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Plugged In

February 6, 2003

By Staff

When I made my first phone call ever over the Internet to my office last month, Anthony Waytekunas Jr., longtime business clerk at The Sun, answered with a cheery "Business news."

Now I know how Alexander Graham Bell and Thomas Watson felt in 1876.

Well, maybe it wasn't quite that momentous, but the call I placed on equipment from Vonage Digital Voice of New Jersey felt like the start of something mysterious and modern that may one day be commonplace.

Vonage is a new breed of company that routes calls over the Internet instead of the traditional phone system.

Most important, during several weeks of using the service, the calls were as clear as on a wired phone (and much clearer than with many cell phones I've used).

To start, I plugged a phone into a Cisco adaptor that converts an analog signal to digital that enables your voice to travel as data over the Internet.

The phone was a standard type you'd pluck off the shelf at Wal-Mart or Circuit City. Vonage supplied a free adaptor; otherwise, it would cost about $200. The box was linked to a router, which was linked to a cable modem, tied to my personal computer at home.

It took me about 20 minutes to install and wasn't difficult. I was able to use the phone right away and to check a record of my calls by typing my account number into Vonage's Web site.

One unusual feature: I was able to choose a phone number from almost anywhere in the country because Vonage is now in about 25 metropolitan areas and covers about 110 area codes. I selected an area code in eastern Pennsylvania, where my parents, sisters and their families live. They were able to call me for free as if they were placing a local call even though they live 120 miles away.

That trick worked well for me only because I kept my regular telephone service; otherwise, my next-door neighbors would have had to pay out-of-state, long-distance rates whenever they called me. But I can see the attraction of being able to choose a distant phone number for someone with a child living away at college or even overseas just to communicate cheaply and often.

Vonage charges $40 a month for unlimited calls nationally and very competitive international rates. It has a second plan for $26 that included unlimited local and regional calling and 500 long-distance minutes, although calling between two Vonage customers anywhere is unlimited. One-time activation and shipping fees total another $40.

Only broadband Internet service is fast enough to accommodate Vonage, so people using dial-up modems - the majority by far of at-home Internet users -can't adopt it yet.

But more and more people are converting to high-speed connections. Broadband use at home grew nearly 60 percent last year, compared with a 10 percent drop in sign-ups for slower, dial-up connections, according to Nielsen/Net Ratings, a tracking service.

Internet telephony has been a force elsewhere for several years, especially in Eastern Europe, Asia and Africa, where the high cost and poor quality of phone service drove users to the Internet as an alternate means. Its use became so popular in Panama that the government tried to ban it because it threatened the existing phone monopoly.

The Internet now carries more than 10 percent of international calls and has grown 2,000-fold in five years - to 18.5 billion minutes last year, according to TeleGeography Inc., a research firm in Washington.

But it's beginning to gain in the United States, too, even if callers don't realize it. As international rates have fallen, major phone companies including AT&T, Verizon and WorldCom have farmed out portions of international calls to Internet-based wholesalers to cut their costs, said Patrick Christian, a TeleGeography analyst.

U.S. companies have begun investing more heavily in the technology, too. Among them are Internet telephony companies ITXC Corp., iBasis Inc. and Net2Phone Inc. and equipment manufacturers Cisco Systems Inc. and Avaya Inc.

Even small local phone providers such as Core Communications in Annapolis have begun considering Internet calling.

One of the leading Internet phone entrepreneurs, Jeff Pulver, recently launched a Web link called Free World Dialup to promote Internet telephony (

People can sign up for a five-digit number and make free calls to another Free World user anywhere in the world, with nothing more than a computer with speakers and a microphone and about $200 worth of equipment. About 5,500 people around the world have signed up since November.

Dan Freedman, chief executive officer of Jasomi Networks, whose software enables Internet telephony, said recent events have converged in the technology's favor. Among them: the 1996 deregulation of the U.S. phone monopoly; struggles within the industry over leasing the Bells' old-style phone network; and the increase in broadband adoption.

The Internet carries conversations like written data - in "packets" that get shipped in an eye blink between two points.

The packets travel out of sequence, but reorder themselves while you wait for an alert on your computer, such as the hourglass icon, to disappear from your screen.

Early use of voice-over-Internet Protocol produced scratchy, garbled calls that reassembled too slowly. But improvements in the technology have made the calls clearer and the business opportunity more viable.

Freedman believes that companies will look more seriously to at least partly adopt Internet-based phones because they enable more efficient use of their information systems - processing calls by day and data overnight. Corporate call centers also can access data on customers more quickly with phone systems tied to the Internet, he said.

"Between three and 10 years from now, you will be paying for phone calls the same way you pay for broadband Internet access - a flat rate," said Freedman, whose company began in San Jose, Calif., two years ago.

He also predicts a major impact on Internet telephony - and the Internet itself - when the third generation of wireless phones, known as 3G, are introduced next year. Because 3G uses voice-Internet technology, it will double the amount of computer devices tied to the Internet almost overnight, he said.

My own hesitation to use a voice-over-Internet phone exclusively is that it's more common for my broadband Internet provider to be on the fritz than my phone company. I can't remember the last time I couldn't get a dial tone on my home phone. Hurricane Gloria? If I needed 911 in an emergency would I bet my safety on my Internet provider? Hmmm, not sure.

Outside of that probably irrational fear, however, reliance on an Internet phone exceeded my expectations.

And never once did I ask the person on the other end of the call, "Can you hear me now?"

Internet calling

Vonage Digital Voice, www- $39.99 unlimited; $25.99 unlimited local/regional, 500 minutes of long distance.

Dialpad Communications Inc., $7.50 for 300 minutes, $9.99 for 500 minutes, $19.99 for 1,200 minutes in continental U.S. Other plans include 2.9 cents a minute in U.S., 3.9 cents a minute to London, 6.9 cents a minute to Mexico City. Similar rates are available on a calling card that can be used with regular phones, but calls are carried mostly over Internet.

Net2Phone Inc., Free calling between PCs. PC-to-phone rates include: 2 cents in the United States, 4.9 cents to United Kingdom, 7 cents to Mexico City. Also offers a calling card that be used with regular phone.

Free World Dialup, Free to other subscribers who buy about $300 of phone equipment.

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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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