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Why are VoIP Calls so Cheap?

Updated on December 29, 2011

How VoIP Works

Despite the growing prevalence of VoIP, a lot of people still don't understand how it works. The traditional model of expensive PSTN calls is so entrenched in people's minds, that they're not able to figure out why VoIP is able to make calls at rates which are as cheap as they are. They think there must be some kind of catch to it. After all, if something is so inexpensive, it can't be as good as the more expensive service right?

It turns out however that it IS as good. The reason is simple – the Internet. It would be a massive understatement to say that the Internet has changed things. It's not only revolutionized the dissemination of information, and enabled free text communication between people, it is also proved to be the enabler of new and improved voice services as well. There's no denying that the infrastructure required to transmit VoIP services efficiently and clearly over the Internet requires special configurations and hardware, but it can be done. And the best part is, it scales beautifully. This scalability is particularly important when using a VoIP server for many different firms and businesses at the same time. The enormous flexibility also allows for a more focused use on single company's servers customized for their unique business practices.

VoIP Services
VoIP Services

Cheap VoIP Is Not Magic

It was only a matter of time before the Internet was used for voice communications. After all, all voice is data in the end and a pipe which can transfer data can also be used for transferring voice. In fact, it's pretty trivial to enable Internet chat between two people. Services like Yahoo Google, and Skype have been doing this for years. The real challenge however is to integrate Internet communications with the traditional phone systems. This means allowing Internet calls to and from people who have a real-world telephone number.

There are different approaches to this problem. The two networks, namely voice and the phone systems are mutually exclusive. So at some point of time, there has to be a "hand off" from one to the other. These points of interconnection are called gateways and are provided by Internet Telephony Service Providers or ITSPs for short. Unlike the Internet however, the POTS phone calls are not free. This means that whenever a call is made where at least one of the participants has a phone number, that call will cost money. But it CAN be cheaper.

We can use the Internet to transfer voice data over the majority of the distance and only drop-down when it actually needs to connect to the other person. This cost saving is particularly noticeable during international calls. In fact, quality VoIP phone services have become the norm for almost all international calls these days. Professional VoIP providers make use of proxy servers to service their clients. Contact your ITSP to find out the benefits of an SIP proxy server.


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