How To Understand And Understand The Value Of Voip

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1 White Paper VoIP Primer Five Technology Basics SMBs Need to Understand Contents Executive Summary....2 Five Technology Basics for VoIP....3 Basic #1 - VoIP is data....3 Basic #2 - VoIP uses a different network than legacy...4 Basic #3 - VoIP is packet-switched....5 Basic #4 - voice is real-time....7 Basic #5 - VoIP is still evolving....8 Conclusion....9 About Ziff Davis B2B Ziff Davis B2B is a leading provider of research to technology buyers and high-quality leads to IT vendors. As part of the Ziff Davis family, Ziff Davis B2B has access to over 50 million in-market technology buyers every month and supports the company s core mission of enabling technology buyers to make more informed business decisions. Copyright 2014 Ziff Davis B2B. All rights reserved. Contact Ziff Davis B2B 100 California Street, Suite 650 San Francisco, CA Tel: Fax: marty_fettig@ziffdavis.com

2 Executive Summary Chances are when you first heard of VoIP, you thought this would be a great way to reduce telephony costs. In most cases, this proves to be true, but there is more to the story, especially once you consider how VoIP differs from legacy service. VoIP has taken a different evolutionary path than legacy, and while the services have many basic equivalencies, the value propositions diverge beyond that. To properly assess the business value of VoIP, you need a foundation in the basics, and that is the purpose of this primer. The underlying technologies are complex, but you don t need to go that deep to understand the nature of VoIP and how it can do things that legacy telephony cannot. VoIP is the product of a different era for communications technology, and has the benefit of many innovations that did not exist when the PSTN was developed. For that reason, VoIP offers value beyond everyday telephony, and if that is important in your decision-making process, this primer will be very relevant. Based on our ongoing research, five basic elements of VoIP s technology have been identified for analysis, and we believe these will greatly strengthen your understanding as to both how and why VoIP will be good for your business. ziffdavis.com 2 of 9

3 Five Technology Basics for VoIP VoIP has been a commercial technology since 1995, but it has only recently reached a point where businesses can rely on it as their primary mode of telephony. The underlying technology is very different from legacy telephony and not well understood. This section addresses five technology basics that will help you better understand why VoIP is different and how this impacts the value you derive from it. Before speaking to those, the term itself provides some clues. The VoIP acronym has two components voice and IP. When compared to legacy, voice is a proxy for telephony, meaning that VoIP service is meant to replace the TDM service you get from your telecom provider. As will be explained later, however, telephony is just one mode of voice in an IP environment. IP is the second component, and refers to Internet Protocol. This is a clearly-defined set of standards that allows data traffic to traverse not just a single IP-based network, but be handed off from one IP network to other IP networks. With this standard in place, the web as we know it exists, serving a multitude of needs for anyone with a broadband connection. Taken together, these two components form VoIP, a service that is optimized for using voice over data networks. Basic #1 - VoIP is data Any discussion about VoIP technology basics really needs to start here. Surprisingly, this cornerstone concept is poorly understood and is at the root of many problems that could be mitigated otherwise. The more deeply entrenched the legacy mindset, the more likely you will associate telephony with voice communication. In absolute terms, this is true, but the opposite is not. Telephony has always been voice-based, especially if you consider its origins. Prior to telephony was the telegraph, which operated on the same principle of sending an electrical signal over a wireline connection between two parties. Just as the telegraph was a revolution in communications technology, so was telephony that quickly replaced it. Once inventors figured out how to transmit voice over a wire, there was no going back. Not only was voice a better way to communicate than tapping out dots and dashes, but it provided two-way, real-time conversation. This historical sidebar is important, because that fundamental shift has remained in place for over 100 years, and has only recently been challenged by VoIP. With the exception of fax, the network that supports telephony is about voice this is its primary function, and the PSTN delivers a consistently great experience. With VoIP, the inverse is not necessarily true. In other words, telephony is just one voice mode with VoIP. Landline telephony may be the driver for businesses built around VoIP, but voice can just as easily be routed over the Web to PCs or via WiFi to mobile devices. Since VoIP travels over data networks, any broadband-enabled device can be ziffdavis.com 3 of 9

