Voice Over Internet Protocol may make for a funny sounding acronym (VOIP), but it could save your company money when used as a business communication system.

VOIP uses the Internet instead of copper wire wiring and telephone lines to transmit voice calls and can drastically cut down on long-distance expenses. VOIP services convert the human voice into a digital signal that travels through the Internet. Businesses like it because it allows them to combine their phone and Internet services over a single high-speed broadband network connection.

Recent consumer and business reports show more Americans are putting their landline phones on hold and dialing up using broadband VOIP. According to research by the Yankee Group, an independent technology research and consulting firm, the number of customers accessing VOIP via their cable provider jumped 167 percent in 2006 from 3.9 million customers to 6.3 million. The Yankee Group expects that number to reach 26.2 million by 2011.

Several companies provide broadband VOIP service across mid-Michigan. Comcast, Arialink and ACD.net can provide customers with the required equipment—a VOIP adapter or specialized phone is typically required—and broadband service. These companies provide VOIP over established private broadband networks, and not over the public Internet, which is an important distinction to make since companies such as Vonage and VoiceGlo connect customer calls via the public Internet, which inhibits their ability to insure quality.

“It’s a huge advantage to own the infrastructure. That allows us to prioritize voice traffic and limit contention for bandwidth,” said Jason Schreiber, president of Arialink, “which eliminates echo, latency, jitter and dropped calls. There were technology bumps and bruises before we mastered the technology. The technology is mature at this point.”

Lansing-based Arialink, which began offering VOIP in early 2005, has grown to 32 employees since Schreiber founded the company in 1995. The company offers bundled voice and data solutions utilizing an advanced integrated services platform, including broadband and traditional telephony service.

“VOIP is really nothing more than the implementation of traditional phone service utilizing Internet technology, but this is really first generation technology that can go a lot further,” Schreiber said.

Industry watchers predict VOIP, sometimes referred to as IP telephony, will continue to cut into the conventional telephone market as quality and reliability issues are solved. Videophones that use VOIP are already available, and breakthroughs like Apple’s iPhone allow customers to make VOIP calls when WiFi is present.

“We are beginning to see the architects [of VOIP] really learn how to take advantage of the tool. This is the future of how voice, video, entertainment and media consumption will take place. There will be a convergence of technology with VOIP being one of the enablers of it,” Schreiber added.

ACD.net began offering VOIP in 2004 and provides high-speed Internet service, Web hosting, telephone service and data storage to more than 20,000 customers spread across the state. The company employs 35 people and contracts with another 15 subcontractors. The Lansing-based company offers two classes of VOIP services for businesses.

“The first is going VOIP between offices using the Internet or a private network so they do not have to pay for calls between offices,” said Kevin Schoen, president of ACD.net. “The second is VOIP as a service similar to what a phone company provides. This accesses the public switched network so you can place calls to the outside world.”

Savings can be substantial if choosing a true VOIP phone system, possibly “up to 50 percent” over traditional phone service, by eliminating long distance charges, Schoen said.

Business with multiple offices can take advantage of VOIP to allow one phone number to ring in multiple remote locations, he added.

“Remote users and people from home offices benefit because we essentially make them part of the business phone system,” he explained. “That greater flexibility is possible because of the many advanced features. The ability to take a VOIP phone with you while you travel and send and receive calls just as if you were sitting in the office is a very important from a business aspect.”

Comcast, the dominant cable television provider across mid-Michigan, also offers Comcast Digital Voice phone service across the state. Comcast rolled out its IP-based phone service in 2006, which is managed over its private network, not the public Internet. According to various reports it is the IP telephony leader with a reported 2.4 million subscribers nationwide.

Patrick Paterno, director of communications for Comcast’s Michigan region, said, “The digital voice product is very important for us. We feel it will be the cornerstone of our product. Business customers are typically looking for combined voice, video and data services, which means better pricing and a single solution.”

Comcast, which has 160 employees at its Lansing office on Miller Road, offers business customers a “reliable business voice solution,” Paterno said.

Simplified Tax and Accounting switched to VOIP from Arialink in 2005 and has since saved nearly 50 percent on its monthly phone bills, stated Ryan Lowe, president of Simplified Tax and Accounting.

“It is very efficient, especially since we have multiple locations. It gives us the ability to route calls any way we want. When call volumes are high in the Lansing office at tax time, we can route them to another location. It’s like opening another office,” Lowe said.

Simplified Tax and Accounting, which has offices in Lansing, Williamston, DeWitt and Owosso, has experienced very few glitches using IP telephony, except for the occasional dropped call because of a “hiccup” in the Internet.

“For any company with multiple locations and multiple lines, [VOIP] can result in amazing cost savings,” Lowe said.

Remember that traditional telephones are connected directly to telephone company phone lines, which in case of a power failure are kept working by backup generators at the telephone substation. However, VOIP uses broadband modems and other hardware powered by electricity, which may be subject to outages.