Sound good? It is good, and it’s making Telstra and other large ingrained telephone companies around the world very nervous.

Last week here at Arts Hub we threw away our expensive leased PABX system, and installed a brand new VOIP (voice over internet protocol) telephone system. It features all the benefits on the list above, and more.

So what is VOIP? Basically it’s telephones run over an internet connection. Nowadays if you ring Arts Hub, instead of your voice hurtling down one of hundreds of copper wires laid under our street and into our building, it’s chopped up into bits and bytes and sent to us over the Internet. Some cool software and hardware housed at our internet provider grabs the phone call and directs it to our phone handsets, and hey presto, our phone rings.

With non-VOIP telephone systems you need a piece of copper wire coming in from the street for each incoming telephone line. So if your PABX has four phone lines, you need four pieces of copper. And if each of the four lines are being used, no-one else can make a call out – and conversely, and possibly more critically, no-one call you.

With VOIP incoming and outgoing lines are virtual, they are created on the fly as need. So in the Arts Hub office we can have every handset operating, answering and making calls, all at the same time. And we need only one phone line – and that’s for our internet connection.

It’s not hard to see why the Telstra’s of this world are worried by VOIP. Research by McKinsey Consulting suggests $US5.5 billion could be lost from the traditional fixed line market across to VOIP. The percentage of fixed line users who might switch to VOIP by 2010 around the world is forecast as high as 26% – that’s Japan, often an earlier adopter. But Forrester still suggests 7 or 8% of users in European countries like France and Italy could switch in the next five years. Just how fast the takeup of VOIP will rocket ahead depends on which research report you read, but for example:

“The global consumer VoIP market is forecast to grow from almost 16 million users at the end of 2004 to 197 million users at the end of 2008, according to Ovum, a technology consultancy based in London.

Over half of these users will use a voice service originating from a PDA, games console, or PC that is integrated with chat, instant messaging, or text messaging.”

The second paragraph is the really interesting one – because when making telephone calls is not tied to telephone equipment, a whole new world opens up. Now any internet enabled device, such as a game console, can be used. All it needs is a broadband internet connection.

A survey of coporate executives worldwide conducted on behalf of US phone giant AT&T last year found:

“43 percent of respondents were currently using, testing or planning to implement VoIP within the next two years. A further 18 percent said they planned to implement VoIP in the longer term.”

In Australia a report entitled ‘Australia VoIP Services Forecast and Analysis, 2002-2007’ says:

“VoIP will continue to be the sweetspot of next-generation networks. It will double every year over the next four years from $14.3 million in 2003 to $288 million by 2007.”

It’s important to point out the big boys of the telecommunications industry are not taking all this lying down, an article in the Age last week says Telstra has 200 people testing a VOIP solution in Melbourne at the moment.

VOIP is not just for business – it’s for home as well, and offers some pretty neat opportunities, including free phone calls anywhere in the world. Many people would have tried talking with audio, and perhaps video, to another computer user. As long as you have broadband, and the right software – which these days just means something like Microsoft Messenger – you can communicate to your hearts delight for no more cost than the use of your internet connection. Here’s some basic stuff about VOIP at home. And a good article from the Melbourne PC User Group.

So what does our VOIP phone system look like? The first thing to get your head around is that VOIP doesn’t run over phone lines, it uses the same network cables as connect your computers together. The telephone units have two sockets on the back, into one you plug the network cable which normally runs to your computer. Then you use a short cable to connect from the second outlet to your computer – the handset just sits inline with your network cable.

And that’s it. There’s no big mysterious box on the wall, nor a million wires sprouting out of the wall. We don’t even have phone points installed in the office. All the magic happens at our internet provider’s offices. Anywhere we can reach with a network cable we can put a phone. Plus, and much more cool, we also have a wireless phone. It uses our existing wireless network here at the office, the handset looks just like any normal cordless phone.

In the middle of writing this Click to Start there was a call for me, and some poor soul wound up lost in cyberspace because the staff messed up transferring the call to me. As with any new office system there is a degree of training involved, to teach people how to push the right button – but that’s inevitable whatever equipment you introduce.

Pricing compares very favourably. Our PABX system had four lines – for which Telstra charged us something like $40 per month each – and we paid around $300 a month to lease the PABX. With VOIP you don’t pay per line – because there aren’t any. Instead you pay per handset. So we now don’t pay for lines, and we don’t pay to lease the PABX.

We’re paying $9.90 lease per handset per month. Call costs are at least 20% cheaper, I reckon, than Telstra.  VOIP is also very scalable. If we want another handset, we just plug it in. If we’re losing quality because of too many concurrent simultaneous phone calls, we just up the speed on our internet connection. No longer do we call the phone company and tell them to come and run more wires from the street.

What’s the downside you ask? Well, like anything, and particularly something new, there are some issues:

The one price we’ve had to pay is a change to our telephone number – which isn’t a bad thing. Even though callers wouldn’t know, we’ve been diverting calls from our main (03) 9682 9920 number since late last year when we moved office. We only shifted a couple of suburbs, but we changed telephone exchanges, so Telstra was unable to move the number. That’s now a thing of the past, our new number (03) 8320 3222 is virtual – we can take it anywhere. With any luck Arts Hub will never need to change its telephone number ever again.

http://www.ozinternetphones.com/ – a pretty good Australian site with a list of providers

http://forums.whirlpool.net.au/forum-threads.cfm?f=107 – the Whirlpool VOIP discussion