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VOIP basics and the benefits for ecommerce

I've mentioned VOIP several times over the last year in my Web marketing and Ecommerce News segment and thought it was time to write a dedicated article on the subject. This technology has many traditional phone companies shaking in their booties, and for good reasons. First, the basics:

What is VOIP?

VOIP (Voice Over Internet Protocol) is a form of Internet Telephony - the process of sending voice in digital packets over the Internet rather than the protocols of the traditional telephone network. Through switching and routing processes, the traditional phone network can also be accessed by VOIP users.

VOIP has been around in many forms for years - I remember playing with applications in 2000; but the challenges of limited bandwidth made it more of a novelty rather than a useful tool. The advent of 56k connections, and better still, broadband, has made VOIP not only useful, but probably the way that many of us will communicate via phone in the future.

There are three ways to access VOIP currently:

ATA (Analog Telephone Adaptor)

An ATA is a hardware device that converts analog signals to digital to send over the Internet. Using the device to connect your traditional landline handset to your PC or router, you can then make and receive calls via the Internet if you have an account with a telecommunications provider that supports VOIP. 

When you make a call to someone, this is the basic process:

  • The ATA converts the analog signal to digital
  • The telecommunications company then determines whether the person you're trying to call has VOIP support or has a standard landline and routes the call accordingly, converting it back to analog if necessary.

I warned you it was basic :). Of course the process of conversion and routing is very complex, if you wish to learn more about the data transmission side of things, try these primer articles:

The Standard Phone System: Circuit Switching 
The VoIP Phone System: Packet Switching

IP Phones

An IP phone looks just like a normal telephone but is "out of the box" digital signal compatible. Just plug it in to your computer via a USB port or into your router, open an account with a VOIP provider and you're set to go. Depending on the type of account you open, you can also have a standard telephone number that people can call you on.

Computer to computer

This is the simplest/cheapest implementation and most standard PC's are ready to use this option. It only requires a headset to use it effectively. You can make free "calls" to any computer also using the same service via software offered by a slew of companies. Depending on the software, you can also also make computer to landline/cell phone calls, usually at greatly reduced rates. Using this option, people can call you via a messenger type application, but not via a landline phone. The computer to computer option is the best way to go while you're exploring the benefits of VOIP as there are no setup costs involved.

What are the advantages of VOIP?

  • Much cheaper long distance/international call rates 
  • Portability: wherever you have a net connection, your phone number can follow
  • Clarity: in my experience, international calls have generally been a lot clearer.
  • Features: as the technology develops; features that aren't available on a normal service will be standard on VOIP. For example, using my current computer-to-computer VOIP setup, I can speak with a client, transfer files to them, display images and IM them - simultaneously.
  • Frees up your standard phone line

What are the benefits to Ecommerce?

Anyone who has an online business providing products and services to the world can appreciate that one of the more costly aspects of running an ecommerce site can be the phone bill :). There's not just communications with clients, but also with potential partners and merchants who may be in other countries. Networking via voice, even in this age of email, is still a very important marketing/strategic partner negotiations tool.

I used to think that I was getting a really good deal from my telco on international rates using a traditional service. I was wrong. Here's an example:

I spoke with a colleague for over 1 hour recently - I'm based in Australia; he's in the United States and using a standard landline. The VOIP call cost me about $US1.47  - and it would have cost the same amount if I had called any of these countries:

Argentina , Austria, Belgium, Canada, Canada (mobiles), Chile, Denmark, France, Germany, Ireland, Italy, Mexico (Mexico City, Monterrey), Netherlands, New Zealand, Norway, Portugal, Russia (Moscow, St. Petersburg), Spain, Sweden, United Kingdom.

For me to call the USA for one hour via my normal landline would cost around US$7.60; more to some of the other countries listed above. Over a year, I project my savings to be around a thousand dollars - and I only had to spend US$10 on a headset to get set up.

How do I get started in VOIP?

Before forking out your cash on hardware and subscription accounts with telecommunications companies, you can gauge the benefits of VOIP to your business by trialing a computer-to-computer service.

Bear in mind that the term "computer-to-computer" is a little misleading - you'll also be able to call people who have landlines. If you're going to get serious about VOIP, while it will work over a 56k dialup connection, broandband is definitely the way to go - a 256kb connection is plenty.

I recommend giving Skype a whirl - it's what I currently use. The software is free, you can make voice calls to other Skype users for free as well; and as demonstrated, their rates for calling landline phones are very reasonable.

Setting up the software is easy; - there's very little to configure. I just plugged the headset in, entered in a few details and I was ready to go. Skype software also includes a full featured IM application.

Dialling out is simple, you just add a country/area code in front of the number. There was no messing with firewalls etc; like the promo blurb says - "it just works"

The voice quality was excellent - it can be a little scratchy at times, but it depends which country you are calling. There's a slight lag, but not unlike the lag you'd experience anyway when calling overseas. 

After each call Skype shows you your current balance. It also keeps a log of all calls and has features such as speed dialling etc. Skype can also be used for conference calls - up to 4 parties simultaneously.

Skype also offer a service called SkypeIn .  It gives you a personal number so that friends can call you on Skype from their landline or cell phones (or computer), wherever you connect to the web around the world. You can also have a number in another country - allowing you to have a virtual office in other parts of the world.

Skype Voicemail lets you pick up messages when you’re offline, away from your computer… or just ignoring people.

Good luck in your forays into the wonderful world of VOIP!

Related articles:

Implementing live chat on your web site

Virtual office solutions

Michael Bloch
Taming the Beast
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