4 used as an endpoint for voice. This is very different from legacy telephony, where calls can only be routed to endpoints connected to the PSTN. Purpose-built networks are great for their intended purpose, but they don t adapt well to change. VoIP, on the other hand, is built from the ground up to run over data networks, and this requires a fundamentally different technology. In order to do this, VoIP must be transmitted in the same digital format as other forms of data. Voice signals become converted to bits and bytes, and are really no different than other forms of digital media, such as , chat or video. They all flow over the same network in the form of data packets, and through the magic of IP-based technologies, they arrive at their destination the same way they were sent. Once you understand that voice is data, your thinking about telephony changes. With legacy service, telephony is provided over a dedicated network that functions independently of your data network. This requires your business to support two parallel network environments one for telephony, and one for everything else. This is very evident by looking at any desktop, which typically has both a wireline desk phone for voice, and a computer again, for everything else. VoIP renders this model obsolete, since it now becomes possible to route all modes of communication through one network your data network. In this world, there is no need to view telephony as a standalone function, especially considering the associated costs. The key here is that VoIP has re-invented telephony around being a data application rather than being a voice application. This is the first step to unlocking VoIP s potential, and the story becomes stronger when tied into the next basic. Basic #2 - VoIP uses a different network than legacy This was touched on above, but more discussion is required. To varying degrees, any business using legacy telephony must manage two networks voice and data. This arrangement has served businesses well, since the underlying applications were different and there really was no need to integrate them. Telephony existed long before the advent of computers, and businesses managed perfectly well relying on the phones, typewriters, the mail, and later, various forms of electronic facsimile or copying technologies. In the 1960s, computers gave rise to the IT role, and with that, the critical functions of a business were built around the data network. Except of course telephony, which remained in its own universe until the Internet came along. During this time, there was no alternative to the PSTN, so businesses had no reason to consider other models for managing information. Telephony was a monopoly in those days there was just one phone company and one network. The Bell System had absolute control over everything, especially prior to digital service, when phones were hard-wired to the wall and they even owned the phones on your desk. ziffdavis.com 4 of 9

5 This all changed in 1984 with the deregulation of telephony in the U.S., and subsequent breakup of AT&T. Out of this came an unprecedented wave of investment and innovation, with VoIP being one of many byproducts we take for granted today. In parallel with VoIP s emergence came the Internet, and together these provided the basis for an alternative to legacy telephony. You may recall that the early days of the Internet were powered by dial-up service, ironically provided by the incumbent telcos. However, they weren t doing this to cannibalize TDM the business opportunity was in providing a connection for subscribers to surf the Web. This was actually a great boom for telcos since a dedicated phone line was required, so customers had to sign up for a second line to go online. Broadband came many years later, but only once the telcos were convinced there was enough content on the Web that would warrant subscribers paying more for a faster data connection. This rudimentary world may seem idyllic compared with today s Gigabit Ethernet, but the back story goes a long way to explaining why voice has been separate from data for so long. Now that everyone has high-speed broadband not to mention equally effective mobile options it s easy to wonder why we need a separate voice network at all. Not only is it redundant if you re using VoIP, but it s expensive to operate. As legacy service gives way to VoIP, the expertise honed over several decades in managing the complexities of TDM will become harder to find, especially since today s engineers are only steeped in IP. Going forward, then, the idea of all fixed line telephony running over your data network is not only inevitable, but even desirable. One network is easier to manage than two, and with that come many cost efficiencies that any business would welcome. Basic #3 - VoIP is packet-switched The fact that VoIP runs over a different network than legacy telephony is just one way that these services are different. Another important difference is the first basic in this section. Thinking of VoIP as a form of data may seem counterintuitive, but that is how it looks to an IP network really no different than the other streams of digital media being carried. This isn t to say voice is any less special compared to legacy telephony. Rather, the same service is being provided, just using a different technology. Purists can debate whether VoIP really is the same as TDM, but certainly at a high level, they re pretty interchangeable. There certainly are trade-offs with each service, and VoIP still has work to do to match the quality that TDM is rightfully lauded for. However, when businesses are paying for VoIP, they re doing it to replace TDM, and for this to be a good decision, you need to know what you re getting. In that regard, packet-switching is another key basic, and further explains how VoIP is a form of data. For any type of media to be routed over a data network, it must ziffdavis.com 5 of 9

