VoIP, or Voice over Internet Protocol, is quickly emerging as one of the dominant trends in telecommunications this year.

So what exactly is VoIP? Forget the technical jargon and think ’phone over the Internet’ A pretty simple concept really. VoIP transforms a high-speed Internet connection into a phone line, converting your analog voice into a digital signal that can be transmitted over the Internet.

While you can’t use VoIP with dial-up Internet service, it works with most types of access including DSL, DSL Lite and cable modem. As well, VoIP offered through a company like Primus Canada also works with most wireless service providers including Bell Sympatico, Rogers Cable and Shaw to name a few.

So where do the savings come in? Long distance charges, that’s where.

Because a small business owner can pick his area code without being restricted to geography, a virtual office can be created in a local call zone.

For example, let’s say a marketing firm has employees in Toronto, Vancouver and Montreal. By choosing one area code, all calls on company lines between those three locations would be considered local — and exempt from long-distance calling charges. For a company that makes a lot of long-distance calls the savings can quickly up to hundreds, or even thousands of dollars a month.

«It’s basically faster, cheaper service than what you would get from your phone company, „ says Jon Arnold, VoIP program leader with business consultants Frost & Sullivan.

Of course, there’s more to VoIP than being able to make a phone call over the Internet. It’s about bringing voice and data together in a way to customize your company’s information to gain efficiencies.

For example, voice-mail can be treated as e-mail using VoIP, meaning you can forward it on to a third party.

“The cool thing is,» says Arnold, «is that you really don’t have to be a big business to take advantage of VoIP.»

But according to consultants IDC Canada, small businesses aren’t adopting VoIP as quickly as the buzz around this product might suggest.

According to a recent study by IDC, only 6% of businesses with 50–99 employees have adopted VoIP, or are in the process of rolling it out. Just 15% were considering it and looking at the different options available to them and 75% of respondents said they didn’t want to implement VoIP at this point. The remaining 4% said they didn’t know what their opinion about the technology was.

So what’s keeping small businesses from jumping on the VoIP bandwagon?

Michael Hyjek, analyst for business customer segments at IDC says he’s not surprised by the seemingly low pick up. «Small business owners are slow adopters to begin with,» says Hyjek. «They’re not going to buy it until they absolutely need it.»

Arnold agrees. He says many small businesses take a ’if it ain’t broke — why fix it’ approach to managing their telecommunications. «The incumbents offer really good phone service.»

One telecom consultant has a more suspect reason. «The technology’s not all it’s cracked up to be,» says business analyst Eamon Hoey of Hoey Associates. «VoIP technology can be unreliable.»

Not to mention, the pickings for a small business looking to migrate to VoIP are slim, with Primus and Vonage the two main companies going after this market.

Primus has two different packages for small business to choose from. TalkBroadBand Pro is the most basic package available to small business owners. For $27.95 a month users get a number of features, including a phone number, basic directory listing and a choice of direct dialing or extension dialing (4-digit dialing within a service area). TalkBroadBand Enterprise for $29.95 a month will get a small business owner Web portal access as well.

Vonage’s small business basic plan is listed at $55.99 on their website.

Until a regulatory framework for VoIP has been established, Arnold says it’s unlikely small business owners will see more choices available to them.

The Canadian Radio-television and Telecommunications Commission (CRTC) is currently debating that framework. It recently held hearings regarding a preliminary opinion earlier in the year that it thought it should regulate VoIP for the big players, like Bell, Telus and Aliant, but not for the newer entrants.

While the incumbents argued strenuously for de-regulation, the smaller players are concerned that should that happen, their competitive jump-start will disappear.Hoey thinks it unlikely the big telcos will get their way. «I think the CRTC is leaning towards the conservative advantage — those who want to see the telco’s regulated.»

If that happens, Arnold says more choice for the small business owner could be long time coming. «As it stands now, BCE, Telus and Aliant don’t have much incentive to enter the market.»