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Vonage Holdings Corp. Reports Fourth Quarter and Full Year 2013 Results

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Vonage, a VT2142 and a RTP300, My Experiences - A Detailed Review
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If You Can't Beat 'Em, Join 'Em


Vonage In Print News

If You Can't Beat 'Em, Join 'Em

December 18, 2003

By Staff

The future of fixed-line telephony has suddenly become apparent.

Telephones, at least of the fixed-line variety, have been much the same for decades. Buttons replaced rotary dials; caller ID appeared;otherwise little has changed. But fixed-line phones are now about to be transformed, thanks to the internet.

In a flurry of recent announcements, big telecoms firms in America have embraced a technology called "voice over internet protocol" (VoIP) as the future of mainstream telephony.

Simply put, Voip breaks telephone calls into packets of data and allows them to be piped around like any other kind of internet traffic. The technology is used in three main ways. In the corporate world, companies are increasingly using Voip to replace separate voice and data networks with a single "converged" network, which saves money.

Secondly, Voip is used by telecoms operators to carry calls inside their networks at lower cost. International calling cards use Voip to keep prices down.


You are, in short, probably using Voip already without realising it. But the third kind of Voip is not so invisible: the consumer variety, currently pioneered by small firms such as Vonage.

By plugging an ordinary phone into a broadband internet connection using a small adaptor box it is possible to make and receive calls in the usual way, though they are in fact being piped across the internet. That makes possible all sorts of new tricks: integration of voicemail with e-mail;
global portability (the phone rings wherever it is in the world,provided it is plugged into a broadband link); web-based logging and billing. For conventional telecoms operators, this sounds like bad news--the Napsterisation of telephony. But a tipping point has now been reached. As they cannot beat VoIP, they have chosen to embrace it.

Their motivations vary. AT&T, for example, which will launch Voip services in the next few weeks, sees it as a way to avoid the access fees--some $10 billion a year--that it has to pay the "Baby Bell" local network operators to route calls over their lines. No such fees apply to Voip calls, which are unregulated (at least for now).

Of course, the service can only be offered to households with broadband. But with over 22m American households already wired up there is a big potential market, notes Cathy Martine of AT&T.

Cable companies such as Time Warner, CableVision and Cox are using Voip to offer telephony cheaply via their broadband networks. Cable firms see telephony as the next big market after TV and broadband and hope to encourage subscribers to give up their conventional phone lines.

Incumbent local network operators are in a tricky position. Voip cannibalises their core business--conventional voice telephony--but,notes Blake Kirby, a telecoms analyst at Adventis, "you'd rather have a Voip customer than no customer at all." Hence the decisions by Verizon and Qwest to offer VoIP. It might even help them pick up new customers
among cable-broadband subscribers. Britain's incumbent, BT, has just launched a Voip service for just this reason.

As consumers do away with second lines for dial-up internet access in favour of broadband, says Dave Axam of BT, Voip can provide a cheap alternative to a second line for use by teenagers.

Voip is not for everyone, of course, since it relies on the
availability of broadband. Voip phones do not work when the power fails, and they do not yet support emergency calls.

Michael Powell,America's telecoms regulator, has said that he favours a light touch when regulating VoIP. But as it goes mainstream, says Muayyad Al-Chalabi of RHK, a telecoms consultancy, rules will need to be established to cover emergency calls, wiretaps and so on.

With luck, this will help to trigger a complete overhaul of America's arcane regulatory system. Its rules were drawn up in the mid-1990s, when the industry's future was unclear, says Mr Kirby. But the way forward--in which voice telephony is just another subscription-based internet service, delivered by a broadband link--now suddenly seems much clearer



 
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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 www.vonage.com/911 for details.

** Certain call types excluded.

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