VoIP: An Introduction

VoIP allows people to make phone calls through their computers by translating telecommunications into data packets for transmission over the Internet. This technology makes phone calls, faxes, and other communications far more efficient and cost-effective than traditional analog, circuit-switched technology.

In this regard, VoIP data packets from a given conversation can travel separately using the most optimal network routes, whereas analog calls require voice signals from each conversation to flow on a single circuit.

To clarify this point, imagine a six-lane highway representing the Internet, with vehicles representing data packets and exits representing beginning and ending points for communications. A traditional call requires blocking one entire lane between exits, whereas a VoIP call breaks up voice data into packets that can travel along any lane of the highway and be regrouped together at the exit. In this sense, VoIP optimizes the Internet by finding the fastest route for each packet and also by allowing simultaneous transmission in both directions of data and voice and pursuant to the software protocol of the Internet. Here are the three scenarios involving phone calls including VoIP:

1. Pure VoIP: A phone call between two users of VoIP technology in which the call involves using a microphone interfaced into a computer. The phone call then goes directly into the Internet through a broadband provider and is received at its final destination by a computer using an adapter for converting the voice packets into analog form and allowing the end user to hear the telephone call.

2. VoIP to POTS with Internet: In this scenario, the initiator of the phone call uses VoIP equipment attached to the computer with immediate Internet access through a broadband provider. The phone call emerges from the Internet, goes into the local exchange carrier system using PSTN (public switched telephone network) or POTS (plain old telephone service) technology (Note that the terms PSTN and POTS are interchangeable). The call is received by the end-user using PSTN/POTS equipment. This scenario is depicted in Exhibit 2.

3. POTS to POTS (using VoIP or the Internet as Transport): This scenario reflects the ultimate hybrid situation in which many nationally recognized long distance carriers use the Internet for transmitting phone calls between local exchange carriers using PSTN/POTS technology. IXCs (otherwise known as Interexchange Carriers) receive the call from the local exchange carrier on the PSTN/POTS system of copper wire. The call is then routed through the Interexchange Carrier’s network, which typically involves use of the Internet. The phone call is then downloaded to its destination from the Internet into the PSTN/POTS system to a local exchange carrier and then to its final destination. Exhibit 3 illustrates this VoIP scenario.

The future of VoIP is very promising, but is also filled with many uncertainties. Some experts predict that VoIP use could increase from its current level of 10 percent of consumer phone calls to 40 percent of consumer phone calls in the US market by 2008. That kind of growth can be viewed as a restructuring of the telecommunications infrastructure of the United States. Concomitantly, the various regulatory, executive, and judicial bodies of the government will become part of this restructuring or revolutionizing of America’s communications infrastructure.

The promise of VoIP is great as it is a part of the apparently unlimited potential of the Internet and the World Wide Web. Nevertheless, it has risks associated with its deployment as it is still a nascent technology requiring additional nourishment and development. The foregoing discussion has highlighted numerous issues that both individuals and companies alike must assess before deploying a VoIP system. Moreover, attorneys advising businesses and individuals need to be cognizant of these issues as part of their role as business counselors and advisors.

The technological development of VoIP and the policy debates surrounding its regulation and pending judicial actions are moving with great rapidity. These events will probably dominate the technological landscape over the next few years as VoIP serves as the medium for the restructuring of America’s telecommunication infrastructure.