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Voice Over Internet Demand Grows

Vonage In Print News

Voice Over Internet Demand Grows

December 4, 2004

By Joel Palmer

WATERLOO --- It's the next big thing in Internet services.

It's the next big thing in telecommunications.

Voice over Internet Protocol (VoIP), which allows users to make voice calls using a broadband Internet connection, is gaining in popularity, though industry estimates show only about 200,000 homes have the service.

Companies are just starting to offer the technology in the Cedar Valley.

Cable companies like Mediacom, which years ago began offering high-speed Internet, are pushing for Voip to add another service to its line, then being able to bundle phone, cable and Internet all on one bill to offer customers. Phone companies, meanwhile, are deploying the technology to stem the flow of people ditching traditional land lines for wireless phones.

In some cases, the two sides are joining forces. Mediacom is partnering with Sprint to add Voip to its existing selection of broadband products and services, with Sprint assisting with switching and termination of traffic, delivery of enhanced 911 emergency service, local number portability and directory services.

"The technology isn't really that exciting from our perspective," said Calvin Craib, senior vice president of business development for Mediacom. "The exciting thing for us is that it allows us to offer telephone service."

"Most people still buy telephone service from their local exchange carrier, and our product is being designed to be a suitable replacement for that product," said Craib.

New Jersey-based Vonage Holdings Corp. recently announced that its broadband communications service is available in Eastern Iowa, including Waterloo and Waverly.

"Our presence along the Avenue of the Saints corridor gives residents and small businesses the option to choose a plan that provides a heavenly alternative... " to traditional phone service, said Jeffrey A. Citron, CEO of Vonage.

Vonage aims to cover the state by the end of the year.

The company is offering four plans. Its basic residential plan costs $14.99 a month and comes with 500 minutes of local, toll and long distance calling throughout the United States and Canada. For $10 more, residential customers can order its premium plan, which allows for unlimited calling.

For small businesses, Vonage is offering 1,500 minutes and a free dedicated fax line for $39.99 a month and unlimited calling and a fax line for $49.99.

Mediacom plans to launch the service in some of its markets by early next year. When the Cedar Valley will have access is unknown.

"We want to get it right, so we're willing to go slow. Because it is a new business, it's going to take us a while to learn how to do this," said Craib. "We'll be in Iowa as soon as possible."

AT&T and Qwest Communications also offer the service in Iowa, with limited availability.

Local residents could sign up for AT&T's service. But because the service is, for now, only available in the Council Bluffs area, people who sign up from here would have a phone number reflecting the (712) area code.

"Your neighbor across the street would have to dial long distance to call you," said Phil Kenealy, president of Advanced Computer Engineering Solutions in Cedar Falls.

According to its Web site, AT&T's CallVantage plan is $19.99 a month for unlimited local service and $29.99 for local and long-distance service.

Qwest has rolled out its OneFlex Integrated Access service to business customers in about a dozen markets, including Des Moines, and plans to double its availability by the end of the year.

In addition, Cedar Rapids-based McLeodUSA started testing Voip service in a few major markets in July and plans to expand its offerings into major markets across its 25-state footprint while adding features, functionality and products beginning in early 2005.

Officials with Cedar Falls Utilities said they aren't planning to add the service anytime soon.

"While CFU doesn't offer voice services at this time, periodically we consider whether offering phone service would benefit the community," said Betty Zeman, marketing manager of CFU. "Currently we are re-evaluating the options and possible benefits of providing telephone service, given the emergence of voice over Internet technology."

Providers of the technology tout its features. AT&T, for example, said its CallVantage plan allows users to log incoming and outgoing calls, ring up to five different phones simultaneously, forward voice messages via e-mail and teleconference with up to nine other users.

"We're all going to the point where we have one phone number for everything and we won't accept anything else," said Zeman.

Also, because calls are routed over the public Internet, there are no long distance charges. With its service, Vongage said users can make international calls -- Tel Aviv and Sydney, for example -- for just 4 cents a minute. Schmitt Telecom Partners in Waterloo can call up a home-based technician on its intercom system using the technology.

Steve Schmitt, president of Schmitt Telecom, said IP phones are dropping in price. What used to cost between $800 and $1,000 now can be had for $300 to $400.

"Most people believe it will cost them twice as much," said Schmitt.

Yet despite the low cost and abundant features, many believe the technology is years away from being widespread.

"For now, 99.9 percent of people will be using a land line or cell phone to call you," said Kenealy. "You won't have a critical mass of people switching over to voice over broadband any time soon. How long have cell phones been around and they haven't yet completely replaced land lines."

Much of its limitation is that Voip is only as reliable as a customer's Internet connection. Broadband service is required.

"For most businesses, there isn't necessarily an application for it to run out and buy new equipment, unless you have multiple offices or a lot of folks working from home," said Schmitt.

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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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