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VoIP: A Wise Investment for Small Business

Small businesses are always looking for ways to increase their competitiveness by cutting costs, improving their value proposition and requiring their staff to work more efficiently.

Today, in the telecommunications industry, a new technology called VoIP - Voice over Internet Protocol (Internet-based phone service) has emerged and is making all of the above and more, possible for SMBs (small and medium-size businesses). VoIP technology compresses voice (audio) data into packets that can be transmitted over data networks and the public Internet, and converted back into voice at the receiving end. This is the basis for some of the significant cost savings as voice now becomes just another form of data, allowing for integration with web based applications and the development of new features that would be impossible using traditional networks.

SMBs Demand Higher Functionality at a Lower Cost

Traditional telephone networks were designed solely to carry low-fidelity audio signals with a high level of reliability. Although these networks are very reliable for voice communication, they are not well suited to service todays explosive growth of digital communication applications, because they: are expensive to build; must have the capacity from day one to address potential growth, increasing initial costs and creating an underutilized investment; transmit data at very low rates and resolutions, making them poorly suited for delivering high-fidelity audio, entertainment-quality video, or other rich multimedia content; use dedicated circuits for each call, which allot fixed bandwidth throughout the calls duration, whether or not voice is actually being transmitted; cannot be leveraged to provide new or differentiated services or functions, such as video communication, that the network was not originally designed to accommodate.

Advantages of VoIP Technology

VoIP uses packet-switched networks to carry non-real-time data using much less bandwidth. The advantages of such networks are flexibility, efficiency, and scalability. Flexibility: networks can be built in a variety of configurations to suit the number of users, client/server application requirements, and desired bandwidth availability. Efficiency: bandwidth is consumed only when needed; service providers can converge their traditionally separate voice and data networks, and carry voice, video, fax, and data traffic over the same network; many terminals can share the same connection to the network and as a result, significantly more traffic can be transmitted over a packet-switched network than over a circuit-switched telephony network. Scalability: Extensions can be easily added to the network as growth demands.


These advantages help create cost savings that can be passed on to consumers in the form of lower telephone bills. Around the world, more than 25 million SMBs could realize significant benefits by employing VoIP as their phone service.

A Hosted PBX

A Hosted IP PBX system is built using a VoIP infrastructure specifically for small business. This system offers many advantages to SMBs compared to traditional telcom offerings. Businesses that opt for non-hosted VoIP phone systems, must first invest in a scalable and very expensive platform; as well as devote resources to set up, configure, and maintain them a significant overhead cost.

In a hosted PBX service, configuration and maintenance are handled by the service provider and included in the monthly service price. In any price comparison, an SMB must look at all these costs and consider the entire total cost of ownership associated with on on-premise based system versus a hosted solution.

In a hosted IP PBX environment, a subscriber uses their broadband IP network for a small business phone system as well as data service. Customer Premise Equipment (CPE) for VoIP service requires only IP phones, or analog-to-digital converters for analog phones. This dramatically reduces start-up costs. Typically, all applications are also hosted, eliminating multiple vendors and points of contact.

Hosted PBXs Reduce Costs from 50 to 90 Percent

With traditional business phone systems, each company must pay for expensive equipment, phones, applications, installation, and maintenance, as well as bring in trunk lines. On top of this, a business will need to add in expensive monthly fees for local and long distance calling, a maintenance contract and annual upgrade costs.

Payback periods for a PBX phone system may never occur, preventing smaller companies from considering a traditional business phone system and forcing them to rely on basic, multi-line service and phones, which can be really expensive. Even after the upfront and quite substantial investment, customers could hear a busy signal if traffic exceeds the number of available lines.

For small businesses, the only alternative has been to use regular, basic phone service, which requires that all users must be in the same physical location, have a limited features and pay a large up front cost. Hosted PBX services nearly eliminate the upfront investment and cover the local and long distance calling costs for a low monthly fee, and include all the features.

For a monthly subscription fee, a business enjoys unlimited long distance and local calls in the U.S. and Canada, and can use all the advanced applications including auto-attendant, ring groups, and extensions. These features would cost much more if provided with traditional solutions. Also, since each user can have two non-blocking lines, up to 20 calls can be handled by a single extension, reducing busy signals and customer abandon rates.

Hosted PBX Features

Most hosted PBX include unlimited calling to the US and Canada; E911 emergency calling; a business class telephone with one-touch controls, DND, park, conference and much more; auto attendant that will route your calls to the appropriate extensions; full featured conference bridge and much more!

For SMBs that demand more features at a lower cost, VoIP is an alternative with great results!


About the Author: Click here for more in-depth information about business voip products and services.

Michael Brito is an internet marketing consultant and freelance writer for a variety of consumer related products.




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