A decade ago, Voice over IP (VoIP) - aka Internet telephony - was all but unknown, until a small Israeli company called VocalTec launched a range of full-length ISA cards for PCs that allowed companies to pump their voice calls across the Internet.
Despite the fact that the ISA cards cost almost as much - and had more processing power - than their host PCs, they were a great success, as international phone calls were still relatively expensive.
Fast forward to today, and the processing power of the average PC has gone through the roof, with the result that a single PC/telecoms card can now handle several dozen VoIP calls at the same time.
This dramatic upswing in processing power has opened the doors to VoIP telephony to even the smallest business although, generally speaking, the larger a business is, the more phone lines it has, and the greater the savings are from moving to VoIP telephony.
Companies also have a choice with VoIP. They can either migrate to a complete in-house VoIP system - from around £6,000 and upwards - or use the lower-cost approach of having their telco or Internet service provider (ISP) process the calls.
Whichever VoIP system a company employs, the rapid rollout of broadband in the UK is helping matters immensely by making VoIP telephony available to businesses in all but the most remote of locations.
VoIP is not just about discount long distance and international calls, it's about zero-cost inter-office calls, which are routed wholly across the Internet, rather than the regular phone network.
Long distance and international call costs are reduced with VoIP, because the carrier routes calls across the Internet, returning them to the regular phone network very close to the destination.
For international calls, this usually involves `out-dialling' the call in the destination country, something that can result in call quality improvements, as well as significant cost savings.
Care needs to be taken, however, in choosing the right VoIP call carrier, as, just as with `regular' phone calls, selecting the cheapest carrier sometimes results in poor call quality.
However, given that basic VoIP phones now cost from around £50.00, it's not that difficult to realise that the cost of a VoIP telephony system for a typical office is a lot less than the cost of a landline installation.
Wireless VoIP to unplug calls
Companies can also buy cordless VoIP handsets which, although costing three to four times the price of a typical VoIP desktop phone, can be used wherever there is a WiFi (802.11b) wireless LAN network.
Early WiFI cordless phones suffered from a slight call transmission delay - a bit like satellite phone calls in the 1970s and 80s. This problem, which was caused by packet latency issues, has largely been conquered today.
With BT Openzone (www.btopenzone.com) offering access to around 10,000 WiFi access points around the UK, a wireless VoIP handset offers a number of cost and routing advantages for both incoming and outgoing calls.
Voice over WiFi is, however, still very much in its infancy in the UK, so care needs to be exercised in the choice of equipment. A good supplier that can advise on this subject is essential in this regard.
From the foregoing, it clear that a VoIP telephony system offers advantages such as improved call management and better use of IT resources, as well as the expected call cost savings.
These savings are such that, even in the UK, which enjoys some of the lowest national and international call costs in the world, the payback on a typical office VoIP installation is relatively short.
In fact, compared to a regular landline installation, such as BT's Featurephone service, a VoIP system can be cheaper to install and run, although some high-end VoIP systems have the same installation costs as with a conventional PBX.
Getting the right number
Routing outbound voice calls across the Internet is all very well, but what about inbound calls? How do customers dial in? In the UK, depending on the size of the business, this can be achieved by the use of an 0870 (national rate) inward dial number - for landline users to call `in' to your VoiP phone.
A growing number of VoIP suppliers can also supply regular (geographic) numbers for inbound calls. This can be useful for those companies that want to establish a `presence' in multiple areas and/or countries, even though the calls end up at their main office.
Reliability & contention issues
Some critics of VoIP point to higher call failure rates than with conventional landline technology. Whilst such criticisms were valid a few years ago, significant strides have been made to the point where VoIP and conventional landline call failure rates are almost the same.
This is hardly surprising, as telecoms carriers are now using VoIP technology on their own networks, with the result that more than half of all conventional UK voice calls are routed across an IP network in one form or another.
Generally speaking, a typical VoIP call using an IP desktop phone needs about 64,000 bps of available bandwidth in each direction.
