August 23, 2007 11:06 AM PDT

Can small business count on VoIP?

Can small business count on VoIP?
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Shawna Hampton, a small business owner from Kansas, knows she always needs to have a backup for her Skype Internet telephone service.

Hampton, who runs what is essentially a one-woman Web development company in Kansas City, said she was glad she had her cell phone handy when she was unable to make or receive calls from clients for 48 hours during last week's Skype outage. She had decided to make Skype's $40-a-year unlimited domestic calling her primary phone system to save money when she started her company.

"I always knew I needed a backup for Skype," she said. "I was annoyed by the disruption, but since I was able to use my cell phone, it wasn't that big of a deal."

Hampton's point is well taken: while many large companies have already made the switch to IP telephones, small business may not want to cut off their traditional phone services just yet.

Indeed, many experts agree that it's risky for small businesses to rely too heavily on services that use voice over Internet Protocol (VoIP) technology that leverages the public Internet. The reason is simple. The public Internet is still what is considered a "best-effort" network. Priority is not given to any type of traffic once it hits the public Internet. And even though voice packets don't take up much bandwidth, the technology is very sensitive to latency, which means that late-arriving packets could distort voice quality or cut off voice calls altogether.

While dropped calls or garbled connections may be tolerated by some consumers, business users generally have higher expectations for quality and reliability.

"The public Internet just can't provide the kind of quality of service that is needed to offer a business-class service. And small businesses don't typically have the money to upgrade their networks. So they shouldn't rip out their analog service to go purely to VoIP."
--Chris Lyman, Fonality chief executive

"The Internet itself is not business class," said Lisa Pierce, a vice president at Forrester Research. "Performance of the network is largely unpredictable. It's like the freeway. Sometimes you can sail through with no traffic, and other times you can be stuck in a traffic jam for hours."

Different for enterprise VoIP
By contrast, big companies deploying VoIP technology from suppliers, such as Cisco and Avaya, don't use the public Internet to transport their voice traffic. They use their own IP networks to transport calls within their campuses. And for calls traveling to other branch offices, they use leased data links rented from service providers like Verizon or AT&T. As a result, large VoIP installations often require companies to invest millions of dollars to upgrade their local-area and wide-area network infrastructures.

There's no question that these enterprise-class VoIP systems are too expensive for companies with fewer than 50 or 100 employees. But even the small-business offerings from Cisco and Avaya are often too pricey for many companies, especially those with fewer than 10 employees.

And yet the tiniest of companies want the features and flexibility that IP technology provides. Skype claims that nearly 30 percent of the 220 million people who have downloaded its peer-to-peer calling software client around the globe use the service for business purposes. In January, the company developed a special product called Skype for Business, which builds upon its existing calling features, such as Skype-to-Skype, Video Calling, SkypeOut, SkypeIn, conference calling, file transfer and chat.

But even though Skype is going after the "business" market, the company says it's only addressing the very low end of the market.

"Skype is not intended for enterprise-level needs," said Skype spokeswoman Jennifer Caukin. "Small businesses, however, should find it a very useful tool that complements their existing communications methods, and helps them reduce communication costs and increase productivity."

Caukin said last week's outage was regrettable, and she added that the company has always encouraged customers to have backup communications.

"It is important to remember that Skype is not a replacement telephony service," she said. "While Skype is extremely resilient, users, especially businesses, are advised to have alternatives in place for the unlikely event that Skype access is disrupted, either because of Internet access problems or other reasons."

Will the public Net suffice?
But some companies, such as 8x8 and Vonage, are marketing their services as a replacement for traditional telephone services. 8x8 offers a hosted PBX service called Virtual Office that provides call functions like four-digit calling, call forwarding and auto-attendant, plus some unified communications features, like e-mail-accessible voice mail. The service starts at just $49.99 per month.

A PBX, or private branch exchange, is used within a private telephone network and allows users to share a certain number of outside telephone lines for making phone calls.

Like Skype, 8x8's service uses the public Internet to carry voice packets. Huw Rees, vice president of sales and marketing for 8x8, said concerns about the reliability of VoIP over the Internet are overblown.

"The public Internet is more than adequate for providing a business-class voice system if you have a decent broadband connection," he said. "We have more than 8,000 business customers who range in size from 2 to 600 employees using our service. There may have been issues with Internet VoIP a few years ago, but not anymore."

But Chris Lyman, chief executive for a software PBX company called Fonality, disagrees with Rees. He said businesses that can't afford to invest in upgrading their own wide-area and local-area networks should use a hybrid solution that allows them to fall back on the traditional phone network if their Internet connection is interrupted. Fonality sells a software PBX solution that does just that.

