Simply put, Internet telephony lets you make real-time voice, fax and even video calls over the Internet. Many small businesses are experimenting with Internet telephony, mainly because it can significantly reduce telecommunications costs.

You might also hear it called voice over IP (VoIP) or voice over the Internet (VoI). A somewhat synonymous term, IP telephony most commonly refers to voice calls routed over a private intranet or wide area network (WAN), as opposed to the public Internet.

Making Calls over the Internet
There are some major differences between making a regular phone call and an Internet call. First, to make a phone call over the Internet, you need a multimedia computer with an Internet connection, a sound card, speakers and a microphone. Installing a specialized PC audio card, such as Internet PhoneJACK from Internet PhoneJACK, will improve the quality of the connection and let you use a telephone handset for Internet calls.

Second, with regular phone calls, your voice travels over the Public Switched Telephone Network (PSTN), a circuit-switched network that creates a dedicated, and thus high-quality, connection between you and the person you're calling. With Internet telephony, your voice travels over the Internet, which is a packet-switched network. And since packet-switched networks were designed to carry data (as opposed to real-time communications), calls might experience delays and distortion.

Third, when making a regular telephone call, you're charged according to the distance and duration of the call. When you make a call over the Internet, distance and duration are not important -- your Internet service provider merely charges you a low, fixed-rate price for your Internet bandwidth. For this low price, it's not surprising that you get a lower-quality call than over the telephone.

Telephony Software and Services
Although you need specialized software to make Internet calls, there are a number of free or inexpensive Internet-telephony products. Internet-telephony software traditionally used proprietary techniques, which meant that both you and the person you were calling needed to have the same software, but some vendors are now adopting a standard protocol. Still, unless you have a dedicated connection to the Internet and continuously run your telephony software, you have to schedule the call ahead of time.

It's also possible to call someone's telephone from your PC through an Internet-telephony gateway service, such as Net2Phone. Such services carry as much of your call as possible on the Internet and use the PSTN to carry only a small part of the call, allowing the provider to charge relatively low per-minute rates for long-distance calls.

Today, small businesses use Internet telephony primarily for international calls. Soon Internet telephony applications will become more popular. Unified messaging will bring all email, voice, fax and pager messages together into a single in-box, phone calls will be routed through calendar applications, and employees in different locations will be able meet online for videoconferences.

---

*AllBusiness.com provides resources to help small and growing businesses start, market, manage and expand their business. The site has Forms & Agreements, Business Guides, a Platinum Program and Business Directories along with an extensive library of Articles and Advice to help with all of the activities associated with starting and running a business. Copyright © 1999 - 2005 AllBusiness.com, Inc., All Rights Reserved.

Instant Vendor Comparison

Select the vendors that you would like to compare