George Tipper explains VOIP, one of the latest technologies to hit the business sector.

What is Voice Over Internet Protocol (VOIP) and what's the fuss about? Why are organisations in the insurance sector turning to it for telephony infrastructure?

The bottom line is cost and quality. VOIP results in cheaper - and in many cases free - calls to participating parties, a useful attribute for a sector traditionally noted as being a very closed community.

VOIP is voice information delivered using the internet network protocol (IP). Voice information is identified, and individual packets are sent in digital form over an IP network that normally delivers only data. In contrast, the traditional PBX and public switched telephone network uses circuit-committed protocols and expensive, dedicated switches.

One of the major factors in the decision to use VOIP generally is that VOIP infrastructure is cheaper to implement and run than a traditional telephony infrastructure. In addition, VOIP uses a reliable network can now deliver the quality and reliability which business needs. That's why telecoms companies are implementing VOIP at the core of their networks. Network reliability and quality are key here. VOIP can be used over the internet, but the internet is not yet up to the job of delivering quality connections all the time, a fundamental necessity for a voice conversation. And some say that the internet will never be up to the job. A reliable private IP network for VOIP allows a quality service to be delivered.

Some may view VOIP as another `fly-by-night' new technical trend with no real place in the business world, but much the same was said of the internet six years ago. The first experiments with VOIP used cheap devices and the internet, and worked in much the same way as the Wright brothers' first flight. Just a few years on, we now have the equivalent of VOIP jetliners, while traffic control and the first airports are opening. Even so, many people's perception of VOIP based on early experiments - poor quality, flaky connections, no good for business.

With major vendors such as Cisco now providing VOIP technology and reliable, broadband networks providing the plumbing, VOIP has come of age.

`If it ain't broke, don't fix it'
Nevertheless, for many people, new technology is a case of, `if it ain't broke, don't fix it' and they see no reason to switch to VOIP when the existing phone system does its job. But VOIP isn't necessarily a case of either/or; it is possible to run both VOIP and the existing company PBX in tandem, rather than do away with existing infrastructure. Why do so? Because new VOIP services now coming on-stream allow an organisation's internal, traditional telephony to be connected to an external VOIP service, delivering cheaper or even free calls.

A number of market players including Markel International are currently trialing the new VOIP service supplied by BIS, a provider of communications solutions and electronic infrastructure, and BIS plans to connect as many as possible in the London insurance market to deliver free calls to the community.

It is only necessary to junk existing internal PBX and telephone cabling and move entirely to VOIP if an enterprise wants to run IP telephony all the way to the user's desktop. There are occasions when it will be cost-effective to do this, for example when upgrade of the PBX is pending or when an organisation is moving to a new facility and has a clean slate in terms of voice and data communications. Clearly, running one converged network for voice and data rather than two separate ones should be more cost-effective, and running IP to the desktop allows delivery of the new services envisaged by the VOIP technology providers.

Ultimately, VOIP may have an impact upon the structure of an organisation. Separate departments often handle voice and data responsibilities and budgets. The resulting `turf war' as to who is responsible for this new infrastructure may be challenging for an organisation. But every organisation needs to be able to use the most cost-effective option for any service. With a VOIP service, organisations can retain their existing PBX systems but connect to an external VOIP service where each call will be routed on a lowest call cost available basis. Where both the caller and receiver are using the same VOIP service, the call is free. These savings cannot be ignored.

Tightly defined
For close-knit business communities such as the London insurance market, communication lines have traditionally been tightly defined and the telephone is a vital business tool. Free calls around the community would be a major saving and cheaper calls to everyone else, a bonus. The insurance sector is often considered as old-fashioned and insular, but VOIP is where the attribute pays off.

The insurance sector is often perceived as being a couple of years behind others in the shift to virtual communication, but with the inevitable move to more global trading, its adoption of VOIP can be key to efficiency by making the good old-fashioned telephone a more capable and cost-effective business tool.

By George Tipper

George Tipper is business development manager at BIS, a leading provider of communication solutions, providing cost- effective and secure electronic infrastructure for business. BIS has developed from supplying internet services to the Baltic Exchange corporate membership to providing services that exploit high bandwidth IP networking.