The prevalence of high speed broadband across the country - and indeed, the world - has enabled a substantial shift change in the way in which telecoms services can be delivered. But what is VoIP, and where is it headed? Peter Gradwell, explained how VoIP is useful to businesses, and provided a comprehensive overview of the current market to the BCS Internet Specialist group.

Voice over IP - or VoIP as it is frequently called - is a term sometimes used interchangeably with IP telephony, or Internet telephony.

It is used to describe the way in which voice calls are increasingly moved using a packet based data network, like the Internet, where much more capacity is available on demand; the service provider bills customers for the data used rather than the time taken to use it.

VoIP systems digitize and transmit analogue voice signals as a stream of packets over a digital data network.

VoIP technology insures proper reconstruction of voice signals, compensating for echoes, due to the end-to-end delay, for jitter, dropped packets and for signaling required for making telephone calls.

The IP network, used to support IP telephony, can be a standard LAN, a network of leased facilities or the Internet.

VoIP calls can be made or received using standard analogue, digital and IP phones. VoIP gateways serve as a bridge between the PSTN and the IP network.

A call can be placed over the local PSTN network to the nearest gateway server, which moves it onto the Internet for transport to a gateway at the receiving end. With the use of VoIP gateways, computer-to-telephone calls, telephone-to-computer calls and telephone-to-telephone calls can be made with ease.

Access to a local VoIP gateway for originating calls can also be supported in a variety of ways. For example, a corporate Private Branch eXchange (PBX) can be configured so that all international direct dialed calls are transparently routed to the nearest gateway. High-cost calls are automatically supported by VoIP to obtain the lowest cost.

To ensure interoperability between different VoIP manufacturers, VoIP equipment must follow agreed procedures for setting up and controlling the telephone calls.

SIP is the prevalent family of standards that define various options for voice (and video) compression and call control for VoIP. Other call set-up and control protocols being utilized, or standardized, include H323 and MGCP.

When buying a service, ensure it uses SIP as this is now most widely adopted.

3 different types of VoIP

1: Consumer VoIP

There are various consumer orientated VoIP services which provide free or low cost voice calling, either through a telephone-like program on the computer, or through a special adaptor which connects to a home broadband service. These services include those offered by BT Communicator, Skype (, FreeTalk (Dixons Group) and Vonage.

Consumer VoIP services are ideal for making low cost calls to the public telephony network and many of them offer consumers excellent deals on calls, including unlimited UK calls and low cost international calling. They will also offer the ability to call other users within the 'service' for free. For example, one Skype customer can call another Skype customer at no cost.

The downside of such services is that, whilst typically orientated around a software program on the user's computer, they are less intuitive to use than a regular telephone and if the computer process is busy then sound quality can suffer.

Additionally, it is important to ensure the software is used with a good quality headset, rather than a microphone and speakers, as otherwise the sound can become distorted with feedback and background noise.

2: Large business VoIP

Perhaps the oldest element of the VoIP market place is the interconnection of the various traditional office phone systems, aka the 'PBX' (Private Branch eXchange) across the different corporate sites.

Many corporate customers have phone systems from vendors such as Siemens, Panasonic or Avaya and frequently through the use of a converter or VoIP adaptor, these systems can be linked so that calls which route between different company sites can be carried over the corporate VPN or Internet connection, and as such, are carried at no additional cost.

Similarly, many new office phone systems are being delivered as 'IP enabled' systems. For example, they may have built in multi-site connectivity using an Internet connection, or they may have support for home-worker handsets, such that the handset can be connected to the head office PBX, but across the Internet.

It is worth noting that there are a number of vendors offering solutions and that there may be an 'easy win' to be had simply by implementing a cost saving through the use of new technology. It is recommended that you discuss this sort of implementation with your current equipment maintainer in the first instance.

3: Centrex

Many VoIP services fall into the 'Centrex' bracket. Centrex is a phone service where the central call control and switching, typically done by the box on the wall in your office, is performed by a central server at a remote Internet hosting centre. It is, simply, a 'PBX in the sky'.

To use the Centrex service, customers will have telephones on their desk, which connect out to the PBX server across broadband Internet. This provides a number of benefits, including:

  • Ease of deployment - phones simply need to be plugged into an Internet connection;
  • Reduced capital expenditure - no need to purchase expensive phone switches;
  • Reduced operational expenditure - maintenance of the phone service is now typically done via the web;
  • Reduced 'internal' phone costs - particularly for inter-site calls, e.g. between offices and home workers;
  • Increased flexibility and new ways of working - home working, distributed offices, etc.

Where next for VoIP? Wireless convergence

The recent launch by BT of its Fusion phone gives us a glimpse of the future where wired and wireless phones will become one.

This is a mobile phone which, when you are inside your home, works as if it is your normal home phone. When you are at home, your calls are charged at normal landline rates and when you are out and about, the calls are charged at normal mobile rates.

The attraction of going mobile is obvious - customers can plug their phone in over the Internet and within minutes they will be logged in to their regular office phone extension, making and receiving calls as if they were at their desk.

At present, there are a number of options for VoIP customers to go wireless:

  • A software phone can be loaded onto your laptop and used in a wireless hot spot. This works very well and is frequently used by business travellers in hotels or airports, etc.
  • There are various software phones available for hand-held computers and PDAs. If you have a handheld computer and a Bluetooth headset then you can use a software phone to login to your phone system.
  • Finally, there are now a number of Wi-Fi based phones available. These phones look and feel like mobile phones, but they use a wireless Internet connection to connect back to the phone system. These phones are beginning to become more usable, though they are probably not yet good enough for mainstream use. The main reason for this is that the manufacturers do not yet have sufficient experience in the mobile arena. Typically the manufacturers of wireless phones come from a background of designing consumer electronics and, as a result, the signal handling, battery life and user interface tends to let these phones down.


VoIP is a revolutionary new technology which is beginning to facilitate a range of business benefits and new ways of working, by allowing the telephone to be merged with the internet, and thus your office phone extension can be transported anywhere in the world.

Peter Gradwell is Managing Director of Gradwell dot com Limited - a UK business internet telephony service provider. He is also the youngest ever (26) BCS Fellow.