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Goodbye plain old telephone, hello VoIP

VoIP – it's the way of the future.

The Plain Old Telephone Service line (POTS) is the type of line most people still use at home, and until recently this was the only option they had.

But Voice Over IP (VoIP) is gaining traction. While it's far from the most common way for people to call each other in New Zealand, it will be – sooner rather than later. 

Telecommunication companies can be split into three tiers; Telecom, TelstraClear, Vodafone and 2degrees are what I call first-tier telecommunication companies. The second-tier telecommunication companies are local internet service providers, now delivering phone services, such as CallPlus, Orcon, WorldXchange and Snap Internet. There are also many third-tier, smaller providers like 2Talk, Kiwi and others in the market today. 

In recent years some ISPs and third-tier telecommunication companies started offering a service where you could buy an IP phone and get a phone number from them. As this was not widely publicised and the set-up was quite technical, it was only used by a few enthusiasts that knew what they were doing. 

Now, with the arrival of Orcon's Genius product, the entire home scene may change. Genius has to date been quite successful – too successful, some might say. But what not everyone might know is that similar services are available from both Slingshot and WorldXchange. It's worth investigating when you are shopping around. 

Things look a little different on the business front.

Most companies don't just rent a phone line – they normally use a phone system to connect to telcos' phone lines and have company telephones connect to the telephone system. 

People often confuse the two elements: the method of connecting telephones to the telephone system via VoIP is often referred to as IP Telephony; the method of connecting telephone systems to the telecommunications network via VoIP is often called either SIP Trunking or simply VoIP. 

It's important to distinguish between SIP Trunking and VoIP. SIP Trunking is where a provider delivers and manages both the data connection and the VoIP phone line as one bundle. In this instance the phone call goes via a privately managed link rather than the internet, so really, the provider is simply delivering a phone line to you. All that is different from the traditional phone lines is the type of cable used and internal communications protocols, which to you, the end user, mean nothing and make no difference. There are, however, lots of new features available that the provider may choose to offer on the new line. 

 IP Telephony has been steadily adopted in the enterprise since the late 1990s - early 2000s, while the first SIP trunks and VoIP phone lines only became available here around 2005.

As such, the rate of adoption of IP telephony is much higher than the uptake of VoIP phone lines or SIP Trunks – but from personal observations, I would argue both have now entered the mainstream. We may still use POTS at home, but at work both IP telephony and VoIP phone lines are well past the early adoption stage. 

One thing that can be said about the quality of SIP trunks in New Zealand – now available from all the tier two telcos and most tier one telcos – is that it is excellent. Kiwis are very much used to the best experience while using digital business phone lines, so in order to compete with the traditional phone lines, tier telcos had to put together a service that would compete.

While VoIP often requires investment in new infrastructure, it is much more cost effective in the long run – and that broadband investment is being co-funded by government.

So look out for new market entrants bringing cheaper VoIP services with more features to the masses.

Igor Portugal is the CEO and co-founder of Vadacom, which developed the VadaXchange phone system that delivers IP telephony and VoIP features to businesses alongside traditional phone lines.