Telecom 101:
Top Communications on a Budget

How you present yourself to your customers is the single most important factor in your business' success. In the old days, your primary contact with customers would have been through your retail storefront, or second-hand, through your reputation with other customers. Today, telecommunication plays an increasingly important role in reaching new prospects, and in converting those prospects into paying customers.

Computing and telecommunication technology has advanced at an amazing pace in the past decade. New technologies make it possible to communicate in ways that were not practical even 10 years ago. What's more, rapidly declining prices for technology products make it possible for budget-conscious small businesses to use them. Sophisticated communication systems are no longer the exclusive domain of the world's richest corporations.

Communication is no longer as simple as it used to be. Where the telephone was once the primary mode of electronic communication, customers can now reach you in many different ways. Likewise, you can also communicate internally using many different media, each of which has its unique benefits and weaknesses. This article will give you an overview of what's available, how and where to use it, and who to contact for more information.

Voice: long live the telephone
In the early days of the internet boom, many people were claiming that the worldwide web would kill the telephone, much like the computer was supposed to eliminate the need for paper. In fact, the reverse has been true. Just as the explosive growth of e-mail has fueled the laser print/laser printer paper industrial complex, the growth of online shopping has generated more, not fewer, customer phone calls. The telephone was, and still is, the most important communication channel.

While the web is a great medium for publishing information, a web site is not a person who can answer a customer's questions. It can make many transactions, such as configuring and pricing a product, much more efficient. But there are often situations where the customer wants to talk to a human being. This is especially true of higher-priced items: the customer will likely want to do his or her tire kicking online. Typically, when he does call—with specific questions—he is close to making a final decision.

Phone systems
A phone system is probably one of the most important purchases a customer-oriented business will make. Its job is to enable you to communicate efficiently by phone, both within the office, and with your customers. A bad phone system repels customers; a good system makes it appear as though each customer has a direct line to the president's desk.

Phone systems, especially those with features like voice mail and ACD (call queuing), used to be terribly overpriced. Thanks to the convergence of computing and telecom technology, prices have declined dramatically, while features and performance have increased by leaps and bounds. This is especially true in the small office market, a niche that had been largely ignored by the major telecom equipment vendors until recently.

These new systems for the small office/home office environment can be divided into three basic categories: KSU-less systems, mini-PBXs (including PC-based phone systems), and LAN-based phone systems.

Intercom (KSU-less) systems
Some of the most exciting developments in the past year have been in low-cost intercom systems for offices with 12 or fewer people. While there are a few very large corporations, the vast majority of businesses have 10 or fewer people. Yet, this market was largely ignored by phone system vendors until the past few years. New KSU-less systems enable even the smallest office to enjoy sophisticated features like intercom calling/paging, voice mail, cordless communication, and more. Unlike big business phone systems, these systems are priced very affordably, typically $100 to $200 per user. The systems are designed to work with existing phone wiring, and are truly plug-and-play.

The most exciting systems in this category are hybrid corded/cordless systems that allow users to mix and match corded and cordless telephones within the intercom systems. So, you can give your office employees corded phones, while giving your shipping clerks headset-ready cordless handsets to use back in the warehouse. An outstanding example of this design is the Panasonic 4-line cordless system. It's available at HelloDirect.com; Hello Direct offers other KSU-less systems on their web site as well.

Mini-PBXs
Mini-PBXs are another exciting category, and a good fit for companies that have more than 10 and less than 100 employees. These systems provide a wide range of features, including voice mail, automated attendant (robot receptionist), intercom features, computer telephone integration, and (in some cases) automated call distribution (call queuing for sales/customer support workgroups).

Mini-PBXs fall into 1 of 2 categories: self-contained appliances and PC-based phone systems. Several companies make self-contained systems that are easy to install and require minimal computer and networking experience. These systems provide a basic set of features that are sufficient for most small businesses, including: voice mail, auto-attendant, intercom, and so forth. Two of the leading vendors in this category are Bizfon and ESI. Bizfon, available at Hello Direct and HelloDirect.com, makes a turnkey small office phone system that handles up to 32 users. ESI makes a system called IVX that expands to handle 100+ users. Bizfon's system is designed to be self-installed. ESI's system is installed by an authorized dealer.

PC-based phone systems are an option for more technically astute users. They have been around since the early 1990s, and have been refined with the introduction of advanced systems such as Artisoft's TeleVantage and AltiGen's AltiServ systems. These systems offer a wider range of features and can be customized to meet the user's exact requirements. For example, AltiGen's system makes it easy to create elaborate IVR (auto-attendant) scripts that route callers to different groups of people based on how they respond to telephone prompts. These systems enable even small companies to handle sales and customer service calls using a call center approach, where calls are queued up and handed off to live reps in first come, first served fashion.

LAN (IP)-based phone systems
If your company has installed a high-speed local area network (LAN) for connecting your computers, you can use this same network as the backbone for your office phone system. Most phone system vendors are migrating toward this approach, and there are now several exciting LAN-based phone systems on the market.

ESI, mentioned above, recently announced the release of a LAN-based version of their award-winning IVX phone system. This system uses a company's Ethernet data network to transport phone calls. Thus, the phone and data cabling are merged. There is no separate infrastructure to maintain.

When they were first introduced, LAN-based phone systems were very experimental, had unpredictable audio quality, and did not offer features that users of conventional phone systems took for granted (such as one-button intercom calling). This has all changed as phone system vendors have retooled the business phone systems to use data networks as their backbone.

