Can small businesses rely on VoIP?

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Marguerite Reardon CNET News

Published: 24 Aug 2007 09:40 BST

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Shawna Hampton, a small-business owner in the US, knows she always needs to have a backup for her Skype internet telephone service.

Hampton, who runs what is essentially a one-woman web-development company, said she was glad she had her mobile phone handy when she was unable to make or receive calls from clients for 48 hours during last week's Skype outage. She had decided to make Skype's $40-a-year unlimited domestic calling her primary phone system to save money when she started her company.

"I always knew I needed a backup for Skype," she said. "I was annoyed by the disruption, but since I was able to use my mobile phone, it wasn't that big of a deal."

Hampton's point is well taken: while many large companies have already made the switch to IP telephones, small business may not want to cut off their traditional phone services just yet.

Indeed, many experts agree that it's risky for small businesses to rely too heavily on services that use VoIP technology that leverages the public internet. The reason is simple. The public internet is still what is considered a "best-effort" network. Priority is not given to any type of traffic once it hits the public internet. And even though voice packets don't take up much bandwidth, the technology is very sensitive to latency, which means that late-arriving packets could distort voice quality or cut off voice calls altogether.

While dropped calls or garbled connections may be tolerated by some consumers, business users generally have higher expectations for quality and reliability.

"The internet itself is not business class," said Lisa Pierce, a vice president at Forrester Research. "Performance of the network is largely unpredictable. It's like the freeway. Sometimes you can sail through with no traffic, and other times you can be stuck in a traffic jam for hours."

Different for enterprise VoIP
By contrast, big companies deploying VoIP technology from suppliers, such as Cisco and Avaya, don't use the public internet to transport their voice traffic. They use their own IP networks to transport calls within their campuses. And for calls travelling to other branch offices, they use leased data links rented from service providers such as Verizon or AT&T. As a result, large VoIP installations often require companies to invest millions of dollars to upgrade their local-area and wide-area network infrastructures.

There's no question that these enterprise-class VoIP systems are too expensive for companies with fewer than 50 or 100 employees. But even the small-business offerings from Cisco and Avaya are often too pricey for many companies, especially those with fewer than 10 employees.

And yet the tiniest of companies want the features and flexibility that IP technology provides. Skype claims that nearly 30 percent of the 220 million people who have downloaded its peer-to-peer calling software client around the globe use the service for business purposes. In January, the company developed a special product called Skype for Business, which builds upon its existing calling features, such as Skype-to-Skype, Video Calling, SkypeOut, SkypeIn, conference calling, file transfer and chat.

But even though Skype is going after the "business" market, the company says it's only addressing the very low end of the market.

"Skype is not intended for enterprise-level needs," said Skype spokeswoman Jennifer Caukin. "Small businesses, however, should find it a very useful tool that complements their existing communications methods, and helps them reduce communication costs and increase productivity."

Caukin said last week's outage was regrettable, and she added that the company has always encouraged customers to have backup communications.

"It is important to remember that Skype is not a replacement telephony service," she said. "While Skype is extremely resilient, users, especially businesses, are advised to have alternatives in place for the unlikely event that Skype access is disrupted, either because of internet access problems or other reasons."

Will the public net suffice?
But some companies, such as 8x8 and Vonage, are marketing their services as a replacement for traditional telephone services. 8x8 offers a hosted PBX service called Virtual Office that provides call functions such as four-digit calling, call forwarding and auto-attendant, plus some unified communications features, such as email-accessible voice mail.

A PBX, or private branch exchange, is used within a private telephone network and allows users to share a certain number of outside telephone lines for making phone calls.

Like Skype, 8x8's service uses the public internet to carry voice packets. Huw Rees, vice president of sales and marketing for 8x8, said concerns about the reliability of VoIP over the internet are overblown.

"The public internet is more than adequate for providing a business-class voice system if you have a decent broadband connection," he said. "We have more than 8,000 business customers who range in size from two to 600 employees using our service. There may have been issues with internet VoIP a few years ago, but not any more."

But Chris Lyman, chief executive for a software PBX company called Fonality, disagrees with Rees. He said businesses that can't afford...

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