Trends To Watch: VoIP Explosion

Trends To Watch: VoIP Explosion

January 26, 2005

By John Brandon

The wireless networking world continues to expand and evolve. As it does, so will the ancillary technologies that depend on hotspots and ubiquitous coverage. Such is the case for voice over IP (VoIP), the Internet phone phenomenon that will become the buzzword for 2005. Already, companies such as Linksys and Netgear are prepping for a momentous reception from gadget hounds, home networking enthusiasts, and early adopters. Yet, there are clear indications that VoIP will reach the public consciousness as well.

For starters, Wi-Fi has become much more common at city parks, backyard barbeques, college campuses, basketball arenas, and just about everywhere in between. In some areas, there's nowhere you can't get wireless access. Second, broadband access is now in one out of every four homes, which means they enjoy a consistent, reliable, and high-quality Internet connection. Third, while cell phones are highly portable, calling plans during peak hours still run high, while VoIP service costs only about $20 per month.

"The technology itself now offers voice quality that rivals traditional telephones," said Gerald Karam, a co-inventor of At&T CallVantage. "Combine that with economical calling plans and new, advanced features and you have a formula that suggests voice over Internet Protocol (VoIP) calling is finally ready for prime time.

VoIP started life almost a decade ago when the Internet first became popular. Users could connect a microphone and headset and talk to Cousin Ted in Tennessee online for hours. Today, VoIP service provides some unusual features not found on regular telephone system lines. For example, you can use up to five phones and have them all ring at the same time or hand off the ring tone sequentially. For a few dollars more per month, you can set up multiple phone numbers and hold conference calls. Of course, while the service providers like AT&T CallVantage, Vonage, Verizon VoiceWing, and a host of newcomers hype the possibilities , the reality today is that there are only a small number of products available on the market. That will change in 2005. Add-ons that plug directly into a router will provide an almost insanely simple installation: plug adapter into a router, plug the phone into the adapter, pick, and dial.

VoIP routers will enable home users to connect multiple phones. Linksys predicts selling a million more of their PAP2 VoIP adapters in 2005. "We're expecting unit sales in the millions or more, and the industry itself will experience phenomenal growth," said Malachy Moynihan, Linksys' vice president of engineering. "Large service providers like Vonage have finally built up a level of interest as competitor to traditional service providers, paving the way for adoption with better advertising and increased customer awareness.

Meanwhile, Netgear is equally excited about the sales potential for a new product line it introduced in late 2004. "Our VoIP routers avoid the complexity of setup by integrating the telephone adapter into the router itself, so no setup or configuration is required," said David James, Netgear's director of product marketing. Another benefit is improved voice quality, because voice traffic can be prioritized over data traffic.

James expects this integration trend to continue, and next year he believes that we'll see devices that integrate the cable or DSL modem, the wireless router, and the telephone adapter into one box. "We will also see dual-mode GSM/Wi-Fi phones that seamlessly hand off from the cell network to the WI-Fi network when a customer walks into the house."

And yet, there are challenges. Broadband has become available in many cities, but many more areas are still not covered. And while a VoIP phone uses the unregulated Internet for service, there are no current taxes for services such as Vonage or AT&T CallVantage, but that may change in the near future. The most critical issue involves 911. Up until recently, there was no way to dial 911 for emergency response services, but that issue will be resolved as trials for e911--or enhanced 911, which can locate cell phones--are underway at all the major vendors.

"In 2004, Vonage announced successful trials of a new E911 service in Rhode Island," said Louis Holder, an executive vice president at Vonage. "The new service allows ANI (Automatic Number Identification) and ALI (Automatic Location Identification) from VoIP-based emergency calls. With this new program, Vonage customers are covered by 911, even if they have an out-of-state area code. regular 911 service can't do that."

Most of the VoIP obstacles are minor compared with the limitless potential. In 2005, when several disparate technologies start to align, such as prevalent broadband and wireless access, making a call over the Web will become a viable, popular, and cost-effective means of communication.