"The public Internet just can't provide the kind of quality of service that is needed to offer a business-class service," Lyman said. "And small businesses don't typically have the money to upgrade their networks. So they shouldn't rip out their analog service to go purely to VoIP. They're not ready for it."

Fonality's products are similar to ones offered by Cisco and Avaya. But because Fonality's software is based on open-source technology, Lyman says it costs 40 percent to 80 percent less than competing products from these big companies. Using open-source and standards-based technology means Fonality's software can be deployed on any server and any desktop phone. By contrast, Cisco's IP PBX solution runs on Cisco hardware and companies using it must buy Cisco's IP phones.

Even Fonality's solution, however, can be too expensive for some businesses. It costs roughly between $300 and $500 per employee.

At the end of the day, small companies looking to deploy VoIP must weigh the pros and cons of the services or solutions they can afford.

"There is a portion of the market at the low end that simply can't afford these more expensive options," said Forrester's Pierce. "So an Internet-based VoIP solution may hit the right price point. Call quality and service reliability may suffer, but it's a tradeoff. And compromises have to be made."

Indeed, Shawna Hampton said that as her company grows, she will likely invest in a more robust phone system. But until then, she will continue to use Skype.

"For right now, Skype is a great service for me," she said. "But I'm glad I have a cell phone, too."

See more CNET content tagged:
small business, VoIP, Skype, Avaya Inc., IP


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Landlines Are Resilient? Cellular Is Resilient?
Let's see, a few years ago AT&T had a major service outage on the East Coast when a rollout of new switching software failed. Then there was Hurricane Katrina, which wiped out cell towers. More recently, the collapse of the bridge in Minneapolis overloaded the cell network with calls, because it could not handle peak load.

Conceptually, the Internet is more resilient than either landline or cell service. Remember, it was engineered by DARPA to survive a nuclear attack. The bottom line though is that everyone should have at least two ways to make and receive phone calls AND email. Yes, don't forget about email. Loss of email service can be almost as disruptive to business as loss of voice service.
Posted by Stating (869 comments )
Reply Link Flag
Internet is more resilient
The internet is more resilient than landlines and cellular phones. Really, the internet at a business should almost never go down, unless the lines coming from the pole to the business go down. Otherwise, it can just re-route around the problem areas, and keep on trucking.

I've also read that the reason that Skype went down is because a lot of computers went down and restarted at the same time, thereby overwhelming Skype's log-in server.
Posted by Leria (585 comments )
Link Flag
Internet not designed for voice
latency and dropped packets make this less then ideal for real time voice communications, better to have a dedicated line (or cellular signal) that does not suffer this issue.

Also if the phone line gets cut, yes you can't use the phone, but if your internet service line gets cut you won't be able to use the internet.
Posted by k2dave (213 comments )
Reply Link Flag
Neither is audio/video/online gaming/etc/etc
So what is your point?

If a business uses what is basically a free service and depends on it, then they deserve what they get.
Posted by MSSlayer (1074 comments )
Link Flag
Backup your voice system
Two tin cans: Free from the trash can
Kite string: $1.49
Look on the dumb secretary's face when she tries to install the battery into it: Priceless.
Posted by Seaspray0 (9714 comments )
Reply Link Flag
Not Ready for Primetime
Sorry, but you should be signing a contract with a provider that spells out uptime requirements and how they will make good in the event that they cannot fulfill their obligations. Nothing is 100% guaranteed, but you at least owe yourself that peace of mind.

Otherwise, you're just playing at business.
Posted by TV James (680 comments )
Reply Link Flag
Fonality based on asterisk (which is free)
Perhaps the reporter should have asked the company that made the software FOR FREE that Fonality has modified and currently sells? <a class="jive-link-external" href="" target="_newWindow"></a> <a class="jive-link-external" href="" target="_newWindow"></a>

<a class="jive-link-external" href="" target="_newWindow"></a>
Posted by kieranmullen (1070 comments )
Reply Link Flag
Don't forgot Trixbox which is also based on the free open source asterisk. It bundles the freepbx web interface to configure your asterisk with little to no linux knowledge.

<a class="jive-link-external" href="" target="_newWindow"></a> - Free open source IP-PBX
Posted by df503 (3 comments )
Link Flag
Small businesses getting ready
I think small businesses are interested and ready. but as always, you have to be cautious enough. Murphy's law is always ready to act.

When you see events like the one organised by Profoss (<a class="jive-link-external" href="" target="_newWindow"></a>) titled "Asterisk and VoIP" ( <a class="jive-link-external" href="" target="_newWindow"></a> ), I think it shows the market is ready and interested to evaluate the options available.
Posted by raphinou (9 comments )
Reply Link Flag
Magicjack is an option...
Magicjack - the usb dongle that gives a dial tone is one option for telephone calls via VOIP.

