Basically Voice over Internet Protocol (VoIP) means that you have the ability to hold conversations over the Internet or any other IP- based network. VoIP is as easy to use as a normal phone.

When you make a call via VoIP it will normally cost less than other traditional phone services supplied by your local provider.

VoIP to VoIP is virtually free. However, if you use your VoIP connection to call a non-VoIP recipient there will be a cost. There are some doubts whether VoIP is at a service standard to cover all end users needs.

There are also a lot of questions that are unanswered about its reliability. Some of those questions are:

How many people can I call?

This typically depends on your provider. Larger companies that have a VoIP connection will allow calls to anyone.

If your call falls off the system (if you have the facility to carry out this function) then it is automatically picked up by the normal landline system. You are then charged at a higher rate for those calls separately.

Should I be concerned about the cost?

Again the cost depends on your provider and the rates they charge. The best idea is to compare cost of a number of companies that supply this service so you can make a well informed decision.

Special equipment may also be required. At the very least, you must have an Internet connection (broadband or DSL connection) and a computer to send and receive the calls.

Are there any problems with VoIP to note?

The number one problem is if your Internet goes down, so does your VoIP connection. That brings us to the consideration as to whether or not VoIP is suitable for a business.

It will obviously differ from country to country but in Australia, in our opinion, VoIP is still in its infancy.

We use it for personal local and international calls to select destinations. However the problem we find is that the call drops out frequently. Drop outs similar to that of cell or mobile phone users experience from time to time in non-signal areas are a nuisance.

If the consumer doesn't have access to a traditional phone in case of emergencies because of slow Internet connections, VoIP may not be suitable. The trade off here is whether the cost verses the reliability is acceptable.

Cost and reliability are the top factors that a businessperson should consider when assessing VoIP. We find that there are select service providers (SP's), which sell VoIP after assessing a businesses position and make recommendations based on that assessment whether to recommend VoIP.

These SP's take into consideration whether it is cost effective for the business to stick to the landline business. In these cases they may offer similar rates on landline business to that charged for VoIP services to get the business.

This service has influenced a large number of businesses to consider staying with traditional landline services. There is only one company, Telco Blue that has developed a "Virtual VoIP" product although it isn't true VoIP it has prices that are very similar to VoIP prices, but all on the standard quality landline service, which gives business the best of both worlds.

Is VoIP right for business?

When making a decision that answers this question the business person will have to consider whether or not they accept the trade-offs in cost verses quality.

There are cost savings to the business consumer. Especially where they have an existing network capacity that can be used for VoIP at little or no additional cost.

Additional costs to consider may include the technical requirements to have VoIP intergraded into their system.

On the bright side VoIP is a growing service and eventually will, arguably, take over the traditional phone system. As a final note something to consider is to avoid any long-term contracts with providers that insist on term contracts.

The arrangement may lose the benefit to the business next week and if you are tied in to a contract it may cost you more in the long run.