Before digital networking took off, everyone had to use the one and only POTS, which stands for plain old telephone dervice (honestly, it does). POTS runs over a network called the PSTN, or public switched telephone network. These POTS telephone systems use the tried-and-true method of telephone service known as circuit-switched. (See Chapter 2 for more about the history of POTS, the PSTN, and the operation of circuit-switched telephony.) For customers, the costs related to the regulated circuit-switched PSTN remain much higher than they need to be. Consumers as well as ompanies that must rely on POTS on a daily basis know what the POTS way of telephony means to their bottom line. The good ews is that VoIP is an alternative that can greatly reduce or eliminate POTS-related costs. (Chapter 3 fully details the recurring charges of the POTS way of doing telephony.) VoIP also enhances productivity, leaving more money in the budget to do other things besides pay telephone bills.

VoIP technology enables traditional telephony services to operate over computer networks using packet-switched protocols. Packet-switched VoIP puts voice signals into packets, similar to an electronic envelope. Along with the voice signals, the VoIP packet includes both the caller’s and the receiver’s network addresses. VoIP packets can traverse any VoIP-compatible network. Because VoIP uses packets, much more information can be carried over the network to support and enhance your communication needs when compared to traditional telephony methods. In a circuit-switched network such as POTS, routing is less dynamic than with a packet-switched network. In the POTS world, if a line is down, the call can’t go through. In a packet-switched network, multiple routes can be established, and packets can travel any of the available routes. If one of the lines supporting the network is down, the packet can switch to another working route to keep the call up. With VoIP, voice signals can travel the same packet-switched network infrastructure that companies already use for their computer data. VoIP technology enables traditional telephony services to operate over computer networks using packet-switched protocols. Packet-switched VoIP puts voice signals into packets, similar to an electronic envelope. Along with the voice signals, the VoIP packet includes both the caller’s and the receiver’s network addresses. VoIP packets can traverse any VoIP-compatible network. Because VoIP uses packets, much more information can be carried over the network to support and enhance your communication needs when compared to traditional telephony methods. In a circuit-switched network such as POTS, routing is less dynamic than with a packet-switched network. In the POTS world, if a line is down, the call can’t go through. In a packet-switched network, multiple routes can be stablished, and packets can travel any of the available routes. If one of the lines supporting the network is down, the packet can switch to another working route to keep the call up. With VoIP, voice signals can travel the same
packet-switched network infrastructure that companies already use for their computer data. Chapter 7 goes into more detail about dedicated packet-switched networks that support VoIP. 12 Part I: VoIP Basics Eye for IP Telephony VoIP also makes possible other services that older telephony systems can’t provide. VoIP telephony services are interoperable, meaning that they work well over all kinds of networks. They are also highly portable, which means they will work with any IP-enabled device such as an IP telephone, a computer, or even a personal digital assistant (PDA). IP telephony works by taking traditional voice signals and converting them to a form that can be easily transmitted over a local area network. Thus, the heart of IP telephony is the same as traditional data networking with computers. IP-enabled phones handle the voice-to-data conversion well, but don’t be misled — implementing VoIP doesn’t mean that everyone has to use IP-enabled phones. The best VoIP providers implement IP telephony in a manner that protects your investment in existing telephone equipment, even if you have analog telephone stations. (You’ll find more on this topic in Chapter 10.) All IP phones have one important thing in common: a built-in network interface card (NIC), just like a computer uses. The NIC is critical for any network device because it provides the device with a physical address and a way to communicate over the network.

The physical address supplied by a NIC is called a MAC address. MAC stands for media access control. The MAC  ddress uses a standardized address and is usually represented by six hexadecimal numbers separated by dashes. For example, the following is a valid MAC address: 00-0A-E4-02-7B-99. To support IP telephony, a server is typically dedicated to run the software used to manage calls. Servers are just like personal computers, except they have more memory, speed, and capacity. The server stores the database that contains all the MAC addresses corresponding to all the IP telephone extensions assigned to users. Depending on the size of the LAN and the number of users, you may use more than one server. For example, some LANs running IP telephony dedicate a server just for handling voice mail. Depending on the size of the LAN, one or more devices known as switches are installed. These switches are boxes that have a series of ports into which all LAN-addressable devices ultimately connect. (Examples of LAN-addressable devices include computers, printers, wireless access devices, gateways, and storage devices.) Usually the switches are set up in the communications closets around the LAN, and they operate 24/7. All the switches are interconnected, often with fiber-optic cable. In a nutshell, all network devices, including your IP telephone, must physically connect to the LAN through a port on a switch.

