Users converge voice and data systems and save money

Considered revolutionary by many, Voice over Internet Protocol (VoIP) technology has the potential to completely rework the world’s phone systems and provide electrical contractors with an ever-growing and ever-changing market opportunity.

According to the Federal Communications Commission (FCC), VoIP is a technology that allows people to make voice calls using a broadband Internet connection instead of an analog phone line. The number of VoIP providers is growing, and services vary. Some VoIP services, according to the FCC, may allow people to call only others who use the same service, but others may allow calls to anyone who has a telephone number, including local, long-
distance, mobile and international numbers.

Also, while some VoIP services work only over a computer’s broadband connection or a special VoIP phone, other services allow the use of a traditional phone connected to a VoIP adapter. And, in “hot spots” such as airports, parks and cafes, the technology allows connections to the Internet for wireless VoIP access.

How it works

VoIP services convert a person’s voice into a digital signal that travels over the Internet through a broadband connection. If a call is made to a regular phone number, the signal is converted to an analog signal before it reaches the destination. By turning a standard Internet connection into a method of placing phone calls, the user of VoIP technology is bypassing the phone company entirely.

“What’s unique about VoIP is the fact that the conversation is digitized and coded into data, which are framed into packets for transmission over the Internet or a company’s intranet,” said Matt Valentine, vice president of Phoenix-based Applied Business Communications of Arizona.

This digital voice technology can facilitate tasks that may be more difficult to achieve using traditional analog networks, such as automatically routing incoming phone calls to a VoIP phone regardless of the user’s physical location, free phone numbers, the ability of call center or technical support agents to work from any location as long as they possess a sufficiently fast and stable Internet connection, and packages that include extra features for which most traditional telephone companies charge.

“The digital call is merged into the computer network, which is usually Ethernet-based, and is then transmitted via broadband circuit or local area network [LAN] to users in the building or anywhere in the world,” said Rusty Stover, datacom manager Broadway Electric Service Corp., Knoxville, Tenn.

Who is using it and why?

VoIP is best suited for those who have a high-speed Internet connection and would like to lower their phone bills, have a business with phone bills that make up a significant part of their overhead, appreciate the convenience of taking their phone number wherever they travel, or wish to use VoIP features such as conference calling, choice of any area code, voicemail, caller ID, call waiting, etc.

According to Jeff Grandia, vice president of technology services for Cache Valley Electric Co., Logan, Utah, people are using VoIP to converge their voice and data systems.

“Everyone, in one way or another, is using VoIP technology. For example, phone carriers are already putting the technology into their network for both business and residential use,” he said.

According to, phone companies are using VoIP technology to streamline their networks by routing thousands of phone calls through a circuit switch and then into an IP gateway, drastically reducing the bandwidth they are using.

Once the call is received by a gateway on the other side of the call, it is decompressed, reassembled and routed to a local circuit switch. However, most of the adoption of VoIP technology is currently by Fortune 500 and larger enterprises to replace their traditional phone systems and switches, although some residential applications are emerging.

“According to one manufacturer that we work with, about half of all phone systems being produced and shipped today are VoIP-based,” Valentine said.

VoIP is an ideal technology for businesses with multiple locations that have existing lines for data transmission, which phones and computers can share. It allows free long-distance calls to be made between sites and provides a seamless transfer of calls between phones at any office location.

Pros and cons

Over the last 90 years, voice services haven’t changed much. However, in the last decade, technology such as VoIP has caused shifts in the telecommunications industry, allowing convergence between voice and data and inventing new applications for both.

“Convergence is the key benefit to VoIP,” Grandia said. “VoIP is paving the way for people to make and receive phone calls and e-mail and to access the Internet, all with a single hand-held device.” 

Other benefits, according to Grandia, are the standardization of communications, reduced cost, increased competition between providers for end-user dollars and the creation of new applications.

“More than half of all business that implemented VoIP in 2006 experienced a cost-savings,” Grandia said.

“A facility that implements VoIP has adopted a platform of the future and is ahead of technological obsolescence,” Valentine said. In addition, unlike inflexible traditional phone switches that require expansion cards to add functionality, “VoIP is very scalable and provides improved functionality as the business and its systems grow.”

Cost savings from using VoIP stem from its ability to transmit long-distance calls on the existing data communications infrastructure and eliminate long-distance charges. In addition, savings come from the bundled packages of features such as caller ID, voice mail and the like, all of which some VoIP providers offer at no additional charge. In addition, the fact that the phone number can follow the user anywhere is particularly attractive for people who travel a lot.

“VoIP allows the user to call anywhere as long as there is access to a computer network or broadband connection,” Stover said.

Too good to be true?

Of course, VoIP technology has its disadvantages. With it, a company’s communications now relates directly to the performance of its network, and any factors concerning the quality of that network will affect the quality of phone communications. Two other major concerns in implementing VoIP are power disruptions and emergency 911 service.

“VoIP requires an uninterruptible power supply to operate, and access to 911 services means an emergency call is targeted to the computer network and not to the physical location of the phone user,” Grandia said.

VoIP also, according to Valentine, adds another layer of complexity for a company’s IT department, which now has to manage both voice and data systems on a single converged network and configure routing priorities between voice and data transmissions.

“This means additional cross-training for both telecom and phone system support personnel,” Valentine said.

VoIP also can take away a certain amount of bandwidth from data transmission and slow down the network somewhat.

Finally, cost savings might be an advantage of VoIP, but its initial startup cost is higher, with VoIP phones generally costing three times more than analog phones.


“VoIP offers electrical contractors the opportunity to demonstrate to customers how they can ensure system uptime by designing, installing and maintaining electrical and backup systems that will provide reliable, constant, clean power,” Grandia said.

The technology is advancing so rapidly that end-users need to rely on electrical contractors’ expertise to ensure it remains available at all times. In addition, for those electrical contractors with datacom divisions, VoIP offers the opportunity to install the computer networks themselves.

“In addition, if the contractor can get a contract with the VoIP service provider, it has the opportunity to install both the phones and the necessary equipment in the data room,” Stover said. However, the software required to program larger systems usually is installed by a software or VoIP service provider and requires more specialized skills than even most datacom electrical contractors have.

To take advantages of these opportunities, electrical contractors need to either become technical experts in supporting data centers or outsource to gain that expertise, according to Grandia.

“Once the contractor understands the complexity of an installation such as a data center, it can better understand the basic communications and power infrastructure needs of most medium-sized enterprises,” he said.

Valentine agrees that for contractors already performing voice and data cabling, it’s important to understand VoIP technology and the direction it’s taking to ensure the customer’s structured cabling system can be designed to fit future growth needs.

“To be successful, the contractor needs the expertise on staff to design, price and propose a system,” Valentine said. In addition, the contractor needs to have the technical resources on staff to maintain installed networks and to provide technical support in case of a problem or new customer requirements. “This is a different enough market that new entrants need to be cautious entering it and have the employees that can configure network systems,” Valentine said.

To get the necessary knowledge, contractors can turn to industry associations and organizations that provide specific datacom training in transmission circuits and computer network communication protocols. “Also important is having some telephone background, which is not usually provided by basic data or telecommunications training,” Stover said.

As more people begin to use VoIP technology, its functionality will grow as well, including increased video and teleconferencing capabilities. In addition, as voice and data increasingly converge, new applications will be developed, and the successful electrical contractor can become a single source provider of power, phone, and data system design and installation. EC
