You''ve probably seen the advertisements and heard the jingles a million times, but still. what the heck is this "VOIP" thing anyway? You''ve probably seen the advertisements and heard the jingles a million times, but still. what the heck is this "VOIP" thing anyway?

Read on and you''ll get some answers: what VOIP is, how it works, and why you should really consider it if you are looking for a way to save money on home office costs and improve the way you communicate with customers and clients.

What is VOIP?

VOIP stands for voice-over-IP, and you may have already seen it marketed as broadband telephone service or internet phone service. Vonage, Packet8 and AT&T CallVantage are a few of the more well known companies offering VOIP. In a nutshell, VOIP is just geek-speak for talking on the Internet. Just like sending email, instant messaging, and downloading files, "voice" becomes just another form of data.

How it Works

In a regular phone call, your voice is transmitted over the Public Switched Telephone Network, or PSTN. In a VOIP call, your voice is converted to data, chopped up into packets and transmitted over the Internet instead, by-passing for the most part the traditional telephone network and charges. With a headset and microphone, you can use your computer to talk to someone on their computer over the Internet. Or, you can plug a regular telephone into voice converter called an ATA (Analog Telephone Adaptor) which then connects to your high speed Internet modem.

How Much You Save

Switching to VOIP for some or all of your home business telephone service can save you at least 50% to 60% off your telephone bill, although it depends on your calling patterns and business needs--whether you make a lot of long distance or overseas calls, or require special calling features such as call conferencing, toll free numbers, and multiple lines.

Plans start at as little as $ 15 per month for the most basic service. More expensive plans cost around $ 40 per month and include important business features such as fax service, additional lines and high volume unlimited calling. Setup charges are free to minimal but termination fees apply should you decide to cancel your service.

Why VOIP is Great for Home Offices

Here''s a good example: Jen is a successful home-based working mom who sells beauty products online from her home in Denver. While her suppliers and customers are all over North America and Europe, her parents live in Boston, and her best friend moved to London, England.

For around $ 45 per month using VOIP, Jen is able to:

• Call long distance to her suppliers, family and friends
• Provide a toll free number to her online customers
• Provide local numbers to her family in Colorado and the UK so that when they call her, they pay only for the cost of a local call.
• Provide a dedicated fax number for placing and receiving orders.

In addition to low rates for long distance and unlimited calling to select destinations, VOIP phone service has great features that traditional telephone companies charge for. For example, most VOIP plans include voice mail, caller ID, call waiting, and 3-way conference calling.

Drawbacks and Tradeoffs

The downside to VOIP home phone service is that it relies solely on a broadband Internet connection and a stable power supply. VOIP phone calls need wall power just like your computer and dishwasher. So, during a power outage you won''t have any phone service.

Voice quality is also variable. Some people have reported clipping, echoing, and dropped calls. Internet congestion as well as the load on your computer at the time of the call can also have a negative effect on quality.

While voice quality is not necessarily better on the PSTN all of the time, the PSTN provides power on the phone line itself so when the power goes out, a regular phone still works.

Emergency 911 dialing also doesn''t work how you expect. There is no way to tie a geographic address to the IP address used to route calls in VOIP. VOIP telephone companies get around this by having you register your physical address with them. When you dial 911, your information is forwarded to an emergency response center. However, if the emergency response center cannot electronically receive address information, you will be asked to provide this information to them, which may prove impossible if you are unable to speak or if the caller is a small child.

How to Choose the Best VOIP Service for You

There are basically two types of VOIP phone services: free and subscriber. You can try VOIP without risk or cost through services like Skype. Skype is a free download available at www.skype.com. Armed with just a microphone and headset (or speakers), you can call other Skype users anywhere in the world for free, AND as of May 15th 2006 through to the end of the year, Skype is
providing free computer-to-landline calls anywhere in the U.S. and Canada. There has probably never been a better time to give VoIP a try!

There are also subscriber VOIP services offered by national companies like Vonage and Packet8. For a monthly fee between $ 14.99 and $ 39.99, you have unlimited calling within North America and very low rates to everywhere else, plus great calling and business features such as voice mail, caller ID, and 3-way calling. The advantages of a national service are several: excellent call quality, you can use a regular phone, you receive a new phone number in the area code of your choice, or in many cases you can transfer your existing phone number over to VOIP.

Another option is to check with your local telephone or cable company.
Chances are they have a VOIP service or are planning to offer one soon.

What You Need to Get Started

To get started using VOIP, you need the following:

• High speed Internet connection, usually a DSL or cable modem provided by your Internet Service Provider.
• An upload speed (that''s the speed of data coming into your modem), of at least 70 to 90 kilobytes per second.

If using a handset to make calls, you need:

• An ATA that connects a regular phone to an Internet modem. An ATA is a small device that converts voice signals between analog and digital formats. It is usually provided by the VOIP service provider.
• Or, a VOIP phone that plugs directly into an Internet modem. A VOIP phone has a built-in ATA and is a little pricier. Depending on the plan, it may be provided by the VOIP service provider.

If using free VOIP software such as Skype to make calls, you need:

• A microphone and headset or speakers.
• Or, a Skype-enabled handset that connects to your computer.

Learn More.

In VOIP you''ll find big company telephone features packaged and priced right for home-based businesses. From free services to subscriber services, there''s a VOIP plan out there that''s right for you.