What is VoIP and why do we need it

Given that we have a telephone system why do we need voice over IP? Basically, as with most things in life, it comes down to cost - VoIP can dramatically reduce the cost of a telephone system.

First we need a description of VoIP, then it should become clear where the cost savings are.

In a traditional telephone system a 'connection' is setup between two parties and the voice signal is sent along this connection. In a VoIP telephone system the voice signal is broken up into packets of voice (normally around 50 every second) and these packets are sent into a network and routed to the other party.

This sounds more complicated than the telephone system!

It is, but the technology for doing this is already here – computer networks. From their beginnings in the 1960's computer networks were designed to allow lots of different types of traffic to traverse between computers connected to the network. Mechanisms have been devised to connect two or more networks through routers to make a bigger network and thus allow the traffic to travel between even more computers. The internet is actually an enormous collection of networks connected together with these routers. The data packets (traffic) that are sent by one computer to another contain address information which routers use to determine where the packet should be sent. The routers forward the traffic between the networks until the packet reaches its final destination. The composition of these networks can be very complicated and there may be several different routes for packets to traverse from one computer to another, but the routers have conversations to allow them to send packets over the best route without any human intervention.

So how does this reduce the costs?

From an office/company point of view:

1. Cabling – rather than cabling for telephone and a computer network, you only need the computer network.

2. Telephone Switch – An expensive telephone PBX or switch is not required, its job can be replaced by much simpler and cheaper hardware.

3. Infrastructure – Telephone numbers are linked to an endpoint rather than where a cable is routed, so someone moving takes their number with them rather than requiring someone to re-wire the telephone.

From a telecommunication company point of view:

1. Only one type of computer network required

2. Cheaper and simpler hardware and software replace complex telephone switches

From a home users point of view:

1. Low cost calls – the internet allows voice calls to be made worldwide for the same cost as a call to your neighbour