VoIP Carries The Sound Of Savings For Some Already With Net Service

Voip Carries The Sound Of Savings For Some Already With Net Service

January 2, 2005

By Tom McGhee

Kevin Stone doesn't care about the high-tech features that help set Internet telephones apart from the land-line phone on which he once relied.

The appeal of the service, called Voice over Internet Protocol, VoIP, is price, said the 32- year-old Denver real estate agent.

"It's just cheaper."

Stone got a Voip phone in September after moving to Denver from California.

There, he paid about $35 a month for a land-line service with voice mail and call waiting. On top of that, he had to pay a separate long-distance bill.

Today, he pays Voip provider Vonage Holdings $14.99 a month for 500 minutes of service, including long-distance calls. Voice mail and call waiting - which cost extra on traditional telephone plans - are part of the package.

Using the service does require a broadband Internet connection, either through cable or a high-speed phone line, which adds considerably to the price. Stone pays Comcast about $50 a month for Internet phone and computer access through a cable modem.

Qwest offers "naked DSL," a high-speed line without a traditional phone connection, for $49.99 a month.

Industry experts have big expectations for the service. "VoIP is the future," said Scott Cleland, chief executive officer of the Precursor Group, a Washington, D.C.-based investment research firm.

Infrastructure needed to operate Internet phones is cheaper than traditional switches and other hardware. Maintenance costs are also low.

A traditional phone line acts as a private road between two locations - even if the conversation stops, the line isn't open to additional traffic.

But the Internet is more like a superhighway with data and voice communications sharing the road.

Voip takes a voice signal and slices it into chunks of data that can be transmitted over communications networks such as the Internet. At the receiving end, the data packets are converted back to voice.

A laundry list of gee-whiz features are standard with Voip - the ability to attach a voice-mail message to an e-mail, or to access voice mail over the Internet, for instance.

Companies that are able to ride the wave of demand churned up by Internet telephone will have cause for celebration.

The Yankee Group projected that there would be close to 1 million Voip subscribers by the end of 2004, up from 131,000 at the end of 2003. By the end of 2008, those numbers are expected to climb to 17.5 million U.S. households.

"It really opens up the marketplace," said Eric Buck, an analyst for Denver-based Janco Partners.