A Plain English Overview of Small Business VoIP

Everything the Small Business Owner wanted to know about VoIP but was afraid to ask...

Imagine the largest machine in the world in a reign that lasted over 100 years. Then, in almost an instant, it was consumed and devoured by another even larger machine. Understand this and you will understand the nature of Voice over Internet Protocol… or VoIP.

My name is Scot Bernhard, I am the Lead Engineer at VoIP PBX Express. I hold and maintain multiple Cisco Design and Programming Certification Specialties including the CCNP Voice, CCNA R&S, CCDA, Cisco Call Manager Express Foundation Design Specialist as well as Technical Degrees in Computer Science, Computer Engineering Technology, and Industrial Electronics. My career in networking spans 20+ years with a focus in Voice Networking and VoIP Technologies.

I am writing this article because I wanted to explain VoIP or Voice over IP in plain English for everyone to understand. I also wanted to break it down specifically for the small business owner. In talking with over 1,000 small business owners over the last 2 years about VoIP, I find many of the same common misunderstandings. Some that lead to mis-steps. I wanted an easy to read explanation that could shed some light on these concepts and help create a better understanding of, not just the technology, but also what VoIP REALLY means to a small business and how you can use it effectively to increase efficiency and productivity while at the same time driving down IT costs.

What is VoIP or Voice over Internet Protocol…

OK while the above statement is a little dramatic, the fact remains that the Telephony Network (dial-tone calling), started in the 1800s, was the largest machine ever until the end of the Millennium. The PSTN, or Public Switched Telephone Network, is made up of circuit switched, older Bell-Labs technology, it actually still works quite well and, in part, it does still exist today. T1, PRI, FXS, FXO, E&M are still practiced technologies. Analog is in fact alive still.

However, there are significant benefits of moving the PSTN (circuit switched network) onto the all-consuming Internet. In order to do this, it must be made to look like computer traffic. Voice has to be processed or digitized, compressed, and packetized in order to be passed on to the Internet. It must be made into the “language” or protocol defined for VoIP (Voice Over Internet Protocol).

Voice Over IP is the means and methodology for digitizing, compressing, and packetizing voice to run over IP (Internet Protocol).

Voice Digitization – The process of turning voice into 1s and 0s. By taking an analog waveform (your voice) and sampling the input amplitude and frequency and creating a binary digital representation of your voice. Many people still remember the reverse effect of this which is having 1s and 0s turned into an analog waveform, or the wobble of the old dial up modems.

Compression – To be made to be smaller. Voice is highly compressible. The nature of voice is that only one person speaks at a time and we have pauses in between words, sentences, and phrases. Voice compression became prevalent in the 1990s when businesses were using 56K and Frame Relay WAN lines to transmit voice with their WAN data traffic. They did this in order to bypass heavy 90s long distance toll charges between their branch locations, lowering their phone bills sometimes by $1000s/month. This would lay the groundwork for enhancements in IP based voice which had the same challenges with latency, jitter, sequencing and bandwidth.

Packetization – To be made to traverse a network. The digitized-compressed voice is broken up and encapsulated, framed, and addressed in network packets or more specifically, Ethernet and Internet Protocol (IP) packets. Doing this allows for voice traffic to cross your Local Area Network and sometimes the public Internet the same way your computers and other network devices do.

Whenever VoIP is established at 2 endpoints (a phone conversation) this digitization, compression, and packetization occurs at both locations. VoIP endpoints can be IP Phones, PBXs, or VoIP modems. Along the path between the two endpoints, controlling network devices are involved in the assuring the transmission of the VoIP packets in a timely manner.

IP PBXs and VoIP modems are often described by different terms, Cisco refers to them as ISRs (Integrated Services Routers) using CUBE (Cisco Unified Border Element)… that’s a mouthful of acronym.

Voice over IP for Small Business….

In order to understand how VoIP works for small businesses, it is necessary first to understand there are two sides to every phone system. There is the Phone Side and the Trunk Side. Or as my old Industrial Electronics instructor James Perozzo used to say “It’s gotta have a goesinta and a goesoutta” (with a pseudo Italian accent).

The name for a phone system, PBX, means Private Branch Exchange. That is, it is the exchange between your private phone network (in office) and the outside
phone network or PSTN (dial-tone). Almost every PBX has more in-office phones that phone lines and the PBX acts as the in-between controlling device.

A VoIP PBX also has a Phone Side and a Trunk Side. And how VoIP applies to each in a small business environment, is explicitly different.

VoIP on the Phone Side, most likely, is just your local in office cat5/6 network. IP Phones connect thru cat5s to an Ethernet Switch. They are networked and powered by the switch and handed to the PBX on an Ethernet cat5 interface. Basically, you can put an IP phone anywhere you can put a computer. Which means that you can also connect branch office PBXs and IP Phones thru a WAN or VPN connection in order to make multiple systems function more like one common system. Two or more systems at two or more different locations connected with VoIP enjoy features like being able to call extension-to-extension, share phone lines, share receptionist and bypass long distance toll charges. Also, you can have work at home VPN IP Phone users that have the same phone system functionality they would have at their desk, virtually from anywhere.