A number of companies, most of them relatively young, have led this wave of development. Among the vendors to watch in this category are: ESI (www.esi-tech.com), Ericsson (www.ericsson.com), Shoreline Communications (www.shoretel.com) and Cisco (www.cisco.com). ESI is especially interesting as they have retooled their award-winning IVX phone system to use data networks to carry calls. They already had a feature-rich system, and have simply migrated it to use computer networks to carry calls.

Video: seeing is believing
Just as prices for computers and telephone service have plummeted, so too have prices for videoconferencing systems. Once accessible only to the richest companies, videoconferencing is now a commodity product.

For a time, people were predicting that video would be as ubiquitous as the desktop telephone. That day has not arrived yet, but video is cheap enough that it is becoming standard equipment in meeting rooms around the world. The conference room is where videoconferencing technology really shines. It makes it possible to link people at remote sites, and to include people off site, such as contractors. It's not the same as being there, but it is much better than listening to a disembodied voice on one of Polycom's "space-phone-thing" devices.

Two of the leading vendors in this space are C-Phone (www.c-phone.com) and Polycom (www.polycom.com). Both companies offer turnkey videoconference terminals that work on both ISDN and IP-based networks. You typically use the ISDN phone line to call videophones outside your company, and use the IP connection to call videophones or desktop PCs inside your company's network.

The quality of these systems has improved dramatically in the past 5 years. It is now possible to send near-broadcast quality video across a typical computer network. The days of watching blurry, jerky video are long gone. As the quality has increased, the prices have decreased dramatically. What used to be $20,000 systems are now pushing the $2,000 price level. Desktop solutions, such as Polycom's ViaVideo™ system, are now available for about $500.

Videoconferencing is a useful technology for any company in which people travel extensively—between offices, say, or to meet with key vendors. While they do not replace meetings entirely, they reduce the need for travel dramatically. Because of this, they pay for themselves very quickly when you consider the direct and indirect costs of business travel.

Data: broadband for the masses
Not too long ago, 56 K was a "fast" internet connection. In fact, just 10 years ago, the backbone of the National Science Foundation Network (NSFNet), the precursor to today's internet, operated at speeds ranging from 56 kilobits to a blistering 1.5 megabits. It's hard to imagine that the backbone of the entire network ran at a slower speed than a typical residential cable modem connection, and that this explosive growth occurred in such a short time.

Today, most users in North America can get fast, always-on internet connectivity for $200 per month or less, sometimes much less. The beauty of the internet is that it can be overlaid onto any 2-way communication medium. Your computer does not care whether your bits are being sent across a cable modem, digital subscriber line (DSL), or some sort of wireless connection. This media-neutral approach means that internet service providers can use different technologies to provide access to different types of users. In today's market, you have the following basic options: cable modem service, DSL, fixed wireless, and satellite.

Cable modems
Cable internet access is currently the cheapest form of high-speed internet service. It is available to several million home users, and some commercial locations. Within the next 5 years, most cable TV companies will offer some form of high-speed internet service.

The only drawback to cable internet service is the fact that it's geared toward residential use. If you plan to host your own web site in-house, or to enable outside users to access services via your network, cable internet is not the best way to do this. Performance is good, but highly variable. The good news is that cable internet use tends to peak on the evenings and weekends, and tends to be light during normal business hours. As a result, you should get very good performance during normal work hours. Speeds typically range from 200 kilobits to well in excess of 1 megabit, comparable to DSL technology.

Digital Subscriber Line (DSL)
DSL is the phone companies' answer to cable internet access. Using special modems, DSL can provide high-speed internet access via a dedicated phone line (up to 6 megabits in some cases). Speeds typically range from 300 kilobits to 1.5 megabits. The maximum speed is related to your distance from the phone company central office (CO) that serves your location. The closer you are to the CO, the faster the DSL can run. Most users can get speeds up to 768 kilobits, which is more than enough for most uses.

DSL is better than cable access because the phone line is dedicated to you. You are not sharing a conduit with numerous other users, so performance tends to be less variable. There may, however, be data bottlenecks upstream from the CO that you are connected to. However, most DSL providers that focus on business customers provide ample network capacity to avoid so-called brownouts where too many users are competing for bandwidth.

DSL is somewhat more expensive than cable access, depending on the class of service requested. DSL service for residential customers ranges in price from about $40 per month to $200 per month, depending primarily on connection speed. DSL service for business customers ranges in price from about $100 per month to $400 per month. You can often get away with ordering residential service, although you will need to order business class service if you want to do things like host your web site on your own server, allow outsiders to connect to machines on your network, etc. The main problem with DSL is that it is not available in many areas, especially in rural areas.

Fixed wireless
Fixed wireless is another option for users who cannot obtain cable or DSL service in their locale. This technology is derived from the wireless cable TV services developed in the 1980s. Users mount a disk-like antenna on the side of their building. This antenna is aimed at a repeater tower that serves users within several miles of the centrally located transmitter.

Speeds and costs are comparable to DSL. The advantage of this service is that it is not dependent on existing phone or cable TV wiring. So, while it may not be economical for your phone company to rewire your neighborhood for high-speed data service, you may be able to find a wireless internet provider in your city. Sprint (www.sprint.com) is in the process of rolling out this type of service in cities throughout North America.

Satellite
Finally, if all else fails, companies have begun offering high-speed internet service via satellite. One company, StarBand (www.starband.com) has developed an especially compelling offering. Their service, available anywhere in the continental United States, offers download speeds of 150-500 kilobits, comparable to residential DSL service. Because the service is satellite-based, it is available even in remote areas where terrestrial internet access is limited to slow dialup connections. The service costs less than $70 per month, and the equipment can be bought in conjunction with DirecTV satellite television systems.