When VoIP became commercialized in 1995, it was largely viewed as a hobby technology and one of many experiments seeking to create utility for the nascent World Wide Web. For millennials, this may seem like ancient history, and it may not have dawned on you this what the “www” prefix used for all Internet addresses refers to. Before there was broadband — never mind 4G — we connected using clunky modems over really, really slow dial-up service.
I digress, but do you know why it’s called “dial-up”? Believe it or not, the only way to go online then was via your POTS line — Plain Old Telephony Service — which, of course was in every home. Landlines were truly lifelines back then, and dial-up service created a new problem for the incumbent phone companies, but also an opportunity. The PSTN — Public Switched Telephone Network — was built for voice, not data, and being the only transport channel at the time, this was highly problematic for VoIP.
In theory, VoIP is superior to legacy technology for telephony — TDM, or Time Division Multiplexing — but in practice back in 1995, the reality was laughable. While the experience was vastly inferior to TDM, telcos didn’t seem to mind since competition for their highly profitable phone service wasn’t welcome.
However, before VoIP came around, consumers were mainly using dial-up simply to connect to the web, and with service being so slow, this tied up landlines. Telcos were more than happy to sell you a second line so you could surf at any time without blocking out the phone. Since there was so little to explore on the web at the time, dial-up service was sufficient. You might be surprised to know that telcos — and others — were hesitant to invest in building out new networks to provide what became known as broadband, mainly because it wasn’t clear if there would be enough demand for the service.
What’s Different With VoIP Today
Fast forward to 2019, and things are much different. VoIP has certainly become mainstream, although many businesses still use legacy service. Perhaps the biggest change is that today’s VoIP is business-grade, and there’s really no reason not to be using it. That said, it’s important to note that VoIP technology itself hasn’t really evolved that much; the big improvement comes from having broadband — lots of it and not expensive — which is engineered to support real-time data applications like VoIP.
Without broadband, VoIP would have died off a long time ago. Thankfully it’s now providing value to businesses that could never have been envisioned during dial-up times. Early on, the impetus for VoIP was 100 percent about cost savings. Cellular service was still a luxury, and there were no alternatives to high-priced, metered phone service. Consumers drove the market at first, but as technology improved, businesses started trying the service, also to save money.
As long as the price for legacy business telephony service remained high, VoIP was worth giving a try. Business adoption was slow, not just because the quality and reliability remained suspect, but also because the feature set for VoIP was very limited. PBXs ruled, and their more-than-comprehensive feature set was a big selling point. While these systems could support virtually any calling need, in reality, they were highly over-engineered, and only a handful of features were ever really used. That said, when businesses went to try VoIP, the trade-off was clear — their telephony costs would go down, but the compromise was having fewer features.
Coming back again to 2019, VoIP is different in another way. Earlier, VoIP was a compromise service for businesses, and if there was no willingness to sacrifice some quality or reliability, there was no take-up. With today’s broadband and the advent of cloud services, that compromise largely goes away, and the economic driver is weaker now. For incumbents, legacy telephony has become an albatross, and they are looking to exit that business and go all VoIP. They will continue offering that service for years to come, but at much lower prices, mainly to be competitive with VoIP’s pricing.
For businesses still using legacy telephony, there are two important takeaways from this history lesson. First is the notion that you’ll realize big cost savings with VoIP. You will get some savings compared to legacy pricing, but not enough to make this primary driver it used to be. The primary driver for VoIP — the second takeaway — is that the feature set is now richer than legacy telephony. Aside from the fact that vendors stopped investing R&D into legacy telephony years ago, VoIP is by nature capable of supporting an endless variety of features.
This matters not just because your end users can personalize their telephony experience, but also because VoIP integrates now with collaboration platforms like UC. You may be thinking about VoIP for your telephony needs, but there’s a bigger value proposition as a stepping-stone for collaboration. This bridge is not possible with legacy telephony, and by showing how far VoIP has come, this post may help update your thinking on what it can do for your business.