The big computer buzzword for 2005 will be VOIP. What is it and why should you be doing it?

Imagine being able to make a phone call anywhere in the world for free. No charges, no catches, no funny codes to dial. VOIP allows you to do exactly this.

IP stands for Internet Protocol, the language of the net. VOIP stands for Voice Over IP, which means making voice calls over the net. If you have an Internet connection, then you can have VOIP.

The technology has been around for some years. Until now, it hasn’t taken off because of the cost of equipment and the poor state of Internet connections. Now, with free software like Skype and service providers like Engin and Freshtel, it’s reliable and easy to set up.

What you need
The most important thing is an internet connection. Without an Internet connection, you have no IP and therefore no VOIP. Any Internet connect can be used, but there drawbacks with different plans.

A broadband connection delivers better quality than a dial up service, you also pay for a phone connection on dial up, which defeats the purpose of using the net. If you are going to make a lot of calls, you may go over the download limits of the cheaper plans. However, the cost of excess usage still make VOIP cheaper than normal dial up.

Being a phone conversation, you need a microphone and speaker. Most computers come with speakers included and microphones are easily and cheaply connected to a PC. A headphone can also be used, and there are some telephone style handpieces that either plug into your computer or VOIP box.

Once you have an Internet connection and the computer hardware, you will need VOIP software or hardware. The cheapest way is to install free software like Skype onto your computer. Hardware like Engin boxes are reasonably priced and allow free calls between subscribers on the same service.

Costs
If you are talking computer to computer, then you pay nothing after the cost of your Intenet connection. You register your user name and then “dial” the username of whoever you want to speak to. If the other person has their computer and VOIP software on, then their connection will “ring.”

Not everyone has a computer or net connection, so you can use VOIP to call a real phone number. The VOIP provider carries the call on their Internet network as far as possible then connects it to the local number. This saves a lot of money and is where the providers hope to make their profits. 

The savings are considerable. A standard call to the UK through Telstra is between 17.5c (for a half hour 0018 call) and 47c per minute. Skype charges €0.017, around 3 cents, per minute.

Three cents a minute compares well for domestic STD calls as well. Telstra’s cheapest STD plan is just over seven cents per minute, with strings attached. Australian providers like Engin offer rates such as 10c flat rate between capital cities and 10c per minute outside the capitals.

Keep in mind there are other providers and shopping around is worthwhile. Your calling patterns make some plans better than others and only you can find the right plan. Providers have different features, such as offering an incoming phone number, conference calls, caller ID and message services.

The biggest drawback with VOIP is that it requires a reliable Internet connection. While home users may be happy to have their IP phone drop out while the cable service is down, this is not suitable for businesses. So, if phone communications are essential, then a good quality (read more expensive) Internet connection is required.

If you have an Internet connection and you make lots of phone calls, then it almost goes without saying that you should consider some sort of VOIP service. Over the next year or so, many people will be switching to get the benefits. By knowing your needs and checking the deals, you can make huge savings.