2 2 The World is VoIP: Cue the Soft Phone Revolution. The technology of telephone communica on is comple ng a revolu on that began over 40 years ago. That revolu on is the digi za on of the phone system or more commonly referred to as Voice over Internet Protocol or VoIP. Without the average consumer realizing it, the vast majority of our phone calls are, at some point in their life, digi zed and de-digi zed. The copper wire installed by telephone companies leading to businesses and houses is the last ves ge of the phone system as it has been tradi onally understood. In the next few years, even that ves ge will disappear and the world will be an en rely VoIP world. At the same me tradi onal phones are increasingly going digital, digital computers have increasingly become more telephone capable. Computers have grown to include microphones and speakers like phones; and programmers have wri en so ware to allow voice communica- ons over networks to which most computers are now connected. We are now at a point most computers and tablet devices can serve as a primary phone. Introduction The reason for this revolu on is simply that VoIP is notably cheaper and more efficient than tradi onal phones. As the technology of VoIP has grown, it has also become higher quality and more flexible as well. The flexibility of VoIP, enhanced by the standardiza on of VoIP protocols, is giving companies and consumers unprecedented control over their phone infrastructure par cularly in the area of connec vity and disaster recovery. As VoIP completes its take-over of the world of telephones, businesses le with some big ques ons: How can they maximize the benefits of communica on in a VoIP world? Can they develop the exper se needed to navigate this new world? Are separate phones even necessary anymore? The following pages provide detailed explana ons of the tradi onal phone, VoIP, some comparison of the upsides and downsides of the two, reasons it is impera ve to prepare for and maximize u liza on of the VoIP world now, and finally, guidance on naviga ng conversion to the VoIP world.
3 3 Contents 2 Introduction 4 Traditional Telephones 4 Voice over IP 5 The Internals of VoIP Codecs Soft Switches & Call Routing Transport & the SIP Protocol Security 6 VoIP in the Corporate Market Quality of Service Soft Phones 7 VoIP Advantages VoIP is cheaper VoIP sound quality is be er VoIP is more secure Down Side of VoIP Emergency Calls Interoperability Costs of Delaying Migration Loss of savings 8 Loss of VoIP abili es Limited me to build ins tu onal knowledge Final Analysis Green Key Technologies About the Author
4 4 Traditional Telephones Those of us old enough to have been bored as children (Pong was only so interes ng) probably put a hole in each of two n cans and connected them with a string. When stretched ght, one could whisper into one end and the person on the other end could hear every word. In principle this contrap on is a telephone though one that relies on different physical principles to operate than what we think of as telephones. Convert that string to a copper wire and those cans to electronic microphones and speakers and we have a basic telephone system. When telephones first came into commercial existence, they weren t much more complicated than this, but slowly telephones went through many changes. A switch hook was added so they weren t on all of the me. The ba ery was removed and the line itself was powered. A crank, then a rotary dial, and a keypad was added to allow users to route their own calls. However, the biggest changes in telephone technology have occurred well out of view of customers. Once a call reaches an exchange, it is digitalized for sending around the globe. Understanding why companies do this and what it means for the future of telephony is detailed more in the rest of the paper, so we will hold off for the me being. Outside of digitalized signals and automated switching there haven t been many changes to tradi onal telephones for a century and a half. While we have all heard of computer geeks using the internet to make phone calls, ini al forays into internet calls were choppy, undependable, and frequently dropped. However, all of that has changed with recent advancements in technology. Voice over IP If we wanted to create a simple n can model of Voice over IP or VoIP, it would be a decidedly complicated affair. VoIP relies on digi zing a voice and sending the informa on over the internet, then de-digi zing it to project out of the speakers on the other end. In essence, VoIP is a computer-based imita on of tradi onal telephones, yet it does so more efficiently and even more clearly than tradi onal phones. Yet there are important and confusing dis nc ons between the two which we will explore. To do so will require a be er understanding of VoIP The first forays into VoIP started with computer geeks trying to avoid long-distance charges by digi zing voice data and sending it over the public internet in the early-1990 s. The setup involved two computers with microphones and sound cards and an internet connec on simula ng a phone. The result was a ji ery mess by today s standards, but the experiment encouraged a range of par cipants including corporate users. Cri cally, Cisco, Nortel, and others developed routers capable of digi zing and de-digi zing VoIP packets for integra ng with tradi onal phone lines, a.k.a. the Publicly-Switched Telephone Network (PSTN), so a VoIP call could go out to non-voip phones. Once this occurred it was only a ma er of increasing the quality of calls. With be er protocols, high defini on audio and widely available broadband, VoIP has come to surpass the PSTN in quality and reliability.