6 first be digitized and represented as bits and bytes. Once in this format, the network can transport them in a highly efficient manner, and this largely accounts for VoIP s compelling economics. More specifically, this format is a packet, which is analogous to boxcars on a train. Each packet contains a payload of data, which consists of the raw information being transmitted along with very specific routing instructions. Packets are really benign vessels they don t make any decisions, and just follow the directions provided by the originator sending the message, along with those of the network operator based on what s optimal for them. Unlike a train, however, packets do not typically follow a straight path to their destination. IP networks of which the public Internet is a big part are built on a common set of standards (Internet Protocol) which allows them to seamlessly share traffic. The result is massive web of connections that makes high-speed, low-cost communications a reality for pretty much everyone with access to broadband. What makes packet-switching so important is ability to travel across any set of these connections based on the most efficient route available at a point in time. The switching occurs when packets make hops from one IP network to another, and will keep doing so until the destination is reached. As such, a VoIP call to a co-worker two blocks away may in fact, make several hops and zigzag halfway around the world. Not only that, but not all the packets used for that call will follow the same path. Each may take a distinct journey, but when they ultimately arrive at their destination, they are re-assembled in the right sequence. In simple terms, this describes the complex nature of VoIP, as all of this happens at a speed that allows your voice to be heard just as it would with legacy telephony. This really is magical when you consider the complexities involved for a real-time mode like voice. There is a small window of time for all this to happen and the caller not notice, and while we can tolerate an taking a few seconds to be received even thousands of miles away telephony has to be nearly flawless. VoIP is actually far from flawless, and we ve all had poor experiences, such as dropped calls, echo in your voice, or a stutter-stop pattern, which is known as jitter. All of these occur when packets don t traverse the network as instructed they get lost or dropped, end up at the wrong address, or get re-assembled in the wrong sequence. Packet-switching is fundamentally different from TDM, which uses a different method called circuit-switching. With VoIP, a call is broken down into a series of packets. When voice signals are converted into a digital format, the raw content cannot be carried by a single packet. Instead, the content is chopped up into discrete segments and transmitted by as many packets as needed to complete the call. Circuit-switching works on the principal of a call being a continuous series of electrical ziffdavis.com 6 of 9

7 pulses that flow in real-time between two parties. To enable that, a dedicated circuit is established, over which these signals travel back and forth between the callers. While this makes for a high-quality experience, circuit-switching is costly, since each phone call requires one of these dedicated connections. Data networks operate very differently from voice networks, and the bottom line is that packet-switching is a far more efficient model in terms of utilizing network resources. Even though a local VoIP call may travel around the world to be established, the flow of data packets is more cost-effective for a carrier than using circuit-switching for a legacy call. Basic #4 - voice is real-time Perhaps lost in this discussion is the real-time nature of voice. There is a good reason why it has taken nearly 20 years for VoIP to become good enough for businesses to rely on. We take it for granted that the phones always work and the quality will be consistently good. Before continuing, let s specify that this analysis pertains to landline telephony only. Mobility is a different situation altogether, and that is better left for another primer analysis. The PSTN also took decades to evolve, but we have long been accustomed to high quality telephony. This quality comes at a cost, since the engineering challenges are quite complex. Basically, telephony works as well as it does because calls run over a purpose-built network. The PSTN does voice extremely well because that s what it was built to do. A key reason why telephony is hard to do is the need to deliver this quality experience in real time. This is what the value proposition for legacy telephony is built upon, since the immediacy of voice is what matters most. Otherwise, people would choose other modes to get in touch. This imperative holds for VoIP, and represents its biggest challenge for getting taken seriously. The main reason is that unlike the PSTN, IP networks were not purposebuilt for voice. They have always been built and optimized for the transmission of data, broken up into small packets and whisked across the ether at wire speed and at virtually no cost. As explained in Basic #1, VoIP is data, so it s fair to counter and wonder why there is a challenge. The concern is valid and can be addressed by adding another layer to our analysis. Although VoIP is data, not all forms of data are created equal; and this brings us to the real-time nature of voice. IP networks were built for data, not for voice, and the idea of making telephony an application in this environment came along well after other uses were established. These other uses have to do with transmitting text and image-based forms of information over IP networks in the same packets used for VoIP. However, the main difference is that these initial uses were not as time-sensitive as voice. At best, near ziffdavis.com 7 of 9

