By Henning Rehder

Everyone in the business community has heard of VoIP.

VoIP stands for Voice over Internet Protocol – a fancy way of saying that you can use a special phone to make phone calls over the Internet. Almost every traditional phone service provider has now implemented a “Hosted VoIP” model. These companies provide you with a special IP phone that is preconfigured for their services and charge you a monthly fee per phone to make unlimited calls. Typically, this monthly fee is in the $25-$35 range per phone. This phone connects over the Internet to their phone servers allowing you have the functions of a large phone system (like auto attendants, follow me, unified communications, and others) without the large phone system price. This has become very popular and it is to the point where small companies are popping up all over providing hosted VoIP and traditional phone carriers (AT&T, SBC, Verizon, Sprint, and others) are buying up the small companies to gain as much market share as they can. The situation is almost to the point where instead of signing up on the Internet for hosted VoIP – you might soon find that every company you purchase IT services from wants to sell you a hosted VoIP solution (either a major provider, or worse – their own “home brewed” solution)

I want to make sure I am clear, however. Hosted VoIP is an excellent product for small businesses. It is simple to understand, implement, and support. You can do things that you could never do with your “traditional” phone. For example, with Hosted VoIP, you can unplug your phone from the office, plug it in at home, and you will receive all your calls and voicemails, just as if the phone was in your office. Additionally, its price point makes it very affordable for small offices and small businesses. With such an easily used technology, it is no wonder why so many companies are trying to sell Hosted VoIP.

There are, however, several major problems that the Hosted VoIP companies won’t tell you about.

• Sound Quality – IP Phones work by breaking up a phone call into data chunks called “Packets”. These packets are sent over the Internet without any kind of guarantee that they will get there in a timely fashion. Additionally, they are sent in a stream, but the stream isn’t monitored for quality. What usually happens with VoIP calls is that they experience small delays in the stream (a problem known as “Jitter”) which causes the phone call’s audio to sound “broken up”. The audio quality will fluctuate based on traffic through your Internet connection as well as general congestion on the Internet itself between you and your VoIP provider.
• Dropped Calls – The delivery of data on the Internet is very inconsistent at times. Sometimes this will cause extreme delays that the VoIP server ultimately can’t compensate for and the call is dropped. This is very similar to what happens when your cell phone drops a call. As anyone who has had their cell phone drop a call in the middle of a conversation, this problem is very frustrating and unprofessional.
• Call quality can NEVER be guaranteed over the Internet – The one problem that VoIP companies fail to inform customers about is that call quality and reliability can’t be GUARANTEED over the Internet. By design, voice traffic on the Internet is treated the same as any other data (such as web browsing traffic). Essentially, the voice traffic “gets there when it gets there”.
• Price – As a company purchases more and more VoIP phone service, the monthly fees start adding up. Even with unlimited phone calls, the monthly costs get out of hand quickly. Most employees don’t make a large number of inbound or outbound calls to justify the cost, except to each other, unless you are in a call center environment. At an average price of $25/phone/month, you can see that an office with 20 phones would pay $500/month for their phones.