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How The Web Found Its Voice

Vonage In Print News

December 22, 2003

By Richard Wray

During the heady height of the dotcom boom, one of the supposed great leaps forward that received the puff of the PRs was the ability to use the internet to make phone calls.

This is going to change the world as we know it, the press releases shouted, BT beware: making calls over the web is free. But the bubble burst, the money that telecoms companies could throw at new ideas evaporated and silence descended.

Well, brace yourselves because web-calling is back. Normally sober executives are talking about Voip - pronounced as one word so it sounds like some form of sickly yogurt drink - and how it will affect consumers, in excited tones.

But let's get a few things straight right now. For most of us, this is not going to turn our world upside down. What it will do, however, is change the competitive landscape in communications, which (hopefully) will lead to cheaper calls for all of us in the long run.

Internet telephony is the process of converting phone calls into the language of the internet or internet protocol. Hence voice over IP or VoIP. Already used by businesses, it is especially suitable for companies who pay a communications provider for a virtual private network - a bit like having your own walled-off section of the internet - so they can contact branches or factories, or centrally collect data from stores.

Plugging Voip technology into such a system, allowing voice communication between parts of the business on that network for no extra charge, is fairly simple.

As for consumers, the problem up to now has been that last bit of pipe that connects to your house, which still uses the basic phone system. Traditional phone technology is startlingly inefficient: every time you make a call the line has to stay open at both ends, using capacity even when nothing is being said. On the plus side your phone company knows how long the call is and can bill it accordingly. On the downside the phone company must have enough lines for everyone.

IP, in contrast, slices and dices the call when someone has something to say, routing each individual "packet" of data to its destination. Packets from several different calls use the same capacity as one traditional end to end call - making it much cheaper.

So why are people getting excited about Voip now? The simple answer is that the take-up of broadband by residential customers has finally produced a significant enough potential customer base to make it workable.
The nirvana of Voip is a call that starts using IP, is carried over the internet, and terminates using IP.

Once you have the software on your computer, a microphone and speaker in your PC, all calls are free. Over four million people have already plugged into Skype - from the peer-to-peer specialists who brought us Kazaa - to do just this.

The problem is you can only call people with the same technology and you don't get to use your home phone number.
This is no problem for teenagers who spend a lot of time online and want to talk to their friends.

As a word of warning, however, the quality will not be great because of the way that traditional phone lines have been tweaked to provide broadband - but it is free.

Hopefully next year the quality will improve as BT is forced to offer its rivals more than just one sort of broadband line (think SDSL rather than ADSL).

But for the rest of us this sort of service is best kept for calling relatives in far flung places at pre-arranged times. In fact, BT is going to suggest we start seeing as well as talking to them early in the new year.

So, companies such as Vonage and Net2Phone in the US have created services that do connect with the traditional phone network. Phone numbers stay the same but the operators have to pay the local phone companies an interconnection charge every time their calls end up on a traditional phone network.

As a result these companies have to charge a flat monthly fee for a voice telephony package. Who else sells services on a monthly flat-rate basis? ISPs. They are becoming increasingly interested in using the technology so they can bundle voice calls in with their existing broadband packages and squeeze BT out of the home market.

On the face of it, that's a revolution. But we already have a flat-rate call package in the UK. It's called BT Together.

Voip is exciting, but keep your pants on.

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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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