5 The Internals of VoIP Codecs In the analog phone, a hardware device (the microphone) converts the acous c sound into an electric signal along the copper wire. Obviously, we need a similar process for VoIP, but in this case we need to convert the electric signal from the microphone into a digital signal for transmission. This is accomplished using a piece of so ware called a codec short for coder-decoder. A codec samples the user speaking several thousand mes a second for a digital reproduc- on of the voice coming through the microphone. It isn t necessary to go too deeply into codecs, but suffice it to say, they sample, sort, compress, and digi ze into packets the audio coming from the microphone very quickly and then dedigi ze, decompress, and rebuild the audio to send to the speaker. 5 Soft Switches & Call Routing A switch is a device that routes the digi zed audio packets to the right loca on. A switch can be a physical device or an increasingly common approach is to use a so ware process called a so switch. The main objec ve of a so switch is to send the packets to the correct IP address in the internet universe. Because some IP addresses are sta c while others are dynamic the so switch must constantly check the database for updated loca ons. On top of remembering all of the IP addresses for our friends so we don t have to, the so switch needs to know which of a user s telephony devices is currently in use and route to it or perhaps to all of them at once. The so switch can determine all of this useful informa on using a key advancement over telephones: user names and passwords! Tradi onal telephones never ask anyone to login before ringing. They just ring at a fixed loca on. VoIP requires users to login so the so switches know where to route traffic. The key benefit here is you can have a VoIP call routed to anywhere you are in the world. Transport & the SIP Protocol When informa on is sent across the internet it is broken down into smaller hunks for a number of reasons all of which combine to make the internet feasible. VoIP call traffic is no different. In fact, the IP in VoIP stands for the same IP in TCP/IP, the primary protocol for internet data transmission. However there are a large number of ways to break-up the voice signal using that protocol, so we need another protocol to handle the transmission of voice data and the signaling to the other computer. In certain cases, like Skype, the calling universe is a closed system, so everyone is using the same protocols from the same company. More commonly, a set of agreed upon protocols is used to handle all of these interac ons. The more common and arguably most efficient is SIP or session-ini ated protocol which is a set of protocols for handling VoIP calls between computers poten ally with different so ware providers. Security In order to keep conversa ons safe from hackers, VoIP requires security. VoIP security technology is really the same for crea ng secure websites, but instead of crea ng a single connec on between computers, it creates a full network between computers known as a Virtual Private Network or VPN. VPN technology has been used widely by corpora ons for securely integra ng external users into its compu ng environment. VPN at its most basic is an encryp on protocol which means it takes ordinary data and writes it in a specifically convoluted manner which can only be de-convoluted if the receiving party has the encryp on key which specifies how the original data was convoluted. VoIP with VPN essen- ally eliminates security concerns since the resources required to de-convolute voice signals without an encryp on key is quite high.
6 6 VoIP in the Corporate Market When VoIP is men oned, the first thing that pops into most people s head (besides confusion) is Skype or perhaps Google Voice. While these are undoubtedly important VoIP examples, they are by no means the most important instances of VoIP. By far, the largest VoIP market is in the corporate sector. To save costs on calls, most large companies use VoIP throughout their en re enterprise. For quite some me, corpora ons have had internal phone systems for calling between employees. These were routed with something called a Private Branch Exchange or PBX to avoid using the phone companies rela vely expensive lines. However, once the call went to a separate corporate installa on long-distance charges applied. Once corpora- on s internet bandwidth increased the call could just as easily get routed by VoIP over the internet. Many firms have gone a step further and have decommission the PBX altogether in favor of handing the administra on of their en re phone infrastructure to an external provider, some mes referred to as a cloud service. Cloud services use their own servers and so ware to provide VoIP services. Clients direct their phones or computers to the cloud provider s infrastructure and no longer need to worry about the details of VoIP. Cloud services provide a number of advantages over in-house VoIP systems including lower cost, simplified management, consistency across installa ons, and more robust disaster recovery. Quality of Service Much of the poor quality of early VoIP was dependent on a lack of bandwidth. If a user sends an in the middle of a bandwidth spike, the just gets delayed. The difference in a 0.1 second and a 1 second delivery is pre y much unno ceable. However, for a voice call in the middle of a bandwidth spike, a 1 second delay makes the call sound choppy and unpleasant. Modern VoIP gets around this in two ways. The first is to priori ze network traffic. and file transfers are set low, while voice is high. The second is simply to increase bandwidth which has happened naturally as capacity has go en cheaper over me. Soft Phones Looking at your desk you might be shaking your head and saying, But I can see a regular phone on my desk, so my company must not use VoIP. On the contrary, most desk phones at corporate installa ons are simply small computers made to look like regular phones. Chances are your company is currently using VoIP but hiding the details. Interes ngly, once voice service is en rely digi zed, having a stand-alone phone called a hard phone becomes unnecessary. Users desktops, laptops, and tablets loaded with VoIP client so ware can easily take the place of hard phones. Using so ware on a computer in place of a phone is called a so phone. While once uncommon in the corporate environment, more companies are embracing so phone technology. There are a number of reasons for this change. So phones are hundreds of dollars cheaper and don t require personnel to route separate lines for phone. So phones are easier to program and travel with the user on their laptop making them much more mobile than hard phones. Another interes ng advantage of so phones is the ability of callers to know when a user is available for a call since so phones can maintain an available status when logged in to the system. So phones also make chat, video, and other mul media func ons available. All of these advantages have led to major changes in the so phone industry with leading so phone maker Counter Path repor ng record earnings. The US military has announced plans on switching as much as 80% of their users to so phones. Even more interes ngly, Apple has recently approved a so phone app for its iphone. (1) To many industry watchers these trends show a big future for so phone usage.
