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The Varied Facets of Voice Over IP

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March 01, 2005
Telecom | Voice Over IP
Mark G. Haley, CHTP

© 2005 Hospitality Upgrade. No reproduction without written permission.

In the last two years, the telecommunications world has buzzed with the promise of voice-over IP, better known as VoIP. The buzz really escalates when people start talking about free long-distance calling and marketing via browser-enabled telephone displays, but people ignore that these are very different things. The fact is, all the VoIP hype fails to start with a definition of what one means by VoIP.

Test Your VoIP IQ with this Multiple-choice Quiz

Voice-over IP really means:

A Routing long-distance telephone calls over the Internet to eliminate long-distance costs
B Using “smart” telephones connected by an Ethernet network to a server and/or a PBX to display “metadata­” about calls and perhaps browse the Internet on the display
C A marketing campaign supporting increased hardware and software sales
D All of the above

It should be no surprise that the correct answer to the quiz is all of the above. Now let’s take a look at each of the above definitions in relation to guestroom applications for hotels.

Low-cost Long Distance
VoIP can save on long distance toll calls by replacing the traditional circuit-switched service with the more efficient packet-switching of the Internet. This strategy works particularly well for organizations with a good deal of on-network voice traffic and a private IP data network. It also works well for remote office locations that want to connect to the home office PBX system.

Any expected cost savings break down quickly when calling off-network, because you still need to terminate the calls on the public switched telephone network (PSTN) and there is a cost for that. Also, spiking volumes of traffic on the IP network (public or private) can cause voice quality to degrade below levels acceptable for hotel guests.
Smart Phones
IP phones are very different from typical guestroom telephones. Today, a typical analog guestroom telephone has several key attributes: message waiting indicator, dataport for easy modem connection, adjustable volume controls and plenty of faceplate space for dialing instructions and hotel information. Optional attributes include multiple lines, speed-dial buttons and speakerphone. At about $35 to $85 per phone depending on options and brand these phones do not normally require AC power (sometimes not readily available in older hotel rooms) and connect with a single pair of copper wires for each line.

IP phones come at many price points and feature sets. Most of them use soft keys which perform different functions depending on what is selected on the multiple line display, which means that the user must select the functions they need and learn how to use the phone. The phone connects via Ethernet (four pairs of copper wire) back to a switch in a wiring closet and requires AC power, either in the room or injected by a power-over-Ethernet device. The displays can show data fed by an XML interface from an Internet application that someone would need to develop, host and maintain in order to take advantage of it. You can estimate about $260 and up each per name brand phone, plus power supply, Ethernet switch and an option to present an analog port for your guests that remain tied to their modems. At two or three phones per room, the cost adds up quickly. The ongoing cost of maintaining the Ethernet network is likely much higher than a simple tip-and-ring voice cable plant.

Marketing Campaign
Every tradeshow and journal buzzes with the conviction that VoIP is a given, fully required in every office and guestroom of the future. While we aren’t convinced, obviously Cisco, Nortel, Avaya and other manufacturers fully buy into that assumption and invest in the buzz. It is their business to do so and an important business activity for them. It helps them sell new and more expensive systems than a digital PBX with analog telephones in the guestrooms.

All of the Above
The total cost of a VoIP implementation in guestrooms is likely to more than double the cost of a digital PBX with analog phones, with little benefit on the ongoing cost of service side. There are no real benefits to the guest other than the undeniable cool factor, and on the negative side someone has to provide and maintain the applications that deliver the cool factor.
Now put all of this into the context of the realities of the hotel business:
  • Hotel telephone revenues are continuing to drop an average of 5 percent per year
  • Telephone service is simply not very important to guests now
  • Money invested in VoIP for the guestroom could perhaps be better spent on areas with a return, like a customer relationship management system or a new carpet in the ballroom
  • Who will fund and maintain the browser applications?
VoIP has major benefits in corporate offices or in administrative locations. The possible value of VoIP in the guestroom comes for those hotels that have placed a strategic stake to offer their guests the highest levels of guestroom technology as a core element of their value proposition. For those hotels and owners committed to funding that strategy, VoIP in the guestroom can be a sound marketing move, and one to be applauded. These hotels might include ultra-luxury properties or ones located in high-tech corridors with high-tech guests. For other hotels, it is recommended to limit the use of VoIP to administrative locations. In new builds, specify future-proofing the cable plant by using structured category 5e cabling for all voice and data cable.

Mark G. Haley, CHTP is a partner in The Prism Partnership, LLC, a consulting firm servicing the global hospitality and travel industries based in Boston. For more information, please visit http://theprismpartnership.com or call (978) 521-3600.

How Does VoIP Save Long Distance Tolls?
In order to understand how voice-over IP can save costs compared to traditional telephony, begin with the difference between circuit-switched communications and packet-switched.

Traditional telephone communications are circuit switched, meaning that a single, continuous circuit is established between your telephone in Boston and the recipient in Atlanta, and the circuit connection is maintained throughout the call. Think of a railroad track running straight from Boston to Atlanta, dedicated to that single train of your voice conversation. You get a very reliable call with outstanding voice quality, but at the relatively high cost of dedicated the entire track (or circuit) to a single call. Every additional call requires an additional dedicated circuit, an additional railroad track.

The Internet and similar data networks are packet-switched rather than circuit-switched. A computer at your end takes your voice, converts to binary (zeros and ones) and breaks it into packets, each wrapped with metadata that define what the contents of the packet are, its destination and how to reassemble it. These packets are then blasted out into the data network where they take various routes and share bandwidth with other, unrelated packets, typically data network transmissions. When the packets reach Atlanta, a computer at that end reassembles them and converts the zeros and ones back into your voice. Think about an interstate highway, with millions of automobiles (packets) getting on and off the highway to go wherever they need to, possibly taking different routes, but always getting there eventually.

Additional calls just ride on the existing data network, with no marginal capacity needed, up to a point. When the network exceeds capacity, some packets get lost or delayed. This results in garbled or distorted sound quality or dropped calls. It is a very cost-effective approach to voice calling that works well most of the time, but is subject to poor quality when traffic volume approaches bandwidth capacity. Then one needs to add bandwidth, analogous to adding another lane on the freeway.


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