In theory, a basic broadband circuit - operating at 512 kbps on the downlink and 256 Kbps on the uplink - can support up to four simultaneous VoIP calls, but this does not take account of the fact that broadband connections are usually contended (shared).
Consumer broadband lines are contended on a 50:1 basis, whilst business broadband lines reduce the contention ratio to 20:1. It's a little-known fact that landline phone connections are also contended, typically on a 10:1 to 20:1 basis.
For this reason, if more than five per cent of landline phone users pick up the phone to make a call at the same time, problems - usually in the form of a delay until a dialling tone is heard - start to occur.
On broadband, the effects of contention at very busy times are more subtle. Users can still use their broadband connection, but the available bandwidth is reduced on basic systems.
On higher-end systems, and where the supplier has taken precautions, this situation can be largely avoided.
A good installer will configure a VoIP system to fall back to lower bandwidth requirements if the available bandwidth is under pressure.
Call bandwidths can fall quite markedly before the effects are apparent to the average user. To give you some idea of the bandwidth reductions that can be tolerated, let's take a cellular phone call as an example.
On a typical cellular call, the handsets user around 11,000 bps of the cellular bandwidth - under 20 per cent of the bandwidth used on a typical VoIP conversation.
If broadband contention is a problem, then a growing number of Internet service providers can offer lower contention broadband connections. On more than 800 BT exchanges across the UK, in fact, a number of ISPs now offer SDSL connections on a 1:1 contention ratio.
SDSL (synchronous DSL) differs from the widely adopted ADSL (asynchronous DSL) broadband most home users are connected to the Internet with in that the uplink speeds are the same as the downlink.
Whereas a 2 Mbps ADSL circuit operates at 2 Mbps on the downlink and 256 Kbps on the uplink, a 2 Mbps SDSL operates at 2 Mbps in both direction, making it ideal for use with VoIP technology.
The fact that a growing number of voice calls now route across the Internet has raised the issue of call security in some circles.
In theory, anyone with sufficient knowledge could tap into a VoIP call as it routes between the user's VoIP phone and the IP telephony gateway. The same could be said of traditional circuit-switched calls, where a tap could be applied at several points on the office PBX.
Once the VoIP call progresses past the IP telephony gateway, however, easy access to a VoIP call disappears, as tracking the data packets that make up a call is a mammoth task.
Much more difficult, in fact, than tapping into a regular phone circuit on the BT network.
It's ironic to realise that so-called `off-premises' phone taps, which are routinely provided by BT, usually under a court order, have no equivalent as far as VoIP calls are involved.
Small wonder, then, that the FBI has expressed concern over its inability to work with US telcos on tapping VoIP telephony calls.
It is only because VoIP calls are still in their early stages of development in the UK that MI5/6 have not made similar complaints on this side of the Atlantic.
Looking to the future
The take-up of VoIP telephony, whether landline telcos such as BT are ready for it or not, is set to soar in the next few years.
Companies which have their own PBX, no matter how small, can also buy a `black box' addition to allow VoIP calls to interface directly with landline calls on the company PBX.
Choosing a `black box' addition to a company PBX is a complex matter and, as with all matters involving VoIP technology in all but the smallest of small businesses, it pays to take advice from a reputable supplier, as the consequences of not doing so can be costly.
The cost savings from moving to VoIP can, nevertheless, be quite significant, which perhaps explains why a growing a number of UK companies are moving their telephony systems over to VoIP.
And the conventional telcos are starting to notice. A report released in February by IDC says says that revenues from voice telephony are now declining in most European countries, mainly as a result of VoIP services.
IDC estimates that the European fixed-voice market will decline from $108 billion in 2003 to $95 billion by 2008, an annual contraction of three per cent a year. This is despite the total telephony usage amongst consumers and businesses being expected to rise by a similar amount year-on-year.
From his base in Sheffield, England, Steve Gold has been an IT journalist specialising in communications and security for 22 years, 18 of them full-time.