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Internet Service Teaches Old Phones New Tricks

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Internet Service Teaches Old Phones New Tricks

November 7, 2004

By Bill Wolfe

In most ways, Barry Martin's telephone service is pretty standard. It uses a regular phone, offers local and long-distance calling, and comes with a full range of features like voice mail, call forwarding, call waiting and caller ID.

But Martin's phone also knows a few tricks yours probably doesn't.

It automatically forwards voice mail to Martin as e-mail he can check at the office or on the road. Just click and play.

If no one picks up at home, it can forward calls to Martin's office. And if no one answers there, it can send the call on to his cell phone.

For $5 a month, Martin plans to can add a "virtual number" local to Kansas City, Mo., where his girlfriend's family lives. They'll be able to make a local call from Kansas City that will ring through to his Louisville apartment toll free.

Martin's phone number is his for life. Whether he moves across town or across the county, he can keep taking calls on his Louisville number.

Long-distance calls are free.

Martin, senior partner with The Mirazon Group, a computer-technology consulting company, subscribed four months ago to Vonage, one of the new phone companies that transmits calls over a high-speed Internet connection.

The price for all this? Around $26.50 a month, not counting the $45 cost of broadband Internet from Insight Communications. That's less than a basic, no-options line from BellSouth if regulatory fees and taxes are figured in.

"I've loved it," said Martin, who also signed up for a plan at work two months ago. "I don't think I can see myself ever going back" to traditional service "unless they offered something like this a competing price."

That may be a difficult standard for traditional phone companies to meet. A full-featured Complete Choice phone line from BellSouth costs $33.50, plus taxes and regulatory fees. Voice mail costs an extra $3.95. Adding unlimited long-distance will tack on $26.49. The total bill, including taxes and fees, will top $70.

Also called VoIP, for Voice over Internet Protocol, Internet calling is available from an assortment of providers, including industry leader Vonage, AT&T's CallVantage and others such as Broadvox, Packet8, Lingo and Voiceglo. Advocates say the technology will revolutionize the way people use their phones.

"The potential is almost unlimited," said Larry Irving, co-chairman of the Internet Innovations Alliance. He expects Internet-based telephone service to eventually supplant traditional phone networks.

Conventional phones may still be around — in the same way that rotary phones and black-and-white TVs remain available. But according to Irving, the future of telecommunication lies in VoIP.

Even supporters agree that Voip is not for everyone, though. The major catch: Users must have a high-speed Internet connection — typically about $40 to $45 a month in Louisville. That means Voip is "not for millions of Americans who cannot get or afford high-speed Internet service," AT&T spokesman Bob Nersesian said.

And while the service can work anywhere, local numbers aren't yet available in many cities. Vonage, for example, has local numbers in Louisville, Lexington, Midway, Nicholasville, Versailles and Wilmore, Ky. Indiana numbers are available in the 219 area code cities of Cedar Lake, Crown Point, Gary and Hammond.

You could choose a number from one of those cities — or from any other city in the network. With unlimited long-distance, your outgoing calls would be free. But if your number is outside your community's local calling area, your phone will be a long-distance call away for your next-door neighbor.

And though voice quality is typically good with VoIP, it may not provide all the clarity of a conventional phone line.

Unlike traditional phone lines, Voip service needs a backup battery to operate when the power goes out. If your Internet service is interrupted, so is your phone service.

In addition, emergency 911 service is not available from all providers — and if it is, it probably won't show the emergency operator your address.

Still, analysts say Internet calling is growing rapidly and will capture a much larger share of the telephone market over the next few years.

Juniper Research predicts that Voip services will reach about 400,000 U.S. households by the end of the year, and that by 2009 will be used by 12.1 million U.S. phones — one of every 10 in the nation.

As Internet calling has become easier to use and its quality has improved, sales have skyrocketed. At the end of 2002 Vonage had 7,500 customers. One year later, the New Jersey company was serving 85,000 customers, said Louis Holder, executive vice president of product development. "Now, in 2004, we have almost 300,000 customers."

More than half of homes with Internet connections have high-speed service, which also paves the way for more Voip growth, experts said.

"The way we look at it, voice over IP is going to grow along with broadband. They are going to be closely tied together," said Ellen Jones, BellSouth's regional director in Louisville.

