Why VoIP? Why Now? The Immediate and Long-Term Benefits of a New Phone System

Transcription

1 Why VoIP? Why Now? The Immediate and Long-Term Benefits of a New Phone System

2 Voice over IP (VoIP) is a hot topic which has gone mainstream from its engineering roots. The concept behind VoIP is the transport of voice communication over digital channels. Specifically, VoIP aims to use internet protocols in seamlessly sending voice calls over existing data transmission lines. With the growth of the internet, maturing 4G technologies and the widespread use of computers and mobile devices using the internet, there should be critical mass for VoIP usage within the next few years. What is VoIP? VoIP is a technology which allows voice telephony over the internet. This is a growing technology which is very much dependent on data transmission technology, specifically the bandwidth capability and the ISP coverage. From its initial development, the research has been focused on the voice quality and the packet size. These two factors have been the driving force for implementation and user acceptance. On a practical level, the user would not care about the underlying technology, as long as he can carry out phone calls of reasonable quality and at a reasonable cost. Quality in terms of a VoIP call is a matter of user perception and measurable latency or lag time. Traditional analog systems have a lag time of 45ms. This is used as a benchmark for comparing lag time with VoIP. For business users with large volume traffic, latency of 60ms to 80ms is considered acceptable. The limits for acceptable latency has been estimated at 100ms. Most users would not tolerate a latency of 100ms, or one-tenth of a second. With consumer broadband internet offerings commonly at least 3mbps, and wireless broadband offerings of at least 1mbps, quality VoIP service is becoming more common and has become a cost-effective alternative to traditional voice telephony. Additionally, the promise of digital transmission is sound quality even over long distances. Traditional telephony is marked with voice degradation and high noise levels over long distances. With digital transmission, the data is encoded at the source and decoded at the other end of the conversation, with a theoretical 100 percent quality. VoIP Requirements As a technology, VoIP encompasses several areas. There are developments in software, VoIP phones and in codecs and standards. The greatest improvements has come from the areas of codecs and standards. The codec is the algorithm used to convert voice to a data stream, and back again. Voice goes into the VoIP phone or software, and with the use of a codec is converted to a series of data packets. The packets are then sent through the internet and Why VoIP? Why Now? Compare Business Products

3 is rearranged at the other end of the call where it is decoded and converted to sound on a speaker or mouthpiece. Because the data goes through the internet, the packets do not necessarily arrive in the same order that they are sent. The data has to be properly rearranged in the correct order before being converted to voice. Also, because of this, each packet has to have additional information detailing what kind of data it is, the destination and where in the data stream the packet is located. This information will be later used when the data stream is rearranged at the receiving end. This process of coding and decoding results in the VoIP latency. Bigger bandwidths allow for faster transmission and for lower latency. Better codecs also help in creating smaller packets. However, there is a tradeoff: codecs which create smaller packets result in lower voice quality. The most common codecs in use have payload bandwidths of 6.6 to 64kbps. On top of the payload, the packet header size is a 16kb per packet. For practical purposes, the bandwidth requirement for VoIP is at least 80kbps for both uplink and downlink. Normal internet offerings typically state their bandwidths as 384kbps, 512kbps, 1mpbs or some other number, however, these figures are for download speeds. Upload speeds are usually only a quarter or less of the download speed. With faster broadband speeds, this hurdle is rendered moot and academic. Why VoIP? Why Now? Compare Business Products

