Sunday, September 4, 2011

VoIP: the state of play in New Zealand

Voice Over IP (VoIP) is probably not yet the most used way for people to call each other in New Zealand. But it will be - sooner rather than later.

I am often asked a number of questions about VoIP. What are the rates of adoption? Is the voice quality OK? Do you provide VoIP lines? Who else does?

This prompted me to put together this overview on the state of play of VoIP in New Zealand. The way I see it. No statistics or scientific method here - this is simply a report from the trenches.

Looking at the industry I split the telecommunication companies into three tiers. Telecom, TelstraClear and Vodafone are what I call first-tier telecommunication companies. The second-tier telecommunication companies are local internet service providers, now delivering phone services, such as CallPlus, Orcon, WorldXchange and Snap Internet. There are also many third-tier, smaller providers like 2Talk, Kiwi and others in the market today.

At Home

First, I will distinguish between the residential and business phone lines. The Plain, Old Telephone Service line (POTS line) is the type of line most people still use at home. Until recently this was the only option.

In the last few years some ISPs and third-tier telecommunication companies started offering a service where you could buy an IP phone and get a phone number from them. As this was not widely publicized and the set-up was quite technical, this service was only used by a few enthusiasts that knew what they were doing.

Now, with the arrival of Orcon's Genius product this home scene may change.

At Work

Now, to the business world.

Most businesses don't simply just rent a phone line. They normally use a phone system to connect to telecommunications companies phone lines and have company telephones connect to the telephone system.

VoIP is a method that can be used by the telephone to communicate with the telephone system, as well as the method that can be used by the telephone system to connect to the telecommunications network.

People often confuse the two. Lets split the two up. I will call the method of connecting telephones to the telephone system via VoIP as IP telephony; I will call the method of connecting telephone system to the telecommunications network via VoIP as VoIP phone lines.

When we talk about rates of adoption it is important to look at the two separately. IP Telephony has been steadily adopted in the enterprise since late 90's - early 2000's, while first VoIP phone lines only became available in New Zealand around 2005.

As such, the rate of adoption of IP telephony is much higher than the rate of adoption of VoIP phone lines. From my personal observations, both have now entered the mainstream business. While at home we still use POTS, at work both IP telephony and VoIP phone lines well passed the early adoption stage.

Despite this being the case, none of the first-tier telcos offer VoIP phone lines yet. Perhaps this is one of the reasons why second-tier telcos are fast gaining the market share.

One thing to say about the quality of VoIP phone lines in New Zealand is that it is excellent. New Zealanders are very much used to the best experience while using digital business phone lines. This means that in order to compete with the traditional phone lines, the second-tier telcos had to put together a service that would compete well. From my experience working with two of the major second-tier providers CallPlus and Orcon, their service is a good match to the Telecom's old ISDN service.

At Vadacom

Many people think that we provide VoIP phone lines. We don't. What we do, is develop world's best telephone system, called VadaXchange.

However, to make it work for our customers, we would partner with phone line providers do deliver a turn-key solution for business.

Our system would work in either just the IP Telephony mode, with the traditional phone lines (mostly ISDN), or it can do VoIP throughout, or a mixture.

We are amongst the most experienced in this area in New Zealand, as we started integrating VoIP phone lines back in 2005 when most other business phone system providers stayed well away from it.

So, talk to us, if you are investigating VoIP in New Zealand.