VoIP: Telecom Then, Telecom Now

By | May 23, 2005

In order to clearly understand the next generation of telephone technology, let’s go back a step to how traditional telephone networks work. An analog telephone line is installed from the telephone company and the customer is issued a telephone number.

To place a telephone call, the caller picks up the telephone, dials a telephone number, and the call is routed to the person being called. The person being called answers the telephone. When the call is answered, a temporary connection is created within the telephone company’s equipment and the caller and called can have an uninterrupted conversation.

There is a large network of underground fiber optic cabling and large telephone switches called Central Offices that provide the network that has been traditionally used for telephone service. This network is called the Public Switched Telephone Network or PSTN. The network was implemented by the Bell Companies and has been in use and growing over the past 100 years.

All companies, whether they are the RBOC (Regional Bell Operating Company) or the CLEC (Competitive Local Exchange Carrier), have typically used the Public Switched Telephone Network to deliver telephone calls. When the Bell Companies were split in 1996 after the Telecommunications Act, each of the RBOC’s and CLEC’s had to use the PSTN to deliver service. At the same time the Bells were being divided, the RBOC’s and CLEC’s had to come up with protocols and standards for delivering telephone service and handing off telephone calls between their networks.

For example, if a caller uses a local phone company called Company A for their local telephone service, and the person being called has a different local telephone company called Company B, then a call is able to be placed from Company A to Company B’s network without any problems or concerns. As a customer, you cannot tell the difference between whether the person you are calling has service from Company A or Company B.

Telecom Now

All of this background information leads us to the current state of telecommunications and the advent of VoIP.

Maintaining the Public Switched Telephone Network has become very expensive. Regulatory fees charged to the customer help reduce those charges. (As a side note, have you ever noticed that your telephone bill is approximately $10-$12 higher than the price you were quoted when you signed up?) However, telephone carriers are looking for new ways to reduce costs and improve their profit margins. Voice over IP allows telephone carriers to use the existing infrastructure of the Internet to deliver calls more cheaply and more effectively than via the Public Switched Telephone Network.

Voice Over IP allows customers to place calls via the Internet. Calls delivered via VoIP are very similar to those delivered via the traditional PSTN. When you pick up the telephone to make a VoIP call, the voice is digitized and sent via the Internet. More specifically, the analog signal is converted to a digital signal, packaged, encoded and sent via the internet. At the other end it is received, decoded, unpackaged and the signal is converted back to analog for a regular telephone to receive the call. Protocols and standards have been put in place to ensure that every carrier or device is able to encode and decode these digital signals.

The digitizing and encoding process can take place at the carrier level or it can take place at the telephone level. Typically, the carrier will provide a piece of equipment to convert the analog signal to a digital signal and vice versa. In a business or home environment, this is a router. This special router’s sole function is to convert analog telephone signals to digital IP information.

Pure IP Implementation

The first method of implementing VoIP is delivering telephone calls to your desktop via the Local Area Network (LAN) or Wide Area Network (WAN). This level of implementation is called “VoIP to the desktop.” This flavor of VoIP is only internal to your network.

In this implementation, an IP PBX will replace your current telephone system. You will have an IP based telephone sitting on your desk. The voice traffic will travel across your LAN or WAN. You will have a single wire to deliver both your network functionality and your telephone functionality.

Typically this type of implementation is seen when a company has multiple branch offices, remote employees or remote sales offices where each location is already connected via LAN or WAN. This allows remote employees to use all of the benefits and features of a traditional business telephone system while being away from the office.

When a company has branch offices, a pure IP implementation creates a single virtual telephone system for all offices to use. A single telephone system for all locations reduces toll charges for interoffice calling, creates centralized administration of the voice and data networks, and creates a single simple numbering plan for all extensions in the system.

In addition, VoIP to the desktop have become popular because of the ease of implementation. Rather than having both a voice network and data network within the office, there is only a single data network. This option becomes very popular with companies that are relocating. Rather than cabling for parallel voice and data networks, a company can implement a single data network for both voice and data traffic.

The downside of having a pure IP solution is twofold. If the network fails, then the telephone system will fail as well. Many times employees are still able to use their telephones during a power outage because traditional business telephones receive power from the telephone system. Many times these traditional telephone systems have extensive battery backups.

Another pitfall to implementing a completely IP based telephone system is that networking equipment may be more expensive. IP telephony requires that the networking equipment must support QoS or Quality of Service. QoS allocates a dedicated amount of bandwidth for voice calls. Voice information is given a higher priority as it is trafficked through the network. If there is network congestion, voice traffic is routed through the network first so call quality does not suffer.

QoS applications are built in to some VoIP systems, as well as some routers. QoS applications can also be purchased separately as upgrades if your network equipment does not currently support QoS. It is not recommended by any manufacturer that a VoIP system run on a network that has not implemented QoS.

The Best of Both Worlds, Mixing VoIP and Traditional Telephone System Technology – Hybrid Implementations

Whether considering purchasing a new business telephone system or adding IP functionality to a current system, mixing IP and traditional telephone system functionality has become very popular. The best part of this type of implementation is that risk is minimized. Traditional, mission-critical business telephone functionality is still handled by tried and true technologies while adding additional functionality to improve communications between multiple locations.

Many current business telephone systems can be IP enabled by adding additional equipment or software upgrades. This allows a company to retain their initial telephone equipment investment and reap the rewards of IP functionality. Enabling IP functionality for most business telephone systems allows remote employees to connect to the telephone system or can enable remote offices to connect via IP into the headquarters location telephone system.

The disadvantage to a hybrid implementation is the same as a pure IP implementation. Most of the time, networks must be upgraded, network failures cause of loss of telephone use, and additional equipment must be purchased.

Voice Over IP from the Carrier

The third most common implementation of VoIP is through the carrier. Many carriers such as Vonage, Covad and CBeyond Communications provide VoIP telephone service at the carrier level.

Carriers providing VoIP service purchased space in central offices so that they can install their own switching equipment next to the RBOC. Depending upon the type of equipment purchased, carriers can provide traditional telephone switching or more sophisticated VoIP switching. When carriers purchase VoIP switching equipment, some of the voice traffic is encoded and partially transmitted via the Internet. The transmission of voice traffic locally is handled via the PSTN, but many times long distance traffic is delivered via VoIP.

Carrier level VoIP services are less expensive than traditional telephone service and eliminate many of the FCC fees incurred by consumers. Many times long distance rates are eliminated because the call is being transmitted via the Internet. On the other hand, sometimes the voice quality may suffer, especially during peak Internet usage times.


I have described in general the three common implementation schemas for VoIP. Now you are armed with enough information to intelligently discuss VoIP implementation modes and have a general idea about what may best suit your company.

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