4 Codec Payload Bandwidth Description G to 64 kbps This is the most common wideband codec available in IP phones, though wideband support is only recently gaining momentum. The quality is excellent at twice the sampling rate of standard G.711, but the compression isn't that great. But considering the fact that it's the same bit rate as narrowband G.711 but delivers much more realistic sound, G.722 will be one of the best codecs to use if your IP telephones will support it. Wideband supports frequencies of 50 to 7,000 hertz. There are no longer any patents covering G.722, so it's free for anyone to use. G to 32 kbps This is a wideband codec, aka Siren7, developed by Polycom. Its key advantage is that it's a computationally efficient and compact codec at 16 to 32 kbps, which is less than half the bandwidth required by G kbps mode isn t appropriate for noisy audio input or if music is mixed in, since the compression artifacts are noticeable. 32 kbps is good for any kind of workload. This codec must be licensed from Polycom, and it's currently used only in Polycom's high-end video conferencing systems under the marketing name Ultimate HD. Current Polycom IP phones use the marketing term HD Voice, which supports only generic G.722 for its wideband codec, although future IP phone models may support G G to kbps Also known as AMR-WB, this is a wideband codec. A 6.6 kbps mode is also supported, but is the practical bit rate for speech in a clean environment. The higher bit rate is better for noisy conditions and music. At the time of this writing, no IP phones support this codec. It's currently used by T-Mobile in Germany for cell phone applications. Speex wideband 10 to 28 kbps This is an excellent open source codec from Speex that offers very good wideband quality at relatively low bit rates. VBR (variable bit rate) is also supported in 12 or 18 kbps mode. This is a free open source codec and can be used by anyone. It's supported by open source Asterisk PBX, but no hard IP phones and only one soft IP phone support it. Siren14 ultrawideband Siren22 ultrawideband 24 to 32 kbps Siren14 is a free-to-license (not to be confused with license-free) ultra-wideband version of the G codec from Polycom. Some of the high-end features in G.722.1, like echo cancellation and noise reduction, are omitted. Even though this is royalty free, you still need a license from Polycom. Siren14 supports a wider dynamic range up to 14,000 hertz, compared with 7,000 hertz in wideband. 32 to 64 kbps Siren22 is a proprietary ultra-wideband codec from Polycom that currently can't be licensed. Siren22 supports an even wider dynamic range--up to 22,000 hertz. The digital sampling rate is 48 KHz. Why VoIP? Why Now? Compare Business Products

5 Even with various codecs, there is no need for a VoIP developer to support all of them. By choice or design, current VoIP developers strategy has not reached interoperability between different softwares. VoIP softwares provide voice calls between devices running on the same software or between the software and land lines or cell phones. There are very few applications which allow for direct calls to and from competing software. VoIP Growth As stated above the use of VoIP has been dependent on the state of technology. With even bigger bandwidth offerings, a host of applications are also having a boom. Along with VoIP, video on demand has been gaining ground. Additionally, HD TV is also making headway via broadband internet distribution. Considering that the broadband requirement for VoIP is much less than video, there should is every reason to expect faster growth of VoIP usage. Reports for 2009 show that there were 100 million VoIP users worldwide. This number includes hard VoIP users only, or only those who use VoIP handsets, and does not include computer-based telephony like Skype. Of this number, there were 22 million users in the US, 21 million in Japan, and France has 16 million users. France also had the highest market penetration with 38% of all lines on VoIP. The VoIP handsets counted in the survey all were connected to the internet via DSL or LAN connections. In the same report, soft phones in 2009 was topped by Skype with a leading 3.1 billion minutes of Skype Out voice calls. This converted to $653 million in revenue. Note that the above Skype figures did not include the free Skype-to- Skype calls. By 2013, the number of VoIP users is estimated to be close to 300 million users worldwide. Of this number, about half will be using mobile handsets. With the above number of users, the estimated gross business will be worth about $35 billion in 2013, not including sales from VoIP software companies like Skype. The three-fold increase in in two years in worldwide sales reflects the level of acceptance for the general population. The growth of mobile VoIP from zero to 150 million users in two years is surprising considering the problems competition that it has. From another point of view, the expected number of mobile VoIP users might be understated. One reason that mobile VoIP has grown so fast in almost no time is because of the new cellular network technologies. With a wireless broadband capability now at 1mbps or faster, mobile VoIP quality has become viable with low-latency and better voice quality. With the implementation of Why VoIP? Why Now? Compare Business Products

6 even faster EDGE, LTE and WiMAX networks, mobile VoIP coverage is also expected to grow. With more potential users, faster networks, and better quality audio, VoIP service is no longer tethered to the LAN port. Even with some problems in implementation, the public has shown interest in VoIP. This may be due to any number or reasons, including but not limited to cost per call, convenience, and sound quality. But it remains as a service which volume users or those who frequently call long distance would better appreciate. Telco Business Model as Hurdles The state of technology has allowed for VoIP to gain widespread acceptance. In a way, the industry hurdles are no longer technological, but corporate or with government regulations. The only remaining technology hurdle is building the infrastructure for mobile VoIP. The traditional competition for VoIP has been the telephone companies. In countries where the telephone companies are not the primary internet service providers, this is a big problem. For countries where the telcos are also the broadband ISPs, this is a great opportunity for them to ride on VoIP as a service or as a benefit to their data plans. The growth of mobile phones has made telcos less dependent on their landline business. The increase in the number of cell phone users has eclipsed any growth in landline users. Nowadays, when a telco also provides internet service, consumers sign up for the data plan, and treat the landline as an added bonus. The telco wins both ways. For these telcos, it doesn t matter if VoIP is run through their system as the consumer pays for the internet either way. However, when a telco is not in the business of providing internet service, the VoIP service is a competitor and they implement ways to discourage VoIP use over their lines. This is especially true for WiFi users. More and more, smartphones are being used to access the internet, and with the introduction of faster 4G service it is expected that smartphones would be used for making more VoIP calls. For telcos, making VoIP use easier over their cellular network is perceived to cut into their core business. This puts telcos in a Catch-22 situation: in order to compete the telcos have to upgrade to faster 4G technologies, however, when they do that, their customers will be using the 4G network to make VoIP calls which are of no benefit to the telco. One reason for this quandary is that telecommunications is one of the most heavily regulated industry anywhere in the world. It provides an important service to the populace and governments ensure that the consumers Why VoIP? Why Now? Compare Business Products