Ramon Ray, Editor &#38; Technology Evangelist,
Posted by rayramon (3 comments )
Reply Link Flag
Skype Outage
Skype or Hype?

The scary thing is that people actually believe that Skype is actually a small business product.
It isn't and never was intended to be. Fact is it will work on any PC that has an internet connection, but that isn't the qualifier for small business when it comes to a reliable service. Small business looks first at price, then reliability, but will always go with price until you have a 2 day outage, then and only then do they understand the damage it causes.

There are still low cost solutions to help small business's, that don't get the attention they need from a Skype. Small business, needs simplified billing, customer service, reliability, and features that will extend their business to the customer base.

Skype doesn't answer this question, and most business's know this, but the internet community doesn't understand the value proposition in this regards. Skype would barely rank as a qualified Residential product, much less run your business on it.

The answer to the question is " HYPE"
Posted by jrothell (2 comments )
Reply Link Flag
Consider A Hybrid Model
There's a place for Skype in business, and it doesn't have to be an all or nothing proposition. My recent experience working with a small business customer:

1) I was able to save my client $6,000 a year on phone charges by renegotiating their contract with a mainstream, traditional dialtone provider. Insteading of paying exhorbitant per-minute charges for in-state and out-of-state long distance, they now just pay one fixed price for all-you-can eat service. This is standard telephone service, regulated by the PUC, and includes 911 support.

2) Even with the new rate plan, the carrier's per minute charge for international calls is too expensive. So I bought a couple of Linksys Skype phones for the employees to use when they make those calls. Skype-to-Skype international calls are completely free. Skype-to-landline/cell calls are just a few pennies a minute vs. our carrier's 30 cents a minute. After a couple of international calls the phones have paid for themselves in LD savings. An added benefit is that the Skype phones are cordless, which is handy for walking around the office when you're on a call.

3) By having two carriers, one providing traditional dialtone and one providing VoIP, we have some measure of redundancy in case of phone failure. Not 100% redundancy, but better than a single point of failure.
Posted by Stating (869 comments )
Link Flag
VOIP is fine if you have a reliable system
Don't depend on cheap solutions.

A well managed network can handle VOIP with no problems whatsoever.
Posted by MSSlayer (1074 comments )
Reply Link Flag
Every technology has caveats
Small business/large business - all have to understand the technology before deciding what's best for their case. If public internet IP Telepphony is OK for you, then you understand that there is no gaurenteed QoS. On the other hand, securing your own dedicated resources via a traditional vendor or from a new SIP vendor gives you PSTN quality at the same reliability as aything else out there. And please, Cell service is not in the same league. People understand and heck, even expect to drop calls/get dropped or endure long pauses or get rejecdted when trying to make calls.

It's all about understanding the caveats of the technology. Right?
Posted by rdooba (2 comments )
Reply Link Flag
Skype a public internet service.
One has to remember that Skype is service that runs on the public internet. So therefore it is not possible to guarantee reliability. This is entirely different from running voip on a private intranet. There is some things Skype could do such as deploying it's servers at critical locations such as major ISP's.
Posted by rshimizu12 (98 comments )
Reply Link Flag
I purchased a PBXtra system for our office nearly a year ago and it has proven itself to be a dependable product. As a CPA office with 13 employees, the flexabilty and ease of use has been wonderful. A similar system would have cost over $10K, but Fonality came in just under $6K out the door. The most amazing thing was the ease of setup. First you plug it in, then push the power button and it just works. My clients in the Telecom business couldn't believe it.
Posted by cdebutts (1 comment )
Reply Link Flag
Try Unia Telecom, VOIP alternative
Unia Telecom - sounds like they're the good guys. at least they try. visited the site <a class="jive-link-external" href="" target="_newWindow"></a> and also called them and was surprised to learn their whole operation is US based, unlike the other providers quick to run to India. they seem to be very well footed and reliable..tested the service too.
Regardless, the fact that they give a percentage of their earnings to humane / humanitarian causes will definitely serve them very well in the future...thinking of signing up for the service....

Shelly G.
Posted by Astonct (12 comments )
Reply Link Flag
We started to offer small business voip to our customers a little while ago. Please feel free to let us help you find the right voip service -

Posted by BroadBandBuyer-com (5 comments )
Reply Link Flag
Part of the problem is installation services. It can be difficult to get these small business voip systems up and running. Usually the router and switches will need to be swapped out and voice will need to be prioritized. To fix this we now offer free setup with our RingCentral packages.

Posted by managedadmin (1 comment )
Reply Link Flag

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