Can VoIP really reduce business telephony costs?
May 12 2008
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Small businesses are constantly seeking to cut costs and become more efficient. Since the luxury of negotiating bulk telephony rates is not available to small players, keeping costs down can be an uphill struggle.
This guide to voice over internet protocol (VoIP) telephony from SmallBusiness.co.uk and purchasing adviser Indirectchannel explain how using it can save money.
What is VoIP?
VoIP is a technology that allows you to make voice calls using a broadband Internet connection instead of an analogue phone line.
According to studies released in 2006, over 60 per cent of small firms in the UK spend in excess of £300 a month on fixed-line calls and £400 a month on mobile phone calls.
Research also shows that small and medium-sized enterprises (SMEs) that switched over to VoIP experienced on average a 23 per cent reduction in overheads and a 13 per cent fall in IT expenses.
While the numbers may vary significantly depending on the size of your company, increased competition will continue to drive down prices.
VoIP providers
Popular UK providers that can meet the internet telephony needs of a small business include Skype, Call Union, PlusTalk, Vonage and Tesco. The greatest benefit of using these packages is that, where two locations are equipped with the same service, the calls will be free.
Initial charges vary according to the provider. For example, Vonage charges £7.99 monthly rental with a £9.99 set-up fee and £8.99 for equipment delivery. Calls are free to all landlines in the UK and Ireland.
Skype, the first IP telephony company, still offers the lowest prices for overseas calls to non-users, making it a useful choice for businesses with international clients.
Calls through Skype to fixed phones in the USA, France and Australia cost 1.2p a minute, and calls to landlines in India cost around 8.7p a minute.
WIth Skype, you pay a £2.24 monthly subscription and calls to landlines in the UK and Ireland are charged at about 1p per minute.
You can buy a USB cordless phone for less than £15 and also have incoming Skype calls forwarded to your mobile phone.
A standard BT landline – not a VoIP service – costs £10.50 a month plus £124.99 for installation of the phone line. Call charges vary depending on your payment plan.
VoIP and your small business
A small travel agency that opened two offices – one in London, the other in India – made the following savings:
• Four employees were provided with telephones — three phones in London and one in India — at a cost of £140 each. A VoIP service was purchased at £6.99 per month per employee. Telephone connection and broadband charges came to £30 per month. Thus, the total expenses for the first year were £1,255.50.
• For a standard BT connection, the costs would have been £1,540. That is, three phones with 4-line PBX and ISDN for £890, BT Together ISDN 2e service for £410 a year and broadband service charges of £240.
So far, it looks like the recurring costs are similar. In terms of equipment and service line costs, VoIP and the standard ISDN line are comparable. However, the differentiating factor soon becomes clear when the actual phone calls are factored in.
• For 1,000 hours per month of international calls at standard ISDN rates of 40 pence a minute, the monthly overseas telephony costs alone equal £400.
• But with VoIP rates, the company found it overseas calls costs averaged 2 pence a minute, and the resulting monthly costs were just £20.
Clearly, enormous savings can be made. Further, some service providers will allow free calls between the London and India offices, and some free talk time to landlines within the UK, especially during evenings and weekends.
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