© 2005 by Nick B. Nicholaou, all rights reserved
President, Ministry Business Services, Inc.
Reprinted from The Clergy Journal’s Faithful Finances

VoIP is a hot topic of conversation at nearly every ministry conference these days!  VoIP, or Voice over Internet Protocol, is what many think of as free phone calls over the Internet.  Television cable companies have begun advertising it to compete with telephone service providers, and now telephone service providers are offering it too!  VoIP sounds promising, but is it as good as it sounds?  Let’s look together at VoIP: what it is, its upsides and its downsides so you can determine if it is for you.

What exactly is VoIP, anyway?
VoIP is a method of making phone calls over the Internet network rather than over the telephone network (known as PSTN— Public Switched Telephone Network or POTS— Plain Old Telephone Service).  The Internet relies on a standard called TCP/IP (Transmission Control Protocol / Internet Protocol) to move data from one computer to another.  Thus transmitting voice over the Internet network has become known as Voice over Internet Protocol, or VoIP.

How does it work?
PSTN was, at one time, an entirely analog (vs digital) network.  In recent years it has become digital everywhere except for the final link from the local central office to the user.  Most telephones are thus analog devices.  To move data of any kind over the Internet it must be digital.  VoIP either requires a telephone that is different from your old telephone (because it’s not digital), or it requires a converter that turns your old telephone’s signal into a digital signal.

There are several ways people connect to the Internet and make phone calls:

• ATA (Analog Telephone Adapter) devices allow you to connect your standard telephone to the Internet and make VoIP phone calls.  If you get a VoIP service that says it will use your existing telephones, you will likely use ATAs.
• IP (Internet Protocol) phones plug directly into the Internet through your router.  Instead of having a standard-sized modular plug (RJ-11), they have a slightly larger Ethernet plug (RJ-45).  Soon wireless phones will also have the ability to connect to WiFi networks, allowing wireless phones to make VoIP calls almost anywhere there is a WiFi signal.
• Many are using free or inexpensive software on their computers (www.skype.com is a popular example) to make VoIP calls.  Adding a microphone and speakers, (or using a microphone-equipped headset) and using their computers is about all it takes!

Once your phone or computer has an active Internet connection, you dial just like a normal call and talk.

And because voice and video can both be digitized, VoIP may be the force that makes video phones a reality!

What are VoIP’s benefits?
When your computer is connected to the Internet and you send an email, you don’t pay a different fee based on the email’s destination, you just pay a flat-rate connection fee.  VoIP is similar.  Using your Internet connection, you’re sending voice-data rather than email-data.  So you are only charged a flat rate for your Internet connection, and you can call anywhere in the world for free!

Some services require the person you’re calling to be in their VoIP network for your call to be free, and calls outside their system may have a nominal charge.  For instance, when I called a friend in New Zealand recently on their home phone (rather than directly to their computer) from my computer in the US, I only had to pay $ .017 per minute.  That’s less than two cents per minute for an international call!

So the benefit and the lure is the elimination of long distance and international call charges and all of their associated taxes, etc.

Is it too good to be true?
VoIP works pretty well, and most will be happy with it.  Two exceptions are:

• A fact about the Internet is that it isn’t up and running as consistently as the PSTN.  Because there aren’t any regulated uptime requirements for the Internet, it is susceptible to power outages, DoS (Denial of Service) attacks, and more.  That means you could be cut off at any time during a phone call, or may not receive some phone calls— all without warning.
• If you are a business and would have to spend a lot of money on a new VoIP voice switch, the extra cost for the equipment may take awhile to justify unless you make a lot of long distance and international calls.

I spoke with a ministry last week who told me their Internet connection had recently been down for more than a week.  Believe it or not, they’re still moving towards VoIP!  One of our engineers has a friend whose home phone is VoIP and who told him he hadn’t been able to make or receive calls that day because of an outage.

Will it always be this way?
Fortunately for most of us there are many early adapters who will get frustrated with their intermittent VoIP connections and complain.  Some of those complaints, if not responded to by the industry, will get government attention which will bring about Internet reliability regulations.  The Internet will become more stable over time, but it will be a few years before it matches the stability and reliability of the PSTN.

Conclusions
VoIP will continue to grow and will become the standard for telephone service over time because it’s cost model is very attractive.  Early adapters will occasionally lose their ability to make and receive calls, increasing the outcry for a more stable Internet.  Making VoIP your primary or only telephone choice could cost more than just the amount for equipment if you’re a business or if there is an emergency and you need to connect with help.  Those costs could easily outweigh the savings realized by relatively free long distance and international calls.  But it does make great sense for long distance and international calls— especially if the person with whom you want to talk is also in the VoIP system you choose.