Simply put , VoIP reduces the cost of making telephone calls and opens up new applications and services.

Let us look into some details:

Lower Costs

• Network Efficiency: With circuit-switched calls, ports in both the originating and receiving switches are tied up for the duration of a call whereas VoIP with its virtual circuits, makes more efficient use of available network bandwidth. The integration of voice and data effectively fills up the data communications channels efficiently thus providing bandwidth consolidation.

• Infrastructure Investment Reduction: VoIP takes advantage of the same equipment that is driving the Internet. The hardware and protocols for VOIP are largely off-the-shelf, interchangeable and developed by numerous vendors.

• Lowered Cost Of Expansion: VoIP is more scalable. Traditional telephone networks are geographically restricted by their circuit switches, with a switch required for each service area. With VoIP technology, a softswitch can be installed at the regional level, allowing multiple markets to utilize it, with only limited equipment required locally.

• Toll Charges Reduction: VoIP is used by companies to eliminate call charges between their offices, by using their data network to carry inter-office calls. They may also use VoIP to reduce the costs of calls outside the company, by carrying them to the nearest point on their network before handing them off to the PSTN. This gives them an alternative to the PSTN that can continue to grow and be scaled to fit their needs.

• Network Simplification and consolidation: One network is easier to manage than two. Moreover since VoIP exchange is based on software rather than hardware, it is easier to alter, configure and maintain. For Enterprise PBX, for instance, it results a substantial improvement in move/add/change of telephony circuits and substantial reduction in staffing and administration costs.

New Applications and Services:

VoIP enables new value-added services for consumers and businesses.

For businesses, this is a great competitive advantage by enabling connected workforce (through a concept known as presence management), more productive work at-home program, seamless integration of branch offices and HQs etc.

Unified messaging is a new and powerful application made possible by convergence that increases productivity per employee and can substantially reduce business support and administrative costs.

The other example is Internet call center that is radically different and more efficient than traditional telephony call centers.

For more views on this topic, check out the qualified information on VoIP listed above.