7 7 VoIP Advantages The preceding discussion should make it obvious why VoIP is winning out over tradi onal telephone. However, there are a few advantages which are worth poin ng out in detail: VoIP is cheaper Almost every company today have an internet connec on and chances are there is plenty of excess bandwidth at those installa ons. VoIP calls simply ride on top of that infrastructure through whatever device a user chooses. It is par cularly cheap if users forgo hard VoIP desk phones and simply use so ware clients on their exis ng terminals. VoIP sound quality is better Despite impressions to the contrary, VoIP audio codes offer higher quality sound than tradi onal PSTN calls. Problems with VoIP sound quality are almost always related to network issues or hardware issues with the microphone and speakers. VoIP is more secure A move to VoIP enhances security by merging today s disparate telecommunica on systems onto a single pla orm. When you go to a common environment, you can also set up common security requirements. Down Side of VoIP In spite of all of VoIP s many advantages there are a couple of areas where VoIP needs to make progress. Emergency Calls One par cular difficulty even with a stable internet connec on is that VoIP doesn t have a geographical loca on associated with the number. The link between number and geography is cri cal for 911 calls and rou ng of emergency services. Already a number of device providers and services gather geographical loca on into the device which could be made available to emergency services. As VoIP becomes the standard for communica on, it is very likely some workaround will be found. Interoperability Interoperability can be a major source of frustra on with VoIP. Many commercial providers insist that one use their system front to back by keeping their protocol a closely guarded secret. Fortunately, there are many providers who support SIP protocol, so as long as one insists on SIP-based VoIP there is no interoperability problem. Costs of Delaying Migration People tend to be conserva ve (or even outright reac onary) when it comes to changes in daily work-flow. The internal resistance to change in a corpora on has kept some firms from switching to VoIP and even more firms from embracing all of its advantages. O en the argument has been that VoIP and its associated cost and labor saving tools will always be there when the firm is more open to change. Yet, there are certain costs which a firm delaying migra on will face by wai ng for a VoIP conversion. Loss of savings Obviously, since VoIP is cheaper than tradi onal phone systems, any firm relying on tradi onal phones will be paying more for the same services (or less as we have seen.) Higher costs in one area can affect needs in other areas of the IT infrastructure un l the firm finds itself falling behind more nimble compe tors. This is also true of was ng money on hard phones and internal PBX installa ons.
8 8 Loss of VOIP abili es For many firms, enabling a more flexible working infrastructure isn t high on the priority list. However, disaster recovery is paramount or even required by law. Doing disaster recovery with VOIP is seamless, par cularly with so phones you simply log everyone into the new site. This level of disaster recovery is unthinkable with tradi onal phone services which require re-rou ng of the network by the telecom that might be having their own disaster issues. Limited me to build ins tu onal knowledge Just like tradi onal phones, VOIP technology requires knowledge to operate correctly. Many of the errors managers have tended to associate with VOIP have really been a func on of flawed installa on by inexperienced administrators. While this aspect can be mi gated by using a business specific cloud service, the longer migra on is delayed the more likely the migra on will happen in a hurry and the more likely errors associated with the learning curve will occur. Final Analysis There is li le to fear from VOIP and a lot to be gained. VOIP is growing more secure and reliable with each passing year while allowing for much simpler disaster recovery and unprecedented user mobility. As long as IT managers insist on SIP protocol capable so ware with VPN encryp on for their VOIP installa ons, many of the more difficult issues can be bypassed. Or even be er, if managers contract with a cloud provider and use so phones the process can not only be easy but decidedly inexpensive. While in their infancy, these technologies are likely to be commonplace in the near future. In the final analysis, dealing with the VOIP world is simple move forward and enjoy it! Green Key Technologies is a privately owned so ware company founded in We are a global team of technologists, quants and developers whose common goal is to change and improve the way voice communica on takes place within the financial markets. We have built a solid reputa on for supplying the world's leading trading and brokerage firms with reliable voice communica on and recording services. Trader Voice Box enables global financial market par cipants to rapidly set up and instantly speak on private, secure voice networks without hardware. Communica on takes place using a downloadable so ware client that is installed on the user s PC connec ng over the internet into Green Key Technologies cloud telecom infrastructure. For more informa on visit About the Author: David Kendal, Ph.D. David Kendall is an independent researcher and product development consultant to funds, companies, and financial firms. A er receiving his PhD from the University of Chicago, David worked for the US Futures Exchange (USFE), the Intellectual Property Exchange Interna onal (IPXI), and Ocean Tomo, LLC. Stone, A. (2013 October 4) So phone revolu on: DoD shi ing to Internet-based phone technology. Defense News from h p://www.defensenews.com Hamblen, M. (2013 September 24) AT&T exec urges faster FCC review of plan to re re wired networks. ComputerWorld from h p://computerworld.com Brodkin, J. (2014 May 13) Verizon, AT&T leaving landline phone networks to rot, complaint says. ARS Technica from h p://arstechnica.com
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