VOIP / Internet Telephony:

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How VoIP Works

It is imperative that senior business managers understand the basics of how and why IP Telephony and VoIP will benefit their organisations. Hence we have outlined our interpretation in a non-technical manner and either a TeleBiz representative or your preferred IT consultant/manager can fill you in on the finer details.

Imagine you are a frequent regional, interstate or international traveller with a notebook computer and can readily access the internet — this could be via a WiFi connection at fast food outlets, hooking up at an internet café, or connecting to broadband at a friend’s home. Isn’t it amazing that you can access the internet to send or receive email messages for a small fee, normally amounting to several cents?

Now take a step backwards and consider how on earth someone can send you an email from one side of the world to you specifically. The answer is that every email address has what we call an IP address, similar to an electronic serial number (IMEI number) on a mobile phone. And instead of sending emails over a traditional telephone line with traditional billing, your messages are sent in packet sized data over the internet to your IP address.

An IP telephone is a telephone with an IP address which means calls can be sent and received over the internet or via your organisation’s VPN (Virtual Private Network), LAN (Local Area Network) or WAN (Wide Area Network).

For example, a customer operates a business headquartered in Sydney with an IP PABX (IP telephone system). The owners daughter is studying in London and she has an IP phone connected via an IP address to her dad’s PABX in his Sydney office and consequently the two can talk all day for just a few cents, if that. This same business owner has an associate in South Africa with another IP telephone connected to the PABX in Sydney and again they can chat all day if they wish to, for next to no cost.


IP Telephony/VoIP pricing is excellent however there are many other advantages. These include:

  • Centralised reception e.g. for call centres such as emergency services and hotel reservations
  • Centralised call accounting
  • Centralised IT&T system management
  • Compatibility with CTI (Computer Telephony Integration) software
  • Converging voice with videoconferencing and other data simultaneously in rapid transfer mode
  • Peace of mind in knowing that your telecommunications systems are future proof
  • Unified messaging — the ability to provide messages to you wherever you are
  • Utilising an IT network to transmit voice reduces establishment costs and ongoing maintenance

IP Telephony case study using voice over existing data cabling

Several years ago a school installed data cabling into every room for their computer network and two years later decided to upgrade the telephone system so that each classroom has a handset extension. Rather than the school spend potentially thousands of dollars installing separate telephone extension cabling, the answer was to install IP extension handsets and transmit calls by sharing the existing data cabling in place for the computers. The outcome was the school saved big $$$, upgraded to a future proof platform which is easier to manage and significantly less expensive to maintain. than a traditional telephone system.

Encumbent Telco carriers have done their best to denigrate IP/VoIP because it erodes their traditional revenue streams. But consumers are not stupid and it is interesting to note the big telcos rush to ramp up their internet (broadband) capabilities because it is on this platform that they can ultimately sell their future IP/VoIP solutions.

The future of IP/VoIP

As demonstrated by the Australian Governments’ commitment to the National Broadband Network (NBN), Governments worldwide are recognising the importance and added value of IP/VoIP to organisations and the community at large. Therefore, we can expect ongoing development and advantages in utilising IP/VoIP. Smart Mobile phones such as iPhone and Android devices are already VoIP Compatible and call costs will spiral downward as a result.

Our summary of IP/VoIP

IP Telephony and VoIP is cheaper, more flexible and all new PABXs are designed to accomodate IP/VoIP. As far back as 2007, 75% of America’s Fortune 500 companies utilised IP/VoIP, and fast forward to 2011 we would expect 100% VoIP adoption. At TeleBiz, we believe it is inevitable all organisations will migrate across to IP Telephony/VoIP. At TeleBiz, our phone bill to Telstra was reduced by over 40% after installing VoIP lines for our outgoing calls. Understandably, TeleBiz believes all of its PABX customers should upgrade their systems to include IP Telephony and VoIP.[/box]

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