How to make your Money work for you New VOIP technology could see business telephone costs slashed. Samantha Downes explains just how entrepreneurs will benefit

Not convinced? Well, VOIP - which means allowing your voice to be transmitted via internet technology - is already allowing us to teleport our voices and personal videos around the globe in real time for next to nothing. "VOIP is a technology that advances the way we send data over the internet," explains Jay Sorrels, a spokesman for VOIP phone specialists Vonage.

"It means you can make phone calls across the globe at the same price as a local call. The quality is as good as using a local landline". Latest research from the UK communications regulator Ofcom shows there are already 1.8 million users of VOIP in the UK. Skype is the most popular provider, followed by BT Broadband Talk, Tesco Internet Phone, Vonage and VOIP Cheap.

And the uptake of VOIP means in less than three years most of the phone calls made, globally, will be done via VOIP. According to analysts Gartner, by 2009, 70 per cent of voice connections around the world will be wireless, so you won't even need to be at home to make a call.

Of course you can pick up the phone to your supplier in Australia without having to use VOIP, but now you can make the same call for a fraction of the price.

At the moment the most common use of VOIP is via a normal phone, known as line replacement VOIP. Basically you plug your phone into a box known as an analogue telephone adaptor or ATA. This then allows you to connect to a standard phone line and access the VOIP technology that allows you to make the cheaper calls. "Providers like Vonage and Orange's Livebox modem use this type as it's easier to use a standard phone with it," explains moneysupermarket.com's VOIP expert Jason Lloyd.


Innovation
"The other benefit of using this system is that you can make VOIP calls without needing to switch on your computer, as long as you have the router on."

The second type of VOIP allows you to use a special headset or phone which you plug into your computer via a USB lead. This is known as soft phone VOIP.

You can use the phone without having to connect directly to the phone line and you don't need any software because the adapted phone has all the technology you need.

Lloyd explains: "The advantage of this is that you don't need specialist software, and the handsets are even sold in Tesco."

But be careful as handsets aren't universal so you might not be able to use a Skype handset and connect to a Vonage line.

Lloyd adds: "This is also similar to wireless VOIP technology where the software to make the calls is in the handset itself and the handset is usually exclusive to that VOIP provider."

The most innovative use of VOIP and the one experts believe will become the most popular is the wi fi version, or wireless version.

You upload free software over the internet onto your computer using Skype and VOIP Cheap.

"As long as you have headphones and a microphone connected to the computer you can start talking to anyone anywhere," says Lloyd. "If you want to call landlines or mobiles you usually have to buy airtime in packs of £5, £10, £15 etc, and use this like a pay-as-you-go mobile service to make calls."

The great thing about using the wireless version is that if you have friends with the same provider - for example Vonage - you can make calls free anytime and anywhere across the world.

"Most of these services will not have monthly line rental fees. There are some that charge fees, Vonage or Dixon's Talk, but you do get free landline calls."

But if you think the idea of sitting in Starbucks and being able to pitch your products to New Zealand is useful, then you've not seen anything yet.

"In the future you will be able to make calls to different providers free, this is because new technology that allows providers to send calls via internet technology is still being developed," says Natan Tiefenbrun at X Connect.

X Connect is working to make calls between different VOIP providers more compatible, a kind of VOIP matchmaker. "When more VOIP providers can interact, then the price can come down," he adds.

But the idea of free calls is not all that fans of VOIP can look forward too, says Tiefenbrun.


Mobile Compatible
"There are new mobile phones coming out at the moment that automatically allowing callers to access VOIP without having to use a computer or a USB lead". These phones include those with tri-band or quad-band technology. But what's really exciting Tiefenbrun is the new range of dual mode phones.

These, says Tiefenbrun, include the Nokia E series and even newer M series. "Also many of the new Windows-based mobile phones support VOIP wireless technology. This means you don't even have to use your mobile phone network to make a call abroad, you can use the mobile to make a VOIP call."

These phones will even allow you to send video and text messages, all via IP, he adds.

David Neil, research vice president at Gartner, says with advances in mobile technology, there will be an estimated three billion mobile subscribers in the world by 2010.

Lloyd says: "The best thing about VOIP is that you can assign a local number to your VOIP connection so friends in say New Zealand would only get charged a local call rate themselves plus chat or video facilities often come with the VOIP call element so you can see and talk at the same time for free."

However he warns there remain many teething problems with VOIP.

Lloyd says questions remain about the quality and reliability of the hardware and software, as well as technical support. "VOIP in this respect needs some time to mature before it can be seen as a reliable service alongside landlines." The quality of the service itself is still being questioned too.

He says there are often delays in delivery of data down the line delaying the call and you can get a jitter - a variation in delivery time of data down the line - which can cause garbled speech.

There's also the issue of packet loss, when packets of data go missing and sections of the voice call drop out.

Unlike landline calls made via broadband can be subject to that good old technology blip, downtime.

"And of course if you are using a computer you are dependent on the power of the processor you are using as well as the speed of your connection." Plus of course VOIP is dependent on mains electricity power unlike landlines and the real killer - you can't make an emergency call from a VOIP, yet.

"Also VOIP does not work on some older analogue phone networks in countries such as eastern Europe or Africa, this is because their networks are not geared up to accept digital voice calls at the moment.

The inoperability between different VOIP providers will have to be sorted as well.

"The only other problem is spam and viruses, " adds Lloyd. He warns it could become massive if the wrong people start to harness the potential of VOIP as a means of spamming, it will then be known unpleasantly as Spit - spam over internet telephony. "And of course computer viruses can be sent via your VOIP connection which is another massive concern."

Lloyd and Tiefenbrun both see the mobile hybrid as the real driver behind VOIP in the future. Its adoption could help iron out such issues.

"This is where you will start to see handsets which operate in the home and also remotely on different networks to make them as cost effective as possible for different circumstances," adds Lloyd. "There are still a number of challenges for VOIP which need to be addressed before it can become a truly mass market alternative to fixed line and mobile phone networks."


Buy The Future Now:

Internet Phones - Skype CIT200 (£99.99)
All you do is connect the base unit via the USB lead into your computer. You can also store all your contacts on the handset, like a mobile. There wasn't much to complain about except that maybe it looked a bit too like a normal phone, meaning it lacked that 'show off' quality. But hey, if you're saving this much money, does it matter? The phone is compatible with SkypeOut dialing, SkypeIn calls and Skype voicemail.
www.argos.co.uk

The Mobile One - Vonage handset (around £90)
This looks like a mobile phone. The only snag is you have to find a wi fi hotspot to make your calls, and let's be honest, there are still not enough around. If you don't mind having to pay for a coffee to take advantage of a Starbucks or Coffee Republic hot spot then this is quite a 'cool' option for now. Later in the year The Cloud is set to launch its City of London WiFi network, which will cover 95 per cent of the square mile. So you will be able to connect to the WiFi network and make calls for free walking around the City. Compare it with other similar handsets at www.uswitch.com - this shows the main competitors - many of whom have their own kit.
www.vonage.co.uk

The Future - VoSKY Call Center from Actiontec (from $69.95)
This phone is expected to launch into the UK later this year. Its cool factor is helped by the fact you don't have to be anywhere near a computer to even use it; this device lets you make free Skype calls remotely from any phone, including your mobile and your home phone. To do this you have to connect the device, called the Call Centre, to your PC and your phone jack. This then allows you to use any phone anywhere to access the Call Center and make free calls. It also allows you to forward all your Skype calls to any number. So you could get Skype calls on your mobile. Given that Actiontec has a reasonable presence in the UK, here's hoping we get it soon.