7 are protected from any wrong doing. This is especially true in the United States, where the monopolies are frowned upon. The break-up of Bell Telephones into regional companies is a case in point. In order for the consumers to make the most of VoIP, the internet service provider has to allow unlimited VoIP calls. This is counter intuitive in an industry which makes money on toll calling. For mobile VoIP to flourish, the telco has to decide to be content in providing WiFi internet to its subscribers. Alternatively, consumers intent on using VoIP on their smartphones would be wise to choose a telco with the best WiFi internet access rates. Benefits of VoIP for a Business VoIP, as a data transmission technology used by the internet, presents benefits for modern businesses. Among these benefits are: Single network for voice and data. With voice calls routed through the LAN/WAN, there is no need to have separate cabling for voice. Network management is simplified. Lower infrastructure and civil work cost as there is no cables running for voice. Lower costs for traveling and tele-commuting employees. There are some jobs which need to have employees traveling to clients or regional offices. With VoIP, they can stay connected to the office at lower costs of communication. This is the same benefit for employees who telecommute. The employees can be anywhere or even be in-transit. Keeping employees in constant communication makes for more efficient use of personnel. Voice, Conference, Video calls and Webinars. VoIP affords the company with options for voice calls, multi-party conference calls, video calls and other media rich options. Increasingly, there is a need to have conference calls with parties located all over the world. Along with this trend, is the growing need to show presentations while on a conference call. Collaborative communication is an off-shoot of VoIP, where you can do video as well as show the computer screen or a PowerPoint presentation at the same time. Increasingly, there is also the need to remotely use a computer while doing conference calls. Lower total cost. From having a single cabled network, to cheaper long-distance communication costs, to more flexibility in meetings, these all translate to lower capital expenditures and lower cost of operations. Why VoIP? Why Now? Compare Business Products

8 The biggest savings comes from leased line costs. Additional costs would come in the form of the IP-based PABX system or third-party system to handle both voice and data. Or if you prefer, you can use dedicated VoIP solutions which can plug in to your existing LAN/WAN. Telephone costs are on a per line basis. The more phones you require, the higher the operating costs. Assuming that the number of lines you have has the same amount of local and long-distance traffic, then it is a straightforward formula to multiply the number of leased line by the expected monthly cost per telephone line. For a VoIP implementation, using 80kbps per line (see above) and adding the data bandwidth requirement, you would have the expected total bandwidth. You would have to check the rates for the next higher bandwidth service of your ISP in order to come up with the monthly costs. If you are already paying for an existing data plan, you only need to add the additional bandwidth (approx. 80kbps per phone line) to come up with the expected bandwidth requirement. The computations above may look like comparing apples and oranges, especially if the costs for telephone use are to be estimated from scratch. You can request your ISP for their rates for higher bandwidth services. Projected and actual savings are higher with a greater number of required phone lines. The Phone is the Computer The smartphone has been around for more than ten years. The same could be said of tablets. But only recently have smartphones and tablets had an impact on internet use, computer sales, and mobility all at the same time. Some would attribute this to the popularity of the iphone and ipad. Whether that is true or not, the point is that the growth of internet access via mobile devices has grown a lot more since the introduction of these two Apple devices. Mobile internet has further gotten a boost with the introduction of Android devices. For all intents and purposes, these mobile devices have the same capability and computing power as early computers, which is more than enough for browsing the internet and using social media. Additionally, these mobile devices have fueled the use of soft VoIP. VoIP software developers which develop for the PC have not been taken into account by tech and telecommunication journalists because they are mostly free. Since they do not have a significant earnings, these companies have not been included in VoIP forecasts. However, since smartphones and tablets mobile, and have the same functionality as hard VoIP devices, it is expected that the number of calls from these devices to landlines and cell phones will explode in the near future. Depending on the source, the sales of Why VoIP? Why Now? Compare Business Products

