It’s getting more difficult every day to tell the difference between Voice over IP and traditional phone service. That can be a good thing or it can be a bad thing, depending on how you look at it and what aspects you’re comparing.

When VoIP first became available, it was very different from traditional phone service in almost every way. Early implementations of consumer VoIP only supported calls from one computer to another, and both parties had to use the same provider. Making a call was a different experience from talking on the “real” telephone: you “dialed” via a software program, talked into a desktop microphone, and heard the other party’s voice through your computer speakers.

The payment model was different, too. Many of those early IP-network-only VoIP programs and services were free. But as always, you got what you paid for, and neither call quality nor reliability was very good. Calls got dropped a lot, and the audio was sometimes unintelligible. Still, there was a big “cool factor” involved in being able to talk over your Internet connection at no extra cost, especially on an international basis where traditional long distance rates could be prohibitive.

Second-gen VoIP

As VoIP matured, the applications became more sophisticated. The ability to place calls from VoIP lines to traditional landlines and cell phones brought VoIP into the mainstream. Added to that was the ability to use regular telephone handsets to make VoIP calls. With those leaps forward, VoIP was no longer just an interesting plaything for techies, but was able to offer real advantages – especially cost savings – to people who weren’t particularly technically savvy.

VoIP providers were popping up all over the place. You didn’t even have to have a computer to use it (although you did have to have an Internet connection). Features were added, and many that quickly became standard with VoIP entailed hefty fees if you added them to your PSTN line – if you could get them at all. The monthly fee for a VoIP line from one of the top consumer level providers cost about half the base monthly rate of a landline, and with VoIP domestic long distance calls were included. Some providers even gave you free calls to other countries.

Meanwhile, VoIP was taking off in the business world. Small companies on tight budgets appreciated the low price of VoIP, while large companies appreciated the extra features. Commercial level VoIP providers flourished, and soon IP PBX systems were replacing the old business phone systems.

This would not have been possible without the dramatic improvement in call quality and reliability that came with the adoption of standards in the industry and increased availability of high bandwidth Internet connections to serve as the foundation of VoIP calls.

A maturing technology

Today it’s almost impossible to tell, when talking to another party on the phone, whether that person is using VoIP or a traditional PSTN line. And as VoIP has become a common alternative to PSTN, devices and services that once required a landline are adapting to the new technology.

New codecs allow for faxing over VoIP – something that was once problematic – and modern fax machines support the new codecs. Traditional fax machines were designed for analog networks, but those that support the G 711 codec, which uses minimal compression, work with VoIP (although admittedly not all the bugs have been ironed out yet). Those with analog G3 fax machines can use T 38 gateways to exchange faxes with fax machines on VoIP networks.

Another common reason for residential and small business VoIP customers to hang onto a landline was for their monitored security alarm systems. Now alarm systems are available that are capable of utilizing VoIP for autodialing the monitoring company. Some of these use dedicated VoIP lines rather than the home phone line.

Government oversight

Another way in which VoIP was different from traditional phone companies was in the area of governmental oversight and taxes. Indeed, the lower taxes and fees was one big reason VoIP service could be so much less expensive than landline service. A glance at a phone bill shows that a large portion of the total bill for a landline is made up of taxes and fees.

At first, VoIP was not subject to the same rules as regular phone companies, but that’s changing fast. The Federal Communications Commission mandated in 2005 that VoIP companies had to provide 911 services over their lines, and last month a House panel approved a bill that would give VoIP providers direct access to the Enhanced 911 (E911) backbone so they can directly connect emergency calls instead of routing them through third parties (telephone companies).

Now the FCC has issued a ruling that applies the local number portability requirements placed on landline and cell phone providers to VoIP providers, too. This means interconnected VoIP providers (those with gateways that allow their users to call landline and cellular numbers, as opposed to those whose users can only call other VoIP users on the Internet) will have to allow you to take your number with you when you switch providers, just as the traditional and wireless telcos have to do.


As VoIP matures and its use becomes more widespread, it becomes more like traditional phone service in terms of reliability and quality. It also becomes subject to many of the same government regulations that apply to its older cousins, the PSTN and cellular service. We can only hope that this doesn’t mean it will become more like the other services when it comes to taxes and overall price.

Deb Shinder is a technology consultant, trainer, and writer who has authored a number of books on computer operating systems, networking, and security. She currently specializes in security issues and Microsoft products, and she has received Microsoft’s Most Valuable Professional (MVP) status in Windows Server Security.

Want more tips and tricks to help you plan or optimize your VoIP deployment? Automatically sign up for our free VoIP newsletter, delivered each Monday!