Author: Yogi Schulz

Bell Canada, Shaw Communications and Telus all recently announced telephone services based on Voice over Internet Protocol (VOIP) rather than the traditional telephone network infrastructure. These announcements are building business and consumer interest in VOIP technology.

What are the differences between VOIP and Plain Old Telephone Service (POTS)? How do the differences translate into benefits for businesses and consumers?

Lower Cost

The major attraction of VOIP is lower cost. For the telephone companies, VOIP lowers cost through lower capital and operating costs in comparison to POTS costs. For businesses and consumers, VOIP lowers costs through cheaper long-distance charges and a cheaper monthly charge per line or extension.

Mr. Paul Rowe, the Vice President of Marketing at Bell Canada, says “businesses can achieve a 25% cost saving through the use of VOIP by reducing the cost of moves and by eliminating duplicate networks and their supporting staff”.

An accurate cost comparison between VOIP and POTS can be blurred by how businesses allocate the cost of the Internet-access infrastructure such as cable or ADSL among voice, data and video. The VOIP service pricing of many upstart providers like Vonage and others appears more attractive than it really is because it assumes that you already operate the required Internet-access infrastructure and that sufficient capacity exists to support the added VOIP traffic.


POTS and VOIP are different telephone technologies with a surprising relationship to each other.

POTS uses the telephone we all know. VOIP uses a computer with speakers, a microphone and a little software for “dialing” and for managing the conversation.

POTS is delivered through the circuit-switching telephone networks that have grown in capacity and complexity from the days of Alexander Graham Bell. Beginning in the 1960’s, telephone networks have evolved into a mostly digital infrastructure.

VOIP is delivered through the Internet’s packet-switching networks. {The Internet chops up all transmissions of data, voice or video into packets of a few hundred characters for ease of management and control.} The Internet uses the digital infrastructure of the telephone networks to transmit its packets.

While POTS and VOIP are quite different technologies for delivering voice communication, both depend on the foundation of telephone networks that are owned and operated by the telephone companies.

VOIP is the next step along the convergence path. Convergence is the term used to describe the trend where distinct communication and storage technologies such as radio, television, telephone and computer are merging into one all-encompassing technology. For example, audio cassettes were a single purpose technology designed just for audio. Today’s CD’s and DVD’s, on the other hand, represent convergence in that they are used to store audio, video or data.

Generally, businesses operate separate networks for voice and fax (POTS), for data (frame relay or T1) and for video conferencing (ISDN). Now the use of the Internet Protocol (IP), which began with data, is expanding to include voice and video. These new uses are feasible due to massive increases in Internet capacity and due to advances in software to manage the transmission and to conserve that Internet capacity when sending the same audio or video transmission to many recipients.

Quality of Service Concern

A common concern about VOIP is its quality of service compared to POTS. Quality of service is broadly defined as availability (Is there a dial tone when I want one? or Did my call drop before I finished talking?) and transmission quality (How much static am I hearing?).

We enjoy excellent quality of service from POTS. When was the last time you picked up the phone and heard a gurgle or silence instead of a dial tone? It hasn’t happened in many years. Also when we use POTS, we rarely experience static or variations in voice volume.

By comparison, VOIP conversations sometimes encounter static or a puzzling delay. These problems are most frequently due to inadequate network capacity on the public Internet. It’s not noticeable when loading web pages because the hourglass just stays on a second longer. However, on a phone call, that same second feels like an unwelcome eternity. {The same network capacity problem can be seen visually when video play is jerky or stops or displays little rectangles instead of a smooth picture.} The solutions are to ensure that you have adequate capacity in your local network and that you contract with a VOIP carrier that operates with sufficient capacity.

“To ensure that customers enjoy an excellent experience, Telus and others are making major investments in a carrier-grade VOIP network infrastructure”, says Mr. Charlie Fleet, the Senior Communications Manager for Telus.


VOIP is coming to homes and businesses all across Canada. For satisfactory results, follow the best practices directions of your service provider.


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