Main Navigation

Phone: +64 9 969 0600

Love your phone system

Reducing Telecommunications Costs

A white paper written by Igor Portugal, Vadacom CEO

Market Overview

When New Zealand Telecom was privatized in late 80s the phone copper network ended up in one set of hands. Telecom's monopoly position kept our costs relatively high and held innovation back. Almost two decades later successive governments started introducing measures to increase competition. Labor regulated the market forcing Telecom to split into three businesses. National are funding new fiber optic network.

The measures are working, which is why you are seeing more competition. This spells lower costs and exciting new products and services.

Eight years ago you could only buy a phone line from either Telecom or, in some areas, from TelstraClear. Today there are more than 20 providers who can sell you a phone line in New Zealand.

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 Compass Communications. There are also many third-tier, smaller providers like 2Talk in the market today.

The competition is high, and the costs are truly reducing. How can you take advantage of this?

Cutting Costs

If Telecom was the only option, would you be able to cut costs without affecting your business?

With the new competition you are in a better position to negotiate. A modern telecommunications specialist can go through your phone bills and show you the savings. If the last time you negotiated your contract was more than two years ago, chances are, you will be able to save 50%-60% of the costs you are paying now.

Everybody knows that when you are negotiating a contract you can get the best deal. However, what can you do when you are already in a contract?

This is where voice over the internet protocol (VoIP) comes in handy! If your telephone system is capable of connection to VoIP providers, you can have more than one supplier of phone calls and use the cheapest route on every call. You cut costs without breaking contracts.

But what about the call quality?

Phone Lines

In business one of the larger figures on the P&L statement often is telecommunications. Your aim is to keep that figure very low, while being able to be productive.

To understand how to keep the costs low, you need to first know the different types of telephone lines that are available.

The Plain, Old Telephone Service line (POTS line) is the type of line most people use at home. This line is delivered to you via an analogue copper wire which is still owned by Telecom. It lacks essential services that business requires. One is multiple phone numbers associated with one phone line. Multiple phone numbers per line enable businesses to have a direct dial-in number (DDI number) so a call can reach the right person. This makes POTS the most expensive service on the market.

The digital lines that were created for businesses also utilize copper wires. They use a standard called ISDN. ISDN allows more than one call through single copper wire. There are two options – basic rate service, allowing two calls per line (basic rate ISDN) and primary rate service allowing up to 30 calls per line (primary rate ISDN). This service is also mostly available from Telecom, and is as expensive as POTS lines, except it does have all the business services.

The new competition to the old Telecom services (described above) comes through the digital lines that utilize data connections that are also capable of delivering the Internet service to you.

SIP Trunks

Session Initiation Protocol (SIP) was created to enable voice connection to be established over a computer network. It has now been established as the industry standard for delivering phone lines via a data connection. A phone line that is delivered to you via a data connection using SIP protocol is called a SIP Trunk.

SIP trunks deliver outstanding savings compared to a traditional landline plus internet connection set up. When you get a SIP trunk, the supplier doesn't need to pay traditional telco for the landline service.

SIP trunks are high quality phone lines comparable in quality to business grade ISDN lines. Typically a SIP trunk provider delivers both data and voice over the data link to the business premises, controlling the quality of service end to end. The voice stays within the provider's network. Even though SIP trunks use the same Internet Protocol as other VoIP calls, SIP trunks differ from VoIP because they don't typically go over the internet.

There are many SIP Providers generating stiff competition, so you can negotiate great cost savings for your business.

Vadacom are experts in SIP Trunking integration for business - we were New Zealand's earliest SIP Trunk integrators.


Direct Dials and Hunt Groups

Incoming calls can be handled intelligently by the system if the system knows who the call is for. For example, if the call is for sales, your system can call your sales team. Alternatively, you can detect who is calling and put the call to the appropriate person. This can be done not just for sales, but with every function in the business – operations, finance, administration.

When you group people in your organization by function, the phone system will “hunt” for someone to answer the call. This feature is called a “hunt group”. Hunt groups can be used effectively to eliminate the need for transferring calls and save your valuable time.

Many business people prefer to talk to a person rather than a machine. They don't want menus to press one for this, two for that. This is where DDI can be used effectively – you can have a phone number for every business function and every person that needs to answer calls.

A combination of DDIs and hunt groups can save valuable time for both you and the caller.

Improving productivity

A phone system can't make you a coffee. But it will let you have one, and still be fully productive.

How much time do you spend transferring calls to other people? Can you do it while you are out having coffee? Can you do it when you need to work from home? Do you need to be by a computer to help a customer? How many people do you need in the office to answer all the calls from your customers?

There are infinite possibilities to improve the way you communicate with your customers and suppliers and ensure that each member of your staff is fully productive at all times. I will give you a few examples here.

Remote Working

High cost of petrol in conjunction with increased amount of traffic jams make working from home an attractive proposition for many people.

From telephony perspective, you need a good broadband connection at home. Modern phone systems will allow for a telephone to be connected remotely. You need a remote IP phone connected to your phone system as you don't want to be only using your mobile phone for the whole day.

With good systems in place you are free to work wherever you choose without it costing you the earth.


The world is becoming increasingly mobile. Your desk at work isn't the only place you work from anymore.

Answering calls on your mobile phone is one way to be productive everywhere. However, how much will it cost you to forward calls to your mobile? It depends. If you simply call forward all the calls, you may end up with increased bill. To keep phone bills low you need calls from your office to your mobiles to be free.

There are two ways to achieve that. One way is to have free calling between your company mobiles and your land lines. Telecom, Vodafone and TelstraClear will offer that to some of their customers.

The other way is through a 0-rate-calling plan between your mobiles in combination with what is called a “Cellular Trunk Unit”, (CTU). The CTU will make your office phone system into another mobile phone in your group, so the calls between the office and your mobiles are free.

Will hunt group calls follow you? Many phone systems by default are configured not to allow hunt group calls to follow the call forwarded to your mobile. You need to remember to ask you PBX supplier to allow that.

The fear of answering group calls on your mobile, is “what if the call is not for me”? If your phone system allows full mobile extensions, you will be able to transfer those calls.

What about calling from mobile phones? You can make the phones always dial the office first, which is a free call, then ask the phone system to call the destination. This way all your calls are charged at land line rates. This can be automated on most mobile phones and really reduce your mobile bills.