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Think Twice About VoIP
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By Carl Weinschenk

Earlier this month, BusinessWeek ran a review of Comcast's Digital Voice service. The company, like the rest of the cable industry, is looking at VoIP as its next big thing.

The review is essentially positive, which no doubt made the operator happy. The better news for the operator--and the rest of the cable industry, for that matter--is that the review appeared at all.

Mentions in consumer and business press are a signal that a new technology has entered the mainstream. Clearly, Internet telephony has. In addition to aggressive rollouts by Comcast and other cable players, Vonage has growing profile and Skype recently was bought by eBay.

The question that small businesses must begin to grapple with is if VoIP is the way to go. It's easy to get swept up in the hoopla surrounding a new technology. But businessmen and women need to ask themselves serious questions before they get on the VoIP train. Indeed, the worst thing they could do is reflectively jump on the bandwagon, since nothing--absolutely nothing--is as important to a business as its phone capabilities. It's not even close.

Vital questions are quality and reliability, of course. In some cases, VoIP now is the equal of the legacy telephone industry in these two categories. Service by some VoIP carriers, however, still is spotty. There are a variety of ways to provide VoIP, and how it is done impacts the product greatly. One of the selling points of the Comcast service, for instance, is that it traffics calls on its own private network. This no doubt is one of the reasons it is expensive. Avoiding the unmanageable and often difficult conditions of the public Internet helps maintain quality.

However, even before a potential VoIP customer starts thinking about quality and reliability, he or she must deal with an even more fundamental question: Why move to VoIP?

The bottom line is that legacy phone companies--non-glamorous and stodgy--offer one of the most reliable services available. Put simply, phones rarely go down. When they do, it's usually under extraordinary conditions that would crash virtually any utility. Traditional phone services are cheap as well. Technological advances and pressure from cell phones and VoIP have collapsed their price structures and forced them to virtually give service away. Finally, separating voice from data keeps it more secure since virus mongers and hackers donít pay much attention to traditional phone networks.

Those are fairly significant attributes: Reliable, cheap and secure. So if it isn't broke, why should small businesses fix their phone service by going with VoIP? Perhaps only businesses that truly benefit from the applications that separate VoIP from traditional phone services should make the jump. VoIP excels in its ability to seamlessly integrate voice with other forms of data. On an Internet protocol (IP) network, voice is more or less just another application. This means that clever engineers and developers can combine voice with other applications in creative ways that are difficult to replicate in traditional setups in which voice and data are fundamentally different technologies that run of discreet networks.

Increasingly, the traditional phone companies see the way the wind is blowing and are introducing their own VoIP services. In theory, these services will marry the flexibility of IP with the reliability of their core legacy services. Likewise, the cable industry is too big a player to market half-baked services.

There is too much money in VoIP for it to not become as rock solid as traditional services. The remaining challenges are operational; they donít involve the need to invent new widgetry. For the time being, however, small and startup business owners should answer one very basic question about VoIP: Are the advantages of VoIP worth the risks for my business?

Carl Weinschenk is the Editorial Director of SmartBiz.
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