The technology is certainly here, but have we seen the benefits of better voice quality and cheaper services? Many of the industry leaders seem to think that while the potential is still there, it's mostly unrealized at this point.
"On the 'pros' side, it can be cheaper. If you have plenty of data bandwidth [fat pipes that aren't typically congested with data], odds are that VoIP can squeeze in without adding more bandwidth. Thus, it's free bandwidth. That's the obvious win, of course. And it can be a major cost-savings compared to separate voice calling to some foreign countries, notably Latin America. (Bandwidth to the EU is so cheap it doesn't matter much any more.)," says Fred Goldstein, President of ionary Consulting, a company specializing in telecom and VoIP issues.
Tyliszcak echoes Goldstein's sentiments. "The real benefits to VoIP are better integration with unified messaging, call centers where the computer screen can act as the telephone, and other combined voice and data applications. It also offers more robust failover backup for systems survivability." Of course, business continuity and disaster recovery are high on many company priority lists these days.
Chris Ward, Senior Director of marketing at iBasis, a wholesale VoIP service, notes, "VoIP is still a viable business opportunity because the cost of bandwidth has gone down faster than the price of international long distance. Over 10% of the international telephone traffic is now VoIP."
It sounds like VoIP has some real advantages. Well, perhaps, but on the minus side, "The international market is already used to lower quality service and is very price sensitive. VoIP is still new technology, so the quality issues have not completely shaken out," continues Ward. Goldstein also reports that, "On the 'cons' side, there are a bunch of issues that don't get enough press," including:
Goldstein lays out the problems, "Voice quality is inferior. That can impact productivity, because people have to talk slower, or worst case, it's like 'bad cellular,' and you don't want dachshunds or mattress dudes showing up! How inferior is largely a design issue; VoIP with heavy compression saves bandwidth, but at serious audible [quality] cost.
"[VoIP also] doesn't work well on congested data networks. If the data network is fairly busy, it will discard packets, which will impact voice quality. Data retransmits; voice doesn't. This is probably worst on the costliest routes, of course. Another issue is that real TCP data slows down in the presence of congestion, while streams such as VoIP don't. VoIP traffic can crowd out data if it's a large fraction of the traffic on a given link.
"Data gear is less reliable. Telephone networks have a 'five nines' tradition. Even PBXs don't have much downtime. TCP/IP networks have more downtime, almost by design, although now the equipment is getting more reliable."
Tyliszcak adds, "There can also be political problems caused by merging support organizations that traditionally never worked together. Between the telephone, network and systems groups, it is not always clear who is responsible for the equipment and support."
VoIP follows the data business process model rather than the telecom switch model. You bill by the size of the pipe, not by the amount of traffic on that pipe. Software to track and bill for calls by the minute doesn't exist.
The most important disadvantage according to Goldstein, "Non-IP voice is usually cheap enough! The bandwidth cost of domestic calling is almost always below a penny a minute; LD carriers give decent deals to even moderate-sized businesses who don't want to run their own voice networks. VoIP's putative savings are thus solving 1983's problem more than 2003's."