8 real-time speed was expected, but for the most part, no standards were needed since these forms of data arrived in plenty of time to keep people happy. Nobody complains if an takes 10 seconds to arrive instead of 3 seconds it s fast enough, especially for a free service. For these purposes, businesses are more concerned with the cost of transmission being low rather than being tied to a real-time delivery benchmark. More importantly, the content in these packets is static once delivered, they are usually just read or viewed. Voice, on the other hand, is dynamic, with many complex nuances that only the human ear can detect. VoIP s biggest challenge is to replicate these nuances in a digital fashion so voice packets can be routed over data networks. Achieving those results in real-time is the only way VoIP will be accepted for business use, and it has taken many years to get there. When your data network is properly optimized for VoIP, and your business chooses the right solution, the real-time performance of VoIP is almost impossible to distinguish from legacy telephony. Basic #5 - VoIP is still evolving While this statement sounds rather benign and amorphous, it may well be the most important technology basic to consider, especially in contrast to the PSTN. Legacy telephony had a lengthy evolution path of its own, but once perfected in the 1970s, very little has changed since. The last innovation of note was the transition from analog to digital service, which is best exemplified by the change from rotary dial to push-button phones. The 10 digit keypad hasn t changed since, and all forms of interaction with the service remain limited by the 1-0 number sequence along with the * and # buttons. Legacy service may still be very reliable and high quality, but the Internet has been with us for a while, and the communications landscape has opened up considerably. As noted, VoIP also took a while to evolve, and it still has work to do. The bar for telephony performance was set very high by the PSTN, and today s VoIP is getting close, but at least is good enough for businesses to rely on. While it s certainly acceptable for businesses to stick with legacy since it performs so well, there is a bigger picture to consider in terms of telephony s role in the overall mix of communications tools. So far, VoIP s evolution has been based on replicating legacy service and offering it at a lower cost. Again, this may be all that businesses are looking for, but longer term, what makes VoIP exciting are the possibilities that go beyond this. Since VoIP runs over the same data network as other communications applications, there is untold potential for new ways to use voice, not just on its own, but integrated with other modes. This takes us into the world of Unified Communications, and we have published a number of guides and primers on UC for further reference. ziffdavis.com 8 of 9

9 For purposes of this primer, the main idea is to view VoIP as a young technology that is still maturing, and as the Web and cloud-based services become more advanced and standardized, VoIP will grow along with it. In time, the PSTN will fade away, especially since it will have little value operating in its own world independent and unconnected to everything else moving forward around it. Conclusion VoIP is no different than any other new technology in that the more you know about it, the better decisions you re going to make. If you have a long history with legacy telephony, VoIP may be difficult to understand even intimidating but you don t have to know it inside-out. There are really two reasons for this. First, if VoIP is new to you, a basic primer is in order, and that is the purpose of this guide. In this context, our guide serves a basic, vendor-neutral educational purpose. There s a second reason that may not be so obvious. If you ve had a good history with legacy telephony and especially if you have a lot invested in legacy infrastructure and legacy vendor relationships it s easy to see how one could be dismissive of VoIP, citing it as an inferior technology that could never match TDM. That thinking has some basis of truth, since the early days of VoIP were just that way, and it was hard to see then how businesses would ever take it seriously. A lot has changed since then, and for this audience, our intention is to dispel some inaccurate notions and explain why and how VoIP is different. Our position here is not to judge and say VoIP is better it s definitely different, and in many regards is better aligned with where today s technologies are going. You are the best judge as to what s best for your business, and all we can say is that the broader and longer view you take, the more the stars line up for VoIP. ziffdavis.com 9 of 9