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VoIP Sounds Off Cheaper Phone Calls With New Features

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Voice-Over IP Sounds Off
Cheaper Phone Calls With New Features

December 1, 2004

By Lina Malkawi

Ever since the invention of the telephone in 1876, our voices have had the ability to travel over long distances, bring people together and make communication, coordination and collaboration instantaneous.

Yes, our voices have come a long way, but Voice-over Internet Protocol (VoIP) marks a true milestone in communications history. Voip sends calls made on ordinary telephones over the Internet, as opposed to regular phone lines, allowing for drastically lower rates and new features. The technology, which has been steadily improving over the last decade, has evolved to the point where businesses are now using it on a large scale, both to reduce calling costs and to offer increased portability to their employees.

The idea of having someone's voice travel over the Internet had its start in 1995, with the emergence of services that converted analog voice into digital data packets and transmitted them over the Internet. However, communication was possible only if both parties had a computer equipped with a sound card, speakers and a microphone, and were connected simultaneously to the Internet.

Even though it was technologically cumbersome, this development represented a significant step toward the integration of voice and data networks. Voice chat capabilities are now available in most instant messaging services, such as MSN Messenger, Yahoo Messenger and AOL Instant Messenger. Voip is also utilized in forums such as Paltalk, which provides audio, video or text chat rooms where people with similar interests can meet.

After computer-to-computer chatting came services that allowed you to make a phone call from your computer to a regular phone, again using the Internet to carry your voice. But that, too, was just a single step toward what many see as the ultimate development: phone-to-phone calls transmitted over the Internet. Using an adaptor that connects to your existing high-speed Internet connection, it is now possible to pick up the phone and dial a number just as you always have. The phone call goes over the Internet to the other party's telephone company and the connection is made. However, to guarantee good sound quality, this service requires a broadband Internet connection that is continually on (such as DSL or cable).

As Voip has gotten more publicity over the last year, more and more home customers have been adopting it. Most traditional telecommunications companies now use the Internet to carry portions of their calls to their customers. Chances are, a long distance phone call you've made recently went through the Internet without you even knowing it, because the call began and ended with a traditional phone. People in the U.S. often call a U.S. customer support number from a traditional phone and talk to a representative in India over the Internet - and they never realize it.

Voip service is likely to replace much of traditional phone service in the coming years. A study conducted by the Boston-based communications and networking research firm Yankee Group estimates that the number of Voip subscribers in the United States will near 1 million by the end of 2004, and the market will grow to nearly 17.5 million subscribers by the end of 2008.

A New Telecom Era

Of all the advantages of VoIP, cost savings are surely near the top of the list. "The advantages for Voip are similar to postal mail versus e-mail," says Gunjan Bhow, vice president of strategic planning and product development for Actiontec Electronics in Sunnyvale, Calif. "Since the calls are carried over the Internet, they are indifferent to the distance they travel. If the origin and destination of the call are both on the Internet, then the entire call is free - regardless of whether you are calling your neighbor or the other side of the globe."

Bhow says the main challenge for Voip today is that it "still needs to rely on the phone company's 'last mile' to call a non-VoIP recipient." However, he adds, "as more subscribers get VoIP, calls between them are logically headed to an incremental cost of zero, similar to e-mail."

Another advantage of Voip is that it's easy to install: Just plug it into your Internet connection. Additionally, there are more features available with an Internet phone than a regular phone. "VoIP is paving the way for the future of communications, and making and receiving VoIP-based calls is just the beginning of what IP technology can do," says Jeffrey A. Citron, chairman and CEO of Edison, N.J.-based Vonage, a leading broadband phone company with over 270,000 subscribers. "Next-generation IP technology such as Wi-Fi and video phones are already knocking on our doors and promising even better ways to communicate," he adds.

Vonage allows you to manage your account through a Web page, get your voicemail either online or sent to your e-mail, and forward calls to another phone number, even your mobile. They also let you manage conference calls online through your Web page. You can choose your own area code; if you move you can take the number with you anywhere in the world.

"If you are leaving the United States or Canada, you can take your Vonage box with you as long as you have an Internet connection," Citron says. "This would allow you to take your unit to Jordan, for instance. Anyone in Jordan can call your U.S. number and/or you have the ability to make calls back to the U.S. or Canada for the cost of a local call."

Can You Hear Me Now?

What about voice quality? Anyone who has used voice chat through an instant messenger would likely be skeptical about the quality of VoIP. But the technology has reached maturity during the past few years due to the continuing adoption of broadband Internet and steady improvement in broadband connections. "

To a large degree, the quality of Voip is as good as the Internet connection it's riding on," says Sarah Hofstetter, senior vice president of corporate communications at Newark, N.J.-based Net2Phone, another Voip provider. "In many markets, Voip today can match the quality, performance and reliability of an existing phone network. In certain markets, Voip quality is even better than traditional telecom service. Provided there is ample IP bandwidth, Voip has reached the point that it can be mass marketed to consumers and even be used by enterprises globally."

But will Voip be able to match the quality, performance and reliability of the existing voice telephone service consumers and businesses have relied on for years?

Considering that the traditional phone has not changed much over the years, while Voip is improving rapidly, the answer seems to be yes.

Because Voip is offered over the Internet, Internet service providers (ISPs) such as Earthlink, Cox Communication, AT&T and Verizon can offer it at very little additional cost.

It's a good tool for retaining subscribers.

And what about cell phones and their mobile characteristics that people have become so dependent on? "Cell phone technologies are also starting to leverage VoIP. Over the next decade they will become entirely VoIP," says Daniel Berninger, vice president and senior analyst at Tier1 Research. "There already exists a number of phones that use Voip in combination with Wi-Fi to obtain traditional cell phone-like mobility," he adds. As an example, Berninger points to Motorola, which recently announced plans for a handset that can roam between Wi-Fi (using VoIP) and traditional cellular. As Wi-Fi hotspots become more common, even spanning entire cities, "Voice-over Wi-Fi" will become a practical reality.

Work and Play
While use of Voip has spread and helped reduce phone costs for homes and businesses, its first major consumer application was probably online game services, such as Microsoft's Xbox and Sony's PlayStation 2, which allow players to voice chat while combating online. Online gaming has provided valuable early clues about how to deliver Voip cheaply and effectively. Microsoft's Xbox Live service has more than 750,000 customers who play online for approximately 500,000 hours each day, and pay on average $50 per year to use Xbox Live.

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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.

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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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