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Local Firms Pick Up

December 15, 2003

By Staff

Dec. 15, 2003 — It's a technology that's been around for almost a decade. But until now, it was too expensive and too obscure for most to understand -- a party trick for tech geeks.

But in the last few months, mainstream users have begun to see the potential of voice over Internet protocol (VoIP) -- a technology that essentially allows users to make calls over the Internet, in some cases substantially reducing the long-distance costs incurred by placing calls over traditional voice lines.

For now, it's an essentially unregulated industry, complete with the requisite sharing of free software and information to take advantage of it and telephone companies nervously standing by.

And a handful of New Mexico business people, armed with newly-available cheap equipment, are taking advantage of the confusion.

Early Adopters

"We essentially got into Voip because of a business requirement in the office," says John Brown, CEO of Albuquerque consulting firm Chagres Technologies, which is now in the process of becoming a worldwide distributor of cheap desktop telephones designed for use with VoIP.

He says his firm needed a new PBX, or private branch exchange -- the network of switches and exchanges that route calls around an office and allow employees to dial out on the company's main line.

"But I didn't want to be tied down to our vendors' systems and phones," he says.

Enter VoIP. On paper, it sounds almost impossibly simple.

Download a free, open-source software called Asterisk and load it on to a computer system running Linux. Set up the software to handle the typical office PBX prompts, like desk extensions. Plug that server, and the phones, into the company network and a broadband Internet connection, and violá -- a complete office telephone system that allows for all sorts of cool features, like using your laptop as a phone. Instead of transmitting voice as electronic pulses, which is what traditional phones do, it is instead turned into data -- ones and zeros -- and sent in 'packets' just like any other Internet communication.

"This allows you to integrate your classical phone system with the Internet," Brown says.

Plus, calls placed to anyone else using VoIP, such as a branch office of your company in another part of the state, are free. And International calls cost pennies on the dollar because they run over Internet networks, and aren't patched into local lines until they get to their destination. For instance, a call to Germany might cost 3 cents per minute to an overseas Voip service provider, as opposed to the 12 cents or more you'd pay a traditional long-distance company like Sprint.

Similarly, domestic long distance calls from a Voip phone to a standard phone could cost as little as 1 cents per minute. And companies with offices all over the globe could have one number and extensions for every desk in the company, over data networks, for a fraction of what they would pay if they placed calls to each other from office to office over voice lines. It sounds confusing, Brown admits.

But, "the average Joe could use this," he says. "It's easier for the average person than setting up a Web site."
That's where companies like his come in.

Voip For The Masses

Chagres is not a service provider. But it is a reseller of Voip equipment that has gone from costing hundreds of dollars to less than $100 in the last year. Take, for instance, an unglamorous but functional $75 Voip desktop phone the firm sells from Chinese manufacturer Grandstream.

Since Brown started selling those, and other equipment like a low-cost adapter for traditional telephones to Voip service providers in August, Chagres has seen sales of Internet telephone equipment ramp up from $19,000 its first month to about $25,000 in November, with no advertising.

And it's still growing. In fact, he says, by March, he expects to have hired 8 to 10 employees, and plans to seek new warehouse space to store and distribute Voip equipment in the spring. Meanwhile, he says he's traveling to Europe later this month to set up a Dutch office for Chagres.

"We ship so much product to Europe now," he says. "So we're going to import directly to Europe from manufacturers in the Far East."

But because of the relative anarchy that still reigns in the domestic Voip industry, he says he'll leave the provision of service to braver souls. The Federal Communications Commission has left data networks relatively untouched, and free of taxes. Some have argued that money collected from taxes on traditional voice communications systems helps fund important programs, like 911 service and technology upgrades in schools.

"VoIP still has a regulatory risk to it," he says, noting that, for instance, Voip calls cannot be traced by 911 operators. "And the [incumbent phone companies] aren't fast enough to keep up with new technology, so they'll use regulatory burden as a hindrance."

The FCC recently announced that it would spend a year looking into an "appropriate regulatory environment for these services." FCC chairman Michael Powell recently said he did not support regulation that he feared could slow development of an important and evolving technology. Taking into account the potential loss of customers, several large telephone companies, including Qwest, have recently announced plans to roll out Voip services of their own.

Niche Markets

For now, most of that service will be provided by a handful of national providers, like Vonage, which offers unlimited calls over a broadband connection for about $40 a month, and many smaller regional service providers, like Dave Cate's Clovis Internet Service Provider I-NET.

"One of the biggest things I'm doing is trying to find small businesses that have multiple offices throughout the state," Cates says, noting, for instance, an insurance firm with offices in Clayton and Clovis, could potentially save $150 a month in long-distance charges between its locations by switching to VoIP.

He is also talking to officials at Cannon Air Force Base about providing such a service to the hundreds of servicepeople from the Singapore Air Force who live and train in Clovis.

Besides offering him an edge over growing competition for Internet services in his area, like Cox's cable broadband service, Voip gives him a new technology to play with, he says.

"There hasn't been a whole lot of new technology in the ISP business," he says. "This is a whole new thing for me to make happen."

There's certainly potential gold in them thar' hills, Cates says.

By 2007, some estimate 60 to 70 percent of all calls will be IP-based, rather than switched through traditional voice systems.

"Industry people say eventually all voice will come over IP," Cates says. "Currently 10 percent of all calls worldwide are over VoIP, but only 1 percent originate over Voip phones. That's why we see an opportunity in the marketplace to start distribution of phones as well as integration and consulting. It can definitely save you money."

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