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why voip is cheper?


Why is VoIP cheaper than a standard telephone line? If you make internal calls, VoIP is free, but if you make external calls, the call have to route to the PSTN anyways? I dont understand the benefits. COuld some body please explain?


VoIP noob.

2 Replies 2

Brandon Svec
Rising star
Rising star

It is not necessarily so, but I can think of several reasons that is *can* be.

One way that it is cheaper (at least in the US) is that the service providers don't have to charge all the taxes they do for a traditional circuit.

For example, with a PRI circuit vs. SIP trunks both delivered via the same T1 transport with the same features and rates the SIP trunks can be $50 - $75 per month less because various taxes and fees can be avoided.

It is not likely to stay this way for long, but it is this way for now at least.

Toll bypass or hop-off routing is another advantage of voip and can lead to obvious savings if you can avoid long distance charges, but it is not unique to voip as you can do it with leased lines as well (as has been done with traditional PBX for decades).

Enabling remote users can be a cost benefit because you can place a phone somewhere on an existing internet connection where previously you would have to pay for a phone line or leased circuit to provide a phone.

Another way is that when you purchase  a new phone system you can save the cost of T1/E1 cards.  Depending on the system some may or may not charge a license fee for voip trunks.

Yet another way you can consider voip to be saving money is on network and cable infrastructure.  You can choose to use single cable drops for phones with PC plugged into the back of the PC.  If you are pulling new cable or would otherwise need to add cable this saves money.  If you run voice and data over the same WAN link you can consider that you are saving the cost of purchasing separate circuits, routers CSU/DSU, etc.

If the voip system happens to be easier to administer then an existing legacy PBX then this may be a cost savings where the IT group can do moves and changes where previously you had to pay a phone vendor to these things.

Those are most of the common reasons I have heard people argue that "voip is cheaper"


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Frequent Contributor
Frequent Contributor

IPT is not cheap as others have highlighted. If you are removing an existing PABX to IPT - dear, need to understand why- this model will only bear fruit if the PABX is on it last legs, no longer supported or you require features- more common. If you are moving to a new building then IPT is the only way forward

The cost statement came from the fact the feature set of CUCM or CCM, when compared to PABX it was no good so the only way Cisco and other IPT only companies could sell was based upon cheap VOIP calls - however how number companies will put the calls across the internet. yes IPT can use the company WAN but so can TDM- H323, QSIG gateway works the same. If you have spare bandwidth then make use of it however if you were the CFO could you not save more money by reducing the original bandwidth in the first place- " if yo can put more applications which you did not foresee when the WAN was first proposed can we not reduce it in the first place????" Make use of QOS so yes again you could us the WAN/MAN. However if you need to implement QOS, upgrade routers , you need to compare this to sending calls across the PSTN to your destinations , do your employees care how they make calls- 4, 7 digit dialling- fine set up translation send them to Telco - same result ?

As people stated the Telco costs are now so cheap it is sometime hard to use this cost saving. The IPT model has now moved- in my mind to a feature set. Cisco and the other IPT companies are now on par with the feature set of PABX or if they are not 100% then you need to identify what then END feature, work flow is and you will probably provide the same result but in a slightly different way.

New Building- save on cabling instead of 4 per desk - two, office moves - Extension mobility though saving that you need to make sure the desk side guys still do not move phones- save even more by going Citrix/" main frame" approach - in theory no P.C moves or phone moves

The other savings are support- - only one supplier, maintainer, Foot print in a comms room- power, A/C frame space etc. however as I mentioned it is the features where potential you save money but not direct costs but more with work flow- Presence, Unified Communications, Blackberry integration, Follow me, even SIP trunks.

Other savings - Centralised support, Applications- Voice Mail Switchboards. Removing maybe your voice only WAN which was used for TDM only

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