Should your business cut the telco cord?

Whether you're a one-person enterprise or a business with sights on the international market, VoIP can save you money. But is the time right to forego landlines altogether? Deb Shinder explores the pros and cons of cutting the telco cord.

Although I often work with enterprise-level companies that span the globe, my own IT consulting and tech writing business is a small one. Like other small businesses, we have been taking advantage for quite some time of the cost savings and other benefits of VoIP.

A few years ago, we had to maintain three PSTN (Public Telephone Switched Network) phone lines. We paid several hundred dollars per year, which included charges for long distance calls that inevitably had to be made during the most expensive peak hours. Today we have more available lines for well under $100 per month and don't pay anything extra for peak-hour calls to other states and even other countries—thanks to VoIP.

However, we still have a single "landline," for which we pay over $40 per month for bare-bones basic service: no caller ID, no voicemail, no frills at all. Long distance charges are extra. By comparison, a basic VoIP package with Lingo, which includes call forwarding, caller ID, speed dial, three-way calling, voicemail with e-mail notification and other advanced features costs $21.95 with free long distance to anywhere in the U.S., Canada, Puerto Rico, and Western Europe. Vonage is a little higher, at $24.95 per month for the same basic package. SunRocket is even cheaper than Lingo, if you pay for a year of service up front at $199 (less than $17 per month), and you can cancel anytime and get back a refund for unused months, but it doesn't include calls to Europe.

Is it time for us (and maybe your small business, too) to cut the cord with the telephone company completely? Let's look at the pros and cons.

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What VoIP doesn't do

There are still some things that VoIP can't do as well as a landline—or can't do at all. Some security alarm monitoring services don't work with VoIP. In fact, we found that this was one of the top two reasons home users and small businesses kept their landlines after implementing VoIP. If you have monitored alarm service, check with your monitoring company.

Some companies now support VoIP, some use your broadband Internet connection without going through your VoIP service, and there are others that use a dedicated cellular link for communicating between the alarm system and the monitoring station. An advantage of the latter is that an intruder can't cut the phone line in order to thwart your security system. Examples of alarm monitoring services that don't require a landline include NextAlarm's Alarm Broadband Network and

Even if you find a new alarm company serving your area that doesn't require a landline, you may run up against the same problem we did: Many alarm companies require a long-term contract, so you may be locked into paying your current service their regular monthly fees for the term of that contract.

Another major drawback of VoIP is that it's dependent on your electrical power service. Unlike PSTN phones, VoIP lines don't have their own power source. If the electricity goes off, your VoIP line goes down. You can ameliorate this somewhat by plugging your VoIP equipment into an Uninterruptible Power Supply (UPS), so that you'll have some time to be able to make calls after the electrical outage begins. And more and more small businesses and home offices now have backup generators to power critical equipment in an outage. Of course, losing your VoIP service in an outage may not be quite as much of a problem as was losing phone service 20 years ago, since a large percentage of people now carry mobile phones that can be used to place calls in such an emergency situation.

What VoIP doesn't do as well as landline service

The quality and reliability of VoIP connections have improved dramatically in the last several years, but the fact remains that the Internet is not as stable as the PTSN. VoIP users still experience occasional voice quality problems, such as echoes and "over-talk," a "half duplex" effect (in which you're not able to hear what the other party is saying if both of you talk at the same time, much like with a walkie-talkie), and very occasionally may experience dropped calls.

VoIP quality of service can be affected by other traffic on your internal network, and of course if the network goes down due to a DoS attack or a hardware failure, you'll lose phone service too.

Some small business owners are hesitant to go "VoIP only" because of uncertainty about 9-1-1 response. A few years ago, some VoIP services didn't support 9-1-1. However, U.S. government mandates now require all VoIP providers in this country to implement e911 (Enhanced 9-1-1) service. In fact, providers had a deadline of August 30 of this year to issue advisories about the limitations of e911 and receive responses. Those customers who didn't respond by that date were to have their VoIP service cut off—but the FCC has now extended the deadline for another month (see this article, "FCC Extends VoIP E911 Deadline").

One of the potential limitations come from what many see as an advantage of VoIP—the fact that you can "take it with you." That is, you can pack up the box and phone and plug it in at a different location if you travel on business or go on vacation. However, if you do this, your actual physical location won't match the address information your VoIP provider has for you, and emergency calls might route to the wrong place.

VoIP lines may also present problems working with some fax machines and TiVo-type or cable TV services that need to use a phone line to download program guides, order pay-per-view programming, and so forth. While the latter is primarily a problem for home users (and can be worked around now that many of these services can use a broadband Internet connection instead of a phone line), the former is more of a problem for businesses.

What VoIP does better

We can sum up the advantages of VoIP pretty easily: more features for less money. Most residential and small business packages give you voicemail that lets you receive your messages via e-mail and play them on your computer, three-way calling, caller ID, and many other features that you pay extra for with a landline. And those packages often cost significantly less than a bare-bones PSTN line.

Other advantages for businesses include low-cost 800 numbers and the ability to have a second phone number that is local to a different area than the one where you're physically located.

VoIP security issues

VoIP traffic is subject to the same security risks as other IP packets that go across the Internet. Likewise, the same security solutions apply. Companies can encrypt VoIP traffic to protect the confidentiality of calls, and physical access to VoIP equipment should be restricted just as physical access to your network's servers and workstations are.


Given the advantages and disadvantages, it's obvious that VoIP is an excellent choice for second and subsequent phone lines. But do you dare cut the telco cord completely for your small business? We suggest you keep a landline when you sign up for VoIP service, at least for a while. That will allow you to evaluate just how often you find yourself using the landline and what you need to use it for.

If there are certain business associates whose phones just don't seem compatible with your VoIP service, if you're locked into a security alarm contract with a company that doesn't support VoIP, or if you're concerned about not having phone service when the power goes out and don't have a cell phone as backup, it makes sense to continue to maintain a PSTN line. On the other hand, if you find that VoIP works for everything you need to do, you can save your small business a nice chunk of change by replacing that landline with a second VoIP line.

About Deb Shinder

Debra Littlejohn Shinder, MCSE, MVP is a technology consultant, trainer, and writer who has authored a number of books on computer operating systems, networking, and security. Deb is a tech editor, developmental editor, and contributor to over 20 add...

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