go through. Your phone system will still work. Likewise if they phone system goes down, the data will still go through.
The way the IP Phone System and data network could affect each other is in the capacity or “bandwidth” of the network, both in the office and going to the outside world. Data is “forgiving” meaning it is not time sensitive. If it is delayed by several tenths of a second or seconds to move your data back and forth the quality of the data doesn’t suffer.
However, voice is time sensitive. It must occur in “real time” which typically means there can’t be more than 150 milliseconds (0.15 seconds) of delay in moving the voice traffic between its destinations. If the combined voice and data traffic is more than the capacity of the network infrastructure to handle it then the voice quality can suffer. The network infrastructure consists of the cabling and the equipment throughout the network.
IP Telephony on a properly designed, private network has the same voice quality as traditional phone systems. To be “properly designed” the network must include a proper “Quality of Service” plan and execution with the proper equipment. (That discussion is too much to include in this article. Give us a call.)
You can use IP Telephony over your private data network to connect remote sites with multiple workers or remote workers in home offices. If you don’t have a private network between sites you can use the public Internet to access remote sites.
VOIP (Voice Over Internet Protocol) — How Does This Enter the Picture?
Although “VOIP” is often used to refer to IP Telephony as described below, it also refers to using the public Internet to carry voice traffic. When the public Internet is used, you (the user) don’t have the same control over the Quality of Service as you do over your own network.
Therefore it is more likely that the voice quality over the Internet could suffer compared to that your private network. However, if properly designed with today’s technologies, the voice quality over the public internet can often be equally as good as your regular phone line quality. The details of how this is accomplished, especially troubleshooting problems that arise, are too detailed to include here so that’s left for another article or discussion with us.
IP Telephony — Why Would You Want It?
Your IP Telephone System provides the following advantages:
- Seamless extension dialing between all your locations on your private network, or even over the public Internet, is relatively easy and much less costly than traditional means. All your offices can be “tied together” to act as one large office no matter where in the world they are located. This also provides the advantage of eliminating long distance charges between your locations.
- IP Telephony creates lower cost and greater functionality advantages from carrier services. With IP Telephony you can connect all your offices together on your own private network. Or you can use the “quasi-private” network of a carrier.
This means you use one service provider to provide the voice trunks at each office. Your voice traffic between offices stays on the private network of the carrier. Your voice traffic never has to travel through the public internet.
If done correctly you have the advantage of carrying your voice traffic over the same network that carries your data traffic between offices but through the service provider you have Quality of Service to give voice priority over data. This will also give you a lower cost than the traditional means of a totally private network connecting your offices.
- Easily and economically connecting home based workers. Your home based worker can be easily connected to your office phone system with a high speed connection such as DSL or cable Internet. Your worker takes a phone from your office and connects it to that Internet connection. Or your worker uses a “soft phone” which is software on their computer at home that functions like a telephone.
That physical phone or soft phone, located anywhere in the world, is now a phone on your office phone system with all the individual settings that worker has on their phone at the office. Someone calls your office and the call automatically rings the phone at your worker’s home. The caller doesn’t know where the person they’re calling is located. This arrangement can even work for a small one, two, or three person branch office.
- Easily and economically connecting traveling workers. Imagine you’re traveling and staying at a hotel with a high speed Internet connection. You have a soft phone on your laptop computer. You can use a headset on your laptop or a handset that plugs into a USB port on your computer. The handset acts just like the handset on your phone at the office. You can now receive and make calls through your soft phone just like you’re at your office. Callers will ring through to your soft phone.
You can be located anywhere in the world and the person you call or calls you won’t know where you are. If you’re going to be away for an extended period of time, you may even want to take a regular office phone and set it up on your Internet connection. This arrangement makes use of IP Telephony for your office combined with VOIP using the Internet. IP Telephony makes all this easily possible at a lower cost than traditional systems.
Home based and traveling workers can also go into your office, in fact any of your office locations, and simply “log in” to your phone system just like they log in to your computer system. Once logged in all their phone settings are automatically provided to the phone in which they log in. This just wasn’t easy or feasible to do economically prior to IP Telephony.
- Enhanced contact center (call center) responsiveness to customer needs. Lowered costs through IP Telephony makes it economical to use multiple call centers for time zone coverage, lower labor market costs, and even overseas call centers for small and medium sized businesses.
I know the mention of overseas (in respect to the U.S.) labor may not be what some people want to hear but the reality is that large corporations have been using overseas labor for call centers, manufacturing, and technical skills for decades. Now, what was once only economical for large corporations is also economical for small and medium sized businesses. IP Telephony levels the playing field of business competitiveness.
- “Contact center” is the replacement term for what used to be “call center.” Why? Is it really necesary to change the terminology? Of course, I think the answer is unequivocally “yes” or I wouldn’t mention it. A Call Center was appropriately named because all it did was take phone calls.
Now a Contact Center using IP Telephony, since it uses IP technology just as the data network uses, can take phone calls, fax messages, e-mail, web text chat, web voice calls, and even web video calls, all at the same time, in the same queues for the contact center agents. Isn’t the point of “customer service” to make it easy for the customer to contact you? What’s better than letting the customer choose the means of contact? Now it’s possible and affordable.
- Disaster recovery and power outage backup for business continuity. Redundant phone systems with automatic failover over dispersed locations is now economical. With the traditional phone system technologies it used to cost 70% - 100% of the original system cost to get redundant systems. In addition, the carrier services to make it happen were also costly.
Now it’s possible to get redundant systems for just 10% - 30% of the original system cost. Additionally, the carrier services are also less expensive than previously. Business continuity planning is just like any other “insurance” you obtain for your business. All insurance is a trade-off between the cost of the insurance and the coverage level you obtain.
At some point paying too much doesn’t reap enough extra benefit to warrant the extra cost. On the other hand, paying too little and not obtaining meaningful coverage doesn’t make sense either. With the costs for obtaining business continuity so dramatically lower than previously, it could make sense to make it a part of your total insurance and risk management for your business.
- Using one cabling infrastructure to carry both data and voice traffic instead of separate cabling infrastructure for each. This can have significant cost savings especially if you are moving your office or setting up a new office. In either of these situations you will have a substantial cost savings by only having to install your network cabling and not having to install a separate cabling system for your phone system.
- Simplified system administration through a GUI (graphical user interface). You can make changes to your system that previously required your telephone equipment vendor to make the changes. Therefore, you can significantly reduce your maintenance costs.
- Easier moves of telephone sets. When moving from one location in your building to another, it previously required re-programming the telephone switch and physically changing some wires in the “telephone closet.” With IP Telephony as you pack up your desk supplies and plants, you also grab your telephone. In your new location, you simply plug the telephone into the Ethernet connection in the wall and then connect your computer to a jack in the phone that acts as a bypass for your data. All your personal settings move with you. Costs for moves are dramatically reduced.
- Software upgrades are much easier and can be performed by you instead of paying the telephone equipment vendor to do them.
There are many more benefits to IP Telephony but this brief overview should be enough to peak your interest to continue your investigation. You don’t need to make a total swap out of your current phone system. It is possible to gradually introduce an IP Telephone System into your organization and interface it to legacy systems.
In addition to this brief explanation, you might want to further discuss the strategic business applications and implications of IP Telephony. New technologies such as IP Telephony don’t just replace previous ones but allow much greater functionality, increased productivity, enhanced customer service and lower costs than prior technologies.
Don’t just improve the way you currently do business! Expand the possibilities of conducting your business in ways you never thought possible. All major phone system manufacturers are investing their research and development dollars into development of their IP Phone Systems. Thousands of companies have already converted to it. There must be a reason or two or twenty.