Vonage - Web-Facilitated Phone Calls Become Cheaper, Clearer

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Voice Over Internet Protocol

February 15, 2004

By Tamara Chