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Vonage Phone Calls Destined To Be Sent As Data Packets

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Phone Calls Destined To Be Sent As Data Packets

March 7, 2005

By John Woolfolk

The day is not far off when everyone's phone calls will be delivered much like their e-mail -- as bits of data.

The phone network that has been the backbone of telecommunications for much of the past century is giving way to the technology that drives the Internet.

``We're in the beginning of a 10-year transformation in which the traditional phone network is going to give way to VoIP,'' said telecommunications analyst Jeff Kagan. ``The telecommunications network is being reinvented.''

Most people still don't know or understand what Voice over Internet Protocol is. But that is changing as the high-speed Internet connections that deliver Voip are becoming more common. Big-name companies like Comcast and AT&T have been pitching the service.

``During the past couple of years we've seen Voip start to happen,'' said Jeff Pulver, a pioneer in Internet communications technology who publishes VON, an industry magazine that is sponsoring a Voip conference Monday through Thursday in San Jose. He predicts Voip customers will double to more than 2 million by the end of this year.

Depending on consumers' calling habits, Voip can be a big money saver, especially if they already had the broadband service. Voip plans offer unlimited U.S. calling for less than $30 a month with all the usual extras like voicemail, plus new features that weren't possible with the traditional phone.

Calls to Europe

Ulfar Erlingsson, a San Francisco researcher for Microsoft who signed up with AT&T's CallVantage Voip service last year, calls Europe daily, yet his monthly phone bill is just $40. At no extra cost, he can check his phone messages by looking at his e-mail on his computer. He sets up telephone conference calls with his bosses, in seconds, by pointing and clicking on a Web page.

All this becomes possible by transmitting voice as data.
The traditional phone system uses electronic circuit switches to connect caller and recipient until one of them hangs up. Voip converts the caller's voice to data packets, sends it piecemeal over the Internet or other digital network, then reassembles it before reaching the recipient's phone -- much like the way e-mail messages are delivered between computers.

Voip calls don't necessarily travel the Internet, though many providers like Vonage and Skype use it to take advantage of its low cost. Cable TV and long-distance phone companies prefer to deliver the calls almost entirely over their own data networks, using the same technology but allowing them better control over quality and security.

Because Voip requires a high-speed ``broadband'' digital network, it has until recently been limited to large businesses. But now that high-speed Internet connections are becoming widespread, consumers are taking notice.

Low-cost calling plans

Cable TV companies, Internet start-ups and long-distance carriers are all pitching low-cost, feature-rich Voip calling plans to broadband customers. And the ``Baby Bell'' companies that own the local phone network are planning the eventual conversion of their networks to VoIP.

``VoIP is the future,'' said John Britton, a spokesman for SBC Communications. The nation's second-largest local phone company, SBC is acquiring AT&T. ``The transition has started and it's inevitable.''

With Internet technology, companies don't have to maintain both a voice and data network, and calls converted to data packets take up less room on the system, making delivery more efficient.

Regulators also have so far exempted Voip calling from taxes on traditional phone service.

Internet start-ups like New Jersey's Vonage and cable TV companies such as Comcast have used Voip to offer local phone service through the Internet or their own data networks. To stay competitive, the Bell companies will have to convert their networks to VoIP.

So far, just a small fraction of today's callers have signed up for Voip plans, which providers attribute to limited exposure.

``The consumer awareness level is pretty low about what Internet telephony is,'' said Cathy Martine, AT&T's senior vice president of Internet telephony. ``One of the most important things we need to communicate is what broadband phone service is.''

The number of Voip callers is expected to grow as more people sign up for broadband Internet connections and competition heats up between big cable TV and telephone companies.

While fewer than 1 million of the 111 million U.S. households have signed up for Voip plans, market analysts at Jupiter Research last fall predicted that figure will grow to more than 12 million by 2009.

Industry experts say wired communications won't go away anytime soon. Most people will still use a wire to hook their desktop computer to the Internet, so companies figure they will go for inexpensive, feature-rich phone service along with it, to complement their cell phone.

`Not as reliable'

``I haven't seen anyone prophesy the doom of land-line connections overall,'' said telecommunications analyst Joe Laszlo. ``In some ways wireless benefits the growth of VoIP. One of the things about current Voip service is it's not as reliable as the traditional phone. It requires broadband and power.

``But as more and more households have cell phones, the need for that reliable land-line is reduced somewhat. We think of them as a complement.''

That's been the case with San Francisco researcher Erlingsson. He and his wife both have cell phones, and use them to call each other locally. But they use the Voip land-line phone for long-distance calls.

They pay $60 for the Comcast broadband cable-modem and $40 for the AT&T Voip service.

Erlingsson said it's easier to make a long-distance call with Voip than through his cell carrier, plus the sound quality is better. And he figures the cell phone is sufficient backup if a power outage cuts his Voip connection. He said he isn't troubled that emergency 911 service on Voip isn't as good as it is with traditional phones.

Erlingsson hasn't used all the features available with his Voip phone. But he likes knowing he can easily program it to forward incoming calls to his cell phone, send late-night calls straight to voice mail or take his phone number to Europe on a family visit.

As a techie, Erlingsson admits he's probably more inclined than most consumers to try such a service, and more forgiving of the inevitable bugs and glitches that came with it.

``The installation is kind of like with cable,'' Erlingsson said. ``If you have broadband, why on earth would you not do this?''

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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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