An important difference to note between the Phone Side and the Trunk Side is that on the Phone Side, you will have in-office cat5/6 cabling costs and maybe internet access for remotes, but there is no service provider involved and thus no monthly fees.

The Trunk Side is your phone systems connection to the outside world or PSTN. This is where you access dial tone. Many of our VOIP PBX customers still use regular old POTS Landlines. In order to do this their PBX uses VoIP on the Phone Side and then uses FXO Analog ports to connect to RJ-11 jacks thru a regular phone cord on the Trunk Side.. The PBX not only institutes the VoIP but converts it between analog and digital. A lot of the time, our customers have an old PBX from the 90s that has gone Kaput or they can’t find anyone to service it. They don’t want to change their phone service or phone lines in any way. They take advantage of the flexibility provided by being able to network VoIP on the Phone Side while leaving all their original Trunk Side service the same. Analog lines still cost about $25-35/month and come with a lot of fees and taxes.

The 2 other predominate Trunk Side services are T1-PRI and SIP Trunks.

T1-PRI is digitized voice but not packetized voice. It used to be that when ISPs had banks and banks of T1-PRI service to serve the “goesinta” side of the ISPs dial modem service. Since then everyone has moved to broadband and T1-PRIs have moved to small business. PBXs with T1-PRI service have calls that connect very fast and with perfect clarity. The signaling allows some additional features for phone systems, like manipulation of the outbound Caller-ID and DIDs (Direct Inward Dial) numbers. DIDs allow you to have more phone numbers than phone lines. A Trunk Side of the PBX may have only 6 lines but 20 numbers that ring into it, all that map to different destinations like a line appearance, an auto-attendant or an IP Phone. The price on T1-PRI has dropped drastically in the last few years into about the $300-500/month range. You can get a T1-PRI that is an integrated T1 serving Internet access as well as VoIP Service.

SIP Trunking is the Trunk Side VoIP service. A SIP Trunk is nothing more than a phone line that runs over IP or Internet access. SIP Trunks can run over your existing Internet access line or a phone carrier may choose to drop in an individual access line for just your VoIP. Typically, the PBX uses a static set IP address to connect to a service provider the same way your PC gets to a web site. If you have a system with 4 phone lines and you want to move to SIP Trunk service, you will need 4 SIP Trunks. Instead of terminating on your wall on a jack, they terminate inside the PBX via a network port. SIP Trunks also allow for the same advanced calling features (Caller-ID manipulation and DIDs). SIP Trunks are cheap about $10/month or $25/month with unlimited long distance calling. You can connect to almost any SIP Trunk provider as long as you have a SIP compatible PBX and Internet access. SIP Trunks also appear to have less taxes and fees than Analog or T1-PRI.

The pitfalls with SIP Trunks…. SIP Trunks are based on networking technology. Networking SIP means that the SIP, at some point, will be combined with some data. Just like networking, computers must be done properly and so must networking voice. How the VoIP performs on the Phone Side and Trunk Side depends on how well the system is designed. When configured and installed properly, using a vendor that specializes in networking like Cisco Systems ensures that the base underlying architecture will be strong and more than likely, the system will run well and be stable. Because they make the PBX, the switch, and the phones, it guarantees device inter-operability and it does result in a more secure phone system with enhanced features, productivity, and flexibility.

Bandwidth isn’t everything….

One thing I hear a lot from Small Business Owners. “I have X Meg up and down from my ISP so I am ok there…”. Well yes that’s true, kind of.

Bandwidth does have a lot to do with making sure VoIP runs properly. I mean if you are pouring water down a pipe, you better make sure you have enough pipe. However, that’s not the only thing. Latency and Packet Loss. Latency is the delay that a packet has in reaching a destination. You can have a 100Mg connection to your ISP but if there is something delaying transmissions of packets between your VoIP endpoints, you may experience problems with your VoIP. Voice doesn’t like delay. Does anyone alive remember the old satellite phones? I do… works but I wouldn’t want to have my install department engaging customers over it. People having a conversation will talk over each other at times. Or packets are so late they are discarded leading to packet loss. If you lose enough packets your voice starts to sound digitized and garbled much like a bad cell phone connection. Quality of Service or QOS techniques can be used here and help to prioritize and give guaranteed latency response or reserved space allocated to your VoIP on the Phone Side and on the Trunk Side. Again, design and proper configuration-install is the key here.

One thing to keep in mind here is that on the Phone Side there is a lot more going on than on the Trunk Side. Signaling between phones includes not just the voice call but the phones must communicate and signal with each other in real time to have the advanced features of your private Phone Side network. Transfers, conference calls, lighting of line appearances, message waiting indicators, voicemail access, these are all things that happen far more often on the phone side than on the trunk side. Not only must each IP phone perform these functions but it must signal and coordinate with every other IP Phone on the Phone Side of your VoIP PBX.