9 smartphones is estimated to be close to 500 million units per year. It should be noted that most smartphones have VoIP software included by default. These are fully functional software capable of calling landlines, of conference calls, and voice mails. In most instances, these software are also capable of making video calls. This is a distinct advantage of smartphones over hard VoIP phones. Worldwide smartphone market, by operating system, by 2011 global sales, according to Canalys 1 : Operating System Shipments 2011 Market Share 2011 Annual ggowth Android % 244% ios % 96% Symbian % -29.1% BlackBerry % 5.0% Bada % 183.1% Windows Phone % -43.3% Others % 14.4% Total % 62.7% 1 Why VoIP? Why Now? Compare Business Products

10 Top Five Worldwide Smartphone Vendors, Shipments, and Market Share, Q (units in millions) Vendor Q Shipment Volumes Q Market Share Q Shipment Volumes Q Market Share Year Over Year Change Apple % % 128.4% Samsung % % 275.0% Nokia % % -30.6% RIM % % -11.0% HTC % % 17.2% Others % % 69.4% Total % % 54.7% So far, there has not been any study or survey compiling data on the number of video calls and their duration using smartphones. This data would be of some use both for the manufacturers and for consumers. The benefit of voice calls is that there is less of an interoperability problem. Online soft VoIP voice calls which can only be received if the same software is installed in the receiving computer, there are more video calls can be received by other software. The smartphone sales volume is increasing faster than even hard VoIP mobile phones do. From the charts, the smartphone sales amount to close to 500 milion units in actual deliveries. Contrast this to the estimated 150 million sales in mobile VoIP phones expected in The challenge for soft VoIP developers is to monetize their presence in smartphones and to make their smartphone host virtual VoIP phones. On the other hand, hard VoIP vendors have to start marketing their phones to the geneal public. With smartphones having the same functionality as mobile VoIP phones, there would be less reasons for consumers and businesses to buy them. VoIP has grown to the point that it has become a mainstream technology without anyone noticing. As a mainstream technology, users no longer Why VoIP? Why Now? Compare Business Products

11 care what the underlying technology is. The driving force remains to be to provide good quality inexpensive voice communication without any need of laying additional infrastructure. The continuing success of VoIP has also made it possible for other technologies to package it as a service even if it competes to provide the same service. It is ironic, that phone manufacturers and telcos include VoIP software in their smartphones. On top of the competition between Android, ios (ipads and iphones), and when it comes out Windows 8, VoIP software would be riding on the resulting phone wars. It is to be expected that VoIP traffic would grow using smartphones, and the earnings of soft VoIP companies would begin to overshadow those of hard VoIP companies. VoIP Goodness of Fit Ultimately, the choice of using a VoIP solution is a business decision. As such, a business has to do their own calculations and studies for total cost of ownership (TCO) and return on investment (ROI). These studies should include not just the hardware cost but also a what-if analysis of possible changes in work flow as well as efficiencies due to the technology changes and resulting paradigm shift. Besides the cost and benefits analysis for the company, the TCO/ROI study should also look at different technologies involved. There are a lot of choices for implementing your own VoIP network, and the right solution would depend on your specific requirement. There are, however, several factors where a company would benefit more from a VoIP solution: Regional offices or multiple site offices. Using VoIP for calls between a company s different offices are practically free. Making a regular call through the phone company has an associated cost. If the call goes through the PABX and out to the phone company switchboard, the phone company will be charging for the call. Large volume of long-distance calls, outbound calls, or telephone support calls (1-800 number). Using a VoIP service circumvents the long distance toll charges. In most instances, long-distance calls become local calls and are charged from the point it connects to the local phone exchange. A significant number of telecommuting workers. Providing your telecommuting employees their own VoIP unit or communicating with them through the soft VoIP solutions (like Skype) for computers or smartphones is more cost-effective than calling them on the cellular network. The flexibility of soft Why VoIP? Why Now? Compare Business Products

12 VoIP solutions for remote computer logins, conference calls, webinars and video calls also make compelling reasons for using VoIP. An existing large bandwidth internet. If you already pay for a large internet bandwidth, adding VoIP as a service may be a minimal cost. A company with any of the above characteristics would be a good candidate for using VoIP. A TCO/ ROI study is necessary to better understand why cost savings occur, and where these will come from. Each company has its own different requirements and it is not easy to say what type of VoIP service would be best for any enterprise. Savings via VoIP has become a blanket statement. However, migrating to a different technology can be frustrating. Understanding the process, and the steps required for the change is important to a successful VoIP implementation. Why VoIP? Why Now? Compare Business Products