Falling prices are helping the migration to VoIP. AT&T launched a price war last month, lowering the cost of CallVantage with unlimited long-distance from $35 to $30 per month. Vonage responded by lowering its price by $5 to $25 a month for its comparable plan, and others followed suit. Broadvox, which charges $20 a month for local and unlimited long-distance service, also offers a plan with local calling with 500 minutes of long distance for $13 a month.

Everyone "sort of had to follow CallVantage's lead, because at the end of the day, AT&T is the phone company. That's just that," said Justin Smith, marketing project manager for Broadvox, of Cleveland.

Voip calls are cheaper partly because the Internet is more efficient than the traditional phone system. Voip service is also free — at least for now — of some of the costly regulatory fees and taxes that apply to regular service.

By federal law, Voip is not regulated on the state level, said Andrew Melnykovych, spokesman for the Kentucky Public Service Commission.

Internet calling may be a better deal with cable-modem service. To buy DSL from BellSouth in Kentucky or SBC in Indiana, you have to also subscribe to a phone line — which eliminates much of the cost-savings associated with VoIP.

Still, Voip might make sense as a second line, such as "a phone for your teenage daughter," said Vonage's Holder. "It's perfect for them — a no-brainer."

Even BellSouth acknowledges that Voip is here to stay. The major phone company for Kentucky and eight other Southeastern states is testing Internet-based phone service in the West Palm Beach area of Florida. "We expect this to be a growing market. And we're going to be a part of it," said Jones.

Insight Communications, which sells phone service along with cable TV and broadband Internet, doesn't plan to sell Internet calling in Louisville for now, but "we are looking at Voip for new markets," said Mike Page, senior vice president of communications and commercial services.

"I think the whole buzz of voice over IP has taken hold of the market," Page said.

Consider these points about Voice over Internet Protocol:


Internet-based calling might be right if you:

  • Make lots of long-distance calls..

  • Want a bevy of free phone features, such as caller ID, voice mail, call-forwarding and three-way calling..

  • Would like to have one or more local numbers in other states or cities that ring through to your local phone, with no long-distance charge..

  • Want advanced phone features that allow calls to track you to work or a cell phone — or both — if no one answers at home..

  • Would like to have your voice-mail messages forwarded to you as e-mail attachments that you can check at work or when traveling..

  • Plan to keep your regular phone line, but would like to add a second line with Voip features..

  • Don't mind a slight loss of sound quality on your calls..

  • Are comfortable using a cell phone for backup during power failures..


You might want to stick with traditional service if you:

  • Don't have high-speed Internet..

  • Use DSL for your high-speed connection and don't need another phone line..

  • Want emergency 911 calls to display your home address to operators..

  • Don't need any optional phone features..

  • Want multiple phones around your home and don't like cordless models..

  • Don't mind paying extra for the clearest possible sound.

  • Are worried about loss of phone service during power failures.

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†AK and HI residents pay $29.95 shipping. ††Limited time offer. Valid for residents of the United States (&DC), 18 years or older, who open new accounts. Offer good while supplies last and only on new account activations. One kit per account/household. Offer cannot be combined with any other discounts, promotions or plans and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.

1Unlimited calling and other services for all residential plans are based on normal residential, personal, non-commercial use. A combination of factors is used to determine abnormal use, including but not limited to: the number of unique numbers called, calls forwarded, minutes used and other factors. Subject to our Reasonable Use Policy and Terms of Service.

2Shipping and activation fees waived with 1-year agreement. An Early Termination Fee (with periodic pro-rated reductions) applies if service is terminated before the end of the first 12 months. Additional restrictions may apply. See Terms of Service for details.

HIGH SPEED INTERNET REQUIRED. †VALID FOR NEW LINES ONLY. RATES EXCLUDE INTERNET SERVICE, SURCHARGES, FEES AND TAXES. DEVICE MAY BE REFURBISHED. If you subscribe to plans with monthly minutes allotments, all call minutes placed from both from your home and registered ExtensionsTM phones will count toward your monthly minutes allotment. ExtensionsTM calls made from mobiles use airtime and may incur surcharges, depending on your mobile plan. Alarms, TTY and other systems may not be compatible. Vonage 911 service operates differently than traditional 911. See for details.

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