Business Service Provider Models of VoIP - Research Paper Example

? VOICE OVER IP (VoIP) TELEPHONY Introduction and Background One of the most popularly used communication technology in modern world is the Voice over Internet Protocol or VOIP. It consists of a group of technologies that helps to deliver voice communications and multi-media over the internet. In the 1980s, SBC of AT&T built an initial model that would enable long distance voice telecommunication. The AT&T networks were built on the concept for offering a platform for launching voice messages over non-telephonic media network connections. The VoIP concept originated in the year 1995 when technology for transferring voice data over internet was discovered and it was quickly realized that such discovery holds great potential in revolutionizing traditional telephone communications. In simple words it can be said that using VoIP applications a caller will be able to avoid paying long distance international call charges and also save expensive telecommunication hardware and infrastructure (Hallock, 2004, pp.5-8). The principles of VoIP are similar to traditional digital telephony in that the former also involves channel setup, signaling, conversion of analog voice signals into digital signals, encoding and decoding. The difference with traditional digitized telephony is that the encoded VoIP digital signals are transmitted over packet-switched networks as Internet Protocol or IP packets instead of being transmitted over circuit-switch network. This concept of packet-switched data transfer is based on the principles of time-division multiplexing networks. The early business service provider models of VoIP were based on traditional telephonic networking only with difference on how the data would transfer across channels. The second generation providers of VoIP included the concept of closed networks for enabling private communication between secured user bases. The Skype is one of the most popular second generation VoIP service providers whose technology offers their users free calls. But the business model of Skype charges connection or access charges to customers to use private networks or public switched telephone networks (PSTN). The advantage of such model is that user’s requirements for hardware or software compatibility would be minimized and independent. The third generation of VoIP, mainly popularized by Google Talk, allows dynamic interconnection between any two user domains on the internet (Bianco, 2006, pp.365-367). Analysis of Existing Applications and Market Trends The main reason for the growth of VoIP over the years is due to its popularity as a business data networks application. With the application of VoIP a business enterprise will be able to reduce its service and hardware costs by increasing productivity through customized telephony applications. VoIP technology ensures secured and consolidated telecommunication network for business enterprises. As the prices of bandwidth are falling, the internet telephony is increasingly becoming popular and more accessible to global customers. With the help of VoIP business critical information could now be telecommunicated without any significant delays (which were more prominent in traditional international telecommunications) and hence increasing the efficiency of the company. Thus, one of the major reasons for quick acceptance of VoIP was cost efficiency that the companies could realize from the implementation (Bergstrom, 2004, pp.17-18). (Source: Tele Geography Research, 2008) The traditional telephone lines are replacing the medium of communication between business enterprises as well as households. A research has found that only the North American residential VoIP services has grown over 31% CAGR (compounded annual growth rate) and it was a $1.25 billion VoIP service industry in the year 2005. (Source: Word Press, 2011) The main drivers for the tremendous growth of VoIP can be attributed to some important VoIP characteristics including cost savings, reliability and easier functionality. SWOT Analysis The VoIP technology allows customers to make free voice calls over the internet which is a great advantage over traditional telecommunications. The application of VoIP is not only limited to internet based voice communications but also includes faster file transfers, instant messaging, video conferencing, and so on. All these features are the reasons for growing market of VoIP. Unfortunately, there are limitations to compatibility of data networks which are mainly caused from the limitation of availability of power. Generally, most data networks use power backup supports such as UPS or generators in case of sudden power failure. Such backup devices can provide the time required for saving business critical data. However, the problem with VoIP technology is that it requires above average power consumption and consequently its backup time is reduced by 20-30 percent (Penn State University, 2013, pp.3-6). A strategic SWOT analysis of VoIP based application gives the following results: Strengths Cost advantage Faster and effective domestic as well as international communication Strong growth and acceptance in the society Customer loyalty Relatively less expensive compared to regular telephony Opportunity cost advantage (especially for businesses since firms can now allocate their scarce resources elsewhere) Very advantageous for small and medium business organizations who could now have global access Free services with no additional cost Better automation technology that requires simple upgrades and least maintenance Quick transfer of business documents Weaknesses The quality of service is not guaranteed Bandwidth is limited and depends upon the service provider Compression and routing techniques is complex High operational cost Compatibility issues with traditional analog telephony Limited access to internet Opportunities Lower cost and easy installation to set up VoIP networks holds huge potential to increase the market share Both the customers as well as operators will be able to save money VoIP is available anywhere in the world where there is internet and hence the market access is limitless Technology to provide option for switching computer-to-computer and computer-to-phone Using existing data networks to steer calls Threats Transmission of private voice data over public networks Dependence on the internet protocol to deliver services can prove fatal in terms of security Hacking, spoofing and exploitation before data reach end user Regulatory restrictions and guidelines Competition from cheaper technology Economic slowdown and exchange rate fluctuations Opportunity and Recommendations for Business Managers Business managers are choosing to switch to VoIP services from traditional telecommunications mainly because of the cost advantages, support, and compatibility factors that gives VoIP an edge over other types of telephony. Business managers are recommended to adapt VoIP technology for telecommunication because by switching to VoIP they will be able to reduce their cost on long distance international business calls. Also, the old telephone systems are dependent on the operator’s connectivity which may be limited and hence traditional telephone systems will no longer be supported in future. Again, the additional features including file transfers, instant messaging, video conferencing, etc. are not available in traditional telephony. Hence from the above discussion it can be said that the faster business managers are able to identify the opportunities of VoIP, the more they will be able to make their business efficient (Mehta and Udani, 2001, pp.26-28). Conclusion The users of VoIP can benefit from features that are not available in traditional telephony such as caller identification, voice mail, call blocking and call forwarding, video conferencing, instant messages, and so on. The biggest advantage is that all these additional features will be available at free of cost using VoIP technology. Also, VoIP users will be able to access and use the services from anywhere provided they have access to internet connection. The technology is very crucial for enterprises where downtime implies loss of revenues. There is huge potential for VoIP in future if the quality of service in terms of voice and video is improved. Issues related to slow deployment, call loss; security over data transmission through public networks, jitters and quality needs to be addressed. The future trends in VoIP will include new security features such as voice recognition for secured access, technology convergence, use of hybrid systems that connects phone and computers (Werbach, 2005, pp.2-8). References Bergstrom, D. (2004). An Analysis of Skype VoIP Application for Use in a Corporate Environment. Retrieved from http://www.cs.columbia.edu/~salman/skype/Skype_Analysis_1_3.pdf. Bianco, M. (2006). Voices Past: The Present and Future of VoIP Regulation. Retrieved from http://commlaw.cua.edu/articles/v14/Del_Bianco.pdf. Hallock, J. (2004). A Brief History of VoIP. Retrieved from http://www.joehallock.com/edu/pdfs/Hallock_J_VoIP_Past.pdf. Mehta, P. C. and Udani, S. (2001). Overview of Voice over IP. Retrieved from http://www.coe.montana.edu/ee/rwolff/EE548/papers/VoIP/upenn_Overview_VoIP.pdf. Penn State University. (2013). Strategic Plan. Retrieved from http://www2.hn.psu.edu/hn/strategic_plan.pdf. Werbach, K. (2005). Using VoIP to Compete. Retrieved from https://files.nyu.edu/kb16/public/voip.pdf. Read More