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Vonage VoIP Phone Service Gains Ground

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Phone Service Via Internet Gains Ground; As Competition Grows And Technology Improves, More Consumers Are Considering Bargain-Priced Voip

January 20, 2005

By Mike Himowitz

Suddenly, everyone wants to be your Internet telephone provider.

Once the province of startups catering to adventurous geeks, Internet telephone service is drawing cable giants, long-distance providers and even regular phone companies into the battle for your communications dollar.

Just this month, Comcast said it would offer telephone service to all of its 21 million cable customers by the middle of next year. Over five years it hopes to snag 8 million of them, which is pretty ambitious considering that only 1 million Americans talk over the Internet today.

Comcast will also have to compete with AT&T, Verizon and a host of smaller outfits with names such as Vonage, Packet8, Primus, VoicePulse and VoiceGlo.

Which leads to the big question: Why get your phone service over the Internet when you already have a perfectly good land line?

One answer is price. Unregulated by the Federal Communications Commission (so far), untaxed by the government (so far) and anxious to get your business, Internet phone providers offer unlimited local and long-distance calling in the United States and Canada for $20 to $40 a month. And they throw in extras that the phone company charges for, such as call waiting, caller ID, call forwarding, voice mail and three-way calling.

Considering that a similar package of traditional phone services from Verizon costs $50 a month, what's the downside of using the Internet? As usual, the devil is in the details.

First, Internet phone service is only available if you have a broadband connection, which costs $30 to $50 a month up front. Second, the technology used to route calls over the Internet and other data networks is improving, but there are still enough gotchas to make many users think twice.

To understand why, it helps to know a little bit about how all this stuff works.

Let's start with regular phone service, which uses technology known as circuit-switching. When you call Aunt Rhoda, the phone company provides a direct circuit between your phone and hers. Your voice is transmitted in analog format, which means that tiny fluctuations in line voltage directly imitate the sound waves your voice creates.

The advantage is that your conversation doesn't have to wait for anyone else's. And because the technology has been improved continually since the days of Alexander Graham Bell, the quality is usually excellent.

The downside, mainly for phone companies, is that the system requires its own expensive network. And, since phone systems must be designed with enough capacity to handle Mother's Day traffic, there are a lot of unused circuits lying around much of the time.

Data networks operate differently. They move information, in the form of digital ones and zeros, by chopping it up into little packets according to a scheme known as the Internet Protocol (IP). Those packets are sent by the fastest route from one computer to another, and they may travel different paths. Some inevitably get lost and have to be retransmitted, but the receiving computer puts them together in the right order when they arrive.

If there's a slight delay on a data network, it doesn't matter much. You won't notice if an e-mail or a Web page takes an extra half-second to download. And the system is much more efficient than circuit-switching.

But what if you want to transmit voice?

It has long been possible to "sample" audio and turn it into digital ones and zeros - that's the basic technology behind CDs and MP3 music players. They use the same kinds of ones and zeros that make up e-mail, Web pages and other data.

But to transmit voice across a data network in real time - as in a phone call - the data have to be delivered almost instantaneously and in the right order, or you'll wind up with echoes, delays and choppy sound. That requires a fast network and computing horsepower.

The first systems that transmitted Voice over Internet Protocol (known in the trade as VoIP) appeared in the mid- 1990s. They used the Internet as their medium and required computers on both ends - with both participants using headset microphones and special software. They worked, after a fashion, but they were too geeky for the general public, and Internet voice quality over dialup connections was marginal at best.

As more users switched to broadband connections, engineers developed systems that solved VoIP's major hangups. First, they improved voice quality to near-phone company levels - particularly when providers use their own data networks instead of relying strictly on the Internet.

Second, they bypassed the computer by plugging a standard phone into a terminal adapter that connects directly to a cable or DSL modem. No software or finagling necessary.

Finally, they developed connections with the regular phone system, so that Voip users could call any normal phone and vice versa.

That's what Internet telephone vendors are selling today, and when it works, it works pretty well. But there are a couple of drawbacks.

The first is that Voip depends on having a working broadband Internet connection - and that can be iffy.

Can you remember the last time your regular telephone went out? Probably not. After 120 years, the public telephone network may be the most reliable feat of engineering in the world. Even power blackouts won't normally take out your phone service - the system has its own power sources.

But unless you have a reliable battery backup for your cable or DSL modem - one that can last for days if necessary - your Internet phone service disappears with the power.

Nor are Internet service providers known for reliability even when the juice is flowing - particularly cable companies. True, Comcast's service in my area has been pretty good, but even so, we've had a couple of cable outages in the past three weeks. They may not last long, but if you have children, or you are elderly or infirm and want to be sure you can dial 911 when you need it, pretty good may not be good enough.

Also, the Voip terminals I've tried out frequently have to be reset after a cable outage - something you might not even know about until you pick up the phone and there's no dial tone.

Speaking of 911, most Voip services aren't fully integrated with local emergency systems. They may put through 911 calls, but in many cases, the 911 operator won't automatically know what address you're calling from. That's an important safety feature of the 911 system.

Voip providers are working with the National Emergency Number Association to develop a technical solution, but for now, it's a good idea to find out how a provider deals with 911 calls if you're thinking of making Voip your only phone service.

Finally, in most homes, you're stuck with using a single phone - the one attached to your cable modem or router - unless you're willing to make some wiring changes to use extension jacks or buy a cordless phone with extension handsets. That gets expensive.

Still, Voip providers are improving their service every day. Comcast, for example, will offer customers a battery backup, live operators and help with home extension phone wiring to deal with three major objections to Internet telephony.

At the moment, I'd be hard-pressed to recommend Voip for anything but a second line. But, as the service gets better, and competition makes the price even more attractive, it could catch on. Meanwhile, some providers offer a free month's trial - it could be worth a try.

Department of thanks. To all those who missed this column while it was gone and wrote, called or e-mailed to ask for its return: It's gratifying to know that the column has helped so many people over the years - and I'm delighted to be writing it again.

Internet phone costs

If you're looking for Internet phone service, you'll find plenty of providers, including established phone and cable companies. All require that you have broadband Internet access.

Here's a list showing the monthly charge for a package that includes unlimited monthly local and long-distance calling within the United States and Canada, plus a variety of add-ons that include caller ID, call waiting, voice mail, conference calling and other features. Most offer low-cost, per-minute international dialing rates. Some charge an extra setup fee.

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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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