We’ve had the PSTN (Public Switched Telephone Network) – our existing wired telephone system – for a bit over 100 years now.  It’s reliable, simple to use (even old people have figured out touch tone and caller ID), and for the most part works great.  Why change?

For one thing, it’s getting too expensive.  With the advent of ubiquitous cell phones and free nationwide long-distance, the traditional phone companies have to get very creative in finding ways to tack on more fees to compensate for the lost revenue from people dropping their phone lines and long distance service.  With less people installing and maintaining wireline phones, that cost must be spread over less people, with more costs per line. Most of my small business retail clients have 4-5 phone lines, which average over $300 per month.  That’s getting pretty expensive for a small business.

What is VoiP?  It’s a way of making a traditional phone call over a computer network (like the one in your office or over the internet).  Why is it important?  Most people have intra-office computer networks and most offices are connected to the internet, so you really don’t need a whole separate setup (phone lines and separate wired phones) to use VoiP.  That saves lots of money.  Also, most internet connections are not data-limited, so you’re not paying extra for the extra data traffic for your phone calls.

VoiP also provides a lot more flexibility.  Want an office phone extension at your house?  No problem, as long as you have a decent internet connection.  Want to dial another office coworker in a different city by dialing an internal extension (and not be charged long distance)?  Again, no problem.  Want a complex automated attendant script with IVR prompts?  Easy with the right VoiP setup.  All these features were available previously with the wireline phone network, but they were so expensive that only large companies had them.  Now, any SMB with an internet connection can have the same features as large enterprise companies.

What is the downside?  Well there are a couple.  One, since the internet (and your internet connection) is not as reliable as the good old PSTN, your phone will only be as reliable as your data connection.  My home DSL has only gone down a couple of times this year that I can tell, and not for very long, so this problem is getting much better.  Second, there are a few legacy devices that don’t work as well over VoiP as they did over analog telephone lines.  Namely old fax machines and POS modems.  If you’re still using dial-up credit card validation, then you’re probably going to need at least one analog line  (I really wish AmEx would move into the 20th century and go to IP validation!).  On the other side of that, I have one customer that relies entirely on IP validation and doesn’t even have a back-up analog modem, and they have been operating without a problem for over a year.

The bottom line.  If you have multiple analog phone lines or you use lots of long distance or you need those big-office features (automated attendant, remote extension dialing), you can save a bunch of money by considering VoiP. 

VoiP is coming on strong, and it is here to stay.  I predict that half of all analog phone lines will gone in 10 years and most will be gone in 20. Are you ready for the new generation of telephone?