Making internal calls When you want to call a coworker at your same location, you dial the phone number corresponding to the person’s name. The signals are packetized and sent to the managing server, where the packet picks up the MAC address of the person you’re calling. Next, the packet is forwarded to the switch, then to a particular port on that switch, and finally to the IP telephone connected to the port. The coworker’s telephone rings. When the coworker picks up the receiver or answers the call, a virtual connection is established between the coworker and yourself for the life of the call. IP telephony does all this at lightning speed.aking external calls The process of calling a coworker at an offsite location varies only a little.
The call is still initiated in the same way. But because the coworker is connected to a different LAN, the local server sends the call not to a switch located on your LAN but through the company’s WAN (wide area network). This is where IP telephony technically becomes VoIP. Each LAN in a multilocation network is connected to the larger WAN. If you’re located at the company’s headquarters in Pittsburgh, and you call a coworker located at the office in Los Angeles, your call begins as an IP telephony call on your LAN. It then travels from your LAN through a gateway, switch, or router that is programmed to re-packetize your call and encode the VoIP packet with additional information, such as the address for the destination LAN. Network gurus refer to the process of packetizing your voice telephone call as encapsulation. A good analogy for this fancy techno-term is putting a letter into an envelope for mailing. The difference is that these encapsulated packets contain the content of the telephone conversation in digitized form. To participate in the company’s VoIP WAN, each LAN needs at least one edge device, such as a router, a switch, or a gateway. An edge device is just that — a device that sits on the boundary, or edge, of your local network and 14 Part I: VoIP Basics Calling over a computer network Voice over Internet protocol is often taken to mean basically what it states: Voice traveling over the Internet. When VoIP was developed, it worked only with the Internet. Today, VoIP works on all other major network types, including those used throughout the corporate sector. provides a connection to external networks. Depending on the company’s network design, these edge devices can even have multiple interfaces that connect them to more than one outside network. The edge devices take care of all the IP telephony traffic going off-LAN by encapsulating the signals into packets, encoding the packets with the correct addressing information, and forwarding the packets out onto the WAN, where they make their way in a packet-switched manner to their respective destinations. When the packets arrive at the destination LAN, the edge device on that LAN breaks down the VoIP packets and forwards them internally to the server that manages IP services. From this point, the rest of the process is similar to IP telephony services described in the preceding section: The phone rings, the person being called answers, and a virtual circuit is established between the caller and the receiver.

Gaining Flexibility with VoIP
VoIP is not just about making and receiving telephone calls; it’s about a whole new way of communicating. Sure, it includes telephone calls, but there is so much more to the VoIP telephony picture. VoIP integrates most if not all other forms of communication. You can even run videoconferencing to your desktop. With VoIP, your company enjoys increased productivity and customer satisfaction. These improvements are typically realized through the flexibility offered by enhanced calling features. A few calling features, such as voice mail and call transfer, have been around in the POTS world for quite some time. On the other hand, integrating data, voice, and video applications to run over a single network and work with w ireless phones are more recent innovations made possible by IP telephony. Following are some enhanced calling features made possible by IP telephony:

 Vemail: Before IP telephony and VoIP, you accessed voice mail through a telephone and accessed e-mail through a computer. With VoIP, you can read your voice mail on your computer screen and listen to your e-mail through an IP-enabled telephone. The new term for this converged feature is vemail (pronounced “v-e-mail”).

Web surfing: Because VoIP operates with the same set of IP rules and protocols that support Web-based applications, it is possible to access the Web with an IP-enabled telephone. If you have an IP telephone with a large enough screen, it can display Web pages or a list of your favorite Web links. For instance, you could use your phone to view your stock exchange trading status or the current weather forecast.

If you have a mobile user base, be sure to check out IP soft phones. A soft phone is software that works on a laptop computer or pocket PC and provides most of the functionality of a traditional desk phone. If a user can connect to a network, the soft phone provides a way to reap the benefits of IP telephony regardless of location.

Saving with VoIP
If you’ve read the chapter up to this point, you’re a much more savvy POTSPSTN customer. You now know exactly how your carrier makes money at your expense. You also know how the five regulated service categories can combine to increase your monthly and annual telephony costs and therefore reduce your revenue. Something that increases costs and reduces revenue is something you need to control or change. VoIP can help you do exactly that.
So, how will you fare under a VoIP system?

Taking savings to the office
If you run a business, local-area calling-plan charges average about $.05 per minute. Under a VoIP model, the cost of calls to the local calling area are the only significant recurring usage charges you won’t get rid of — at least not
until the rest of the world adopts VoIP.  Even local carrier charges can be reduced under a VoIP model, however. You can do this if you leverage volume by total minutes and make a contractual commitment to the local carrier. Tell them you are going VoIP, and see how quickly they will accommodate you. If most of your local calls are to other offices on your company’s network, VoIP eliminates any recurring service charges for those calls because this traffic is on-net. It’s in the other service categories — intralata, intrastate, interstate, and international — where your company can save the bulk of the usual monthly service charges by using VoIP. Keep in mind that these monthly charges can be huge. One of my clients had 367 locations across the country and 17 international locations, and a combined computer and telephone network billing of $4.2 million per month. And 75 percent of the billings were telephony carrier services charges. That’s about $3.78 million per month for POTS-PSTN telephone services. VoIP would eliminate more than 90 percent of these telephony charges because the company is already paying for its computer network. Under a VoIP telephony model, any company with substantial intralata, intrastate, interstate, or international calling service requirements saves a bundle of cash.