Types of PBX Phone Systems…

There are 3 basic types of Small Business Phone Systems. Traditional, VoIP, and Hosted

This is your old PBX or KSU (Key System Unit). Analog/Digital Phone Side (not VoIP) and Analog/Digital (not VoIP) Trunk Side. You will see a lot of old AT&T Merlin, Panasonic, NEC, Nortel Meridians still in use. A Traditional PBX could also use a T1-PRI if they were really advanced. These were the original Multi-Line Phone Systems.

VoIP on the Phone Side and Analog/Digital/VoIP on the Trunk Side. The typical knock on VoIP PBX Systems is that they are very expensive, both to
buy and to maintain. Typically, they have been (stay tuned). See prior Phone and Trunk Side explanations, enough said.

Hosted PBX
Another type of VoIP phone system that you see in many small businesses is a Hosted PBX. A Hosted PBX is a PBX that runs on a server somewhere on the Internet. The Phone Side extends down to you on an Internet access connection. The Trunk Side and the PBX itself are owned and controlled by an external server and network.

In theory, and often, it works. But because there is so much signaling and coordination that goes on in the Phone Side, sometimes it doesn’t work so well.
At times, an IP connection can have frequent delays or latency (that don’t always come down to bandwidth) and sometimes it can cause all that Phone Side coordination between VoIP devices to slip or mis-align. Many small business customers do experience dropped and poor quality calls because they simply do not have good synchronization between VoIP devices. For some customers this is a non-issue (they don’t rely that heavily on their phones), for some businesses it just isn’t acceptable. Some questions that come into play here are simply how does phone traffic pertain to your daily small business operations, is it critical? “If the internet goes down, can I wait for my phones to come back up with it or… if this install doesn’t work, how hard will it be to switch service providers?” Having your phone company own (not just your Trunk Side services) but your entire PBX means you are as locked as a cell phone to a cell contract. Many times hosted-system providers advertise no contracts simply because they know they won’t need one knowing how difficult it will be for a customer to change to another service provider.

Again, it’s not that hosted-systems don’t work but they don’t work as often as a sales rep drawing a cloud would have you believe. I know this for a fact as we replace many hosted systems where the small business owner is beyond frustrated with the service. No doubt, the technology will improve over time. Be that as it may, as the Internet overall becomes more crowded with streaming other services (Netflix makes up 33% of all internet traffic), the more the voice will have to contend for on the Phone Side of Hosted Systems. Still, I’ve yet to hear one customer rave about how good their Hosted PBX works, usually their response is negative or it works “just ok”.

The proper way to design a hosted service would be with a private line circuit to the premises but then cost starts becoming a factor. Hosted Systems can also be very expensive. Because they serve you on the Phone Side, often they want per phone per seat monthly licensing. Once more it brings up more practical business related questions like “this might be ok up to 5 phones, do I see myself moving beyond that. And if I think I will be at 20 phones in 1-2 years, how much is 20 x the per seat license?” Monthly it can add up to a lot and again, it may not be very easy for you to change phone systems once the time comes. Some forethought now could save you some much-needed growth capital later on.

Understanding the PBX nature of Phone and Trunk side and how VoIP applies to each individually, in addition to knowing the different type of phone systems available, will go a long way towards helping you plan your future phone system needs.

VoIP PBX Express and our Unique Value Proposition…

There are many small businesses where an onsite VoIP PBX is clearly the best solution. The customers want to take advantage of the low monthly cost of phone lines and/or they require system performance you can only have with an on-premises VoIP PBX.

The two biggest negatives of VoIP PBX Systems are that they are expensive to buy and expensive to maintain. Both have been true for a very long time… Cisco, for example, is a workhorse product. Solid. Cisco can be difficult to configure and program. It is so sophisticated; the number of available options is enormous. It was our goal at VoIP PBX Express to find a better and more efficient way to bring costs down. We have accomplished just that.

We use standard small business template applications to match your individual needs to correlating programming modules. We stage systems in house as opposed to installing them onsite and when we send the system out it is 90% plug and play. We can access systems remotely to add efficiency to configuring, troubleshooting, and remotely managing each IP PBX. Our project managers have become small business VoIP PBX installation experts and each install averages less than 2 hours (with training). As a result, the overall cost drops and we offer reduced price Safe-Net Premium Service Agreements where we spare each item of the complete VoIP PBX System and provide priority technical support on demand.

Many small business owners and managers have learned a small amount about I.T. in the last decade, having to network their own computers. Cat5, network switches, etc. This makes it easy for us to explain over the phone how to connect the Cat5 cables involved. It allows the small business owner to use their basic network knowledge to enable us to deliver complex Cisco and Networking expertise, but in a more cost efficient method… and we pass the savings along in the low system prices.

About the Author…

Scot Bernhard is the Lead Engineer at VoIP PBX Express. He holds and maintains multiple Cisco Design and Programming Certification Specialties including the CCNP Voice, CCNA R&S, CCDA, Cisco Call Manager Express Foundation Design Specialist as well as Technical Degrees in Computer Science, Computer Engineering Technology, and Industrial Electronics. Scot’s career in networking spans 20+ years with a focus in Voice Networking and VoIP Technologies. Scot is available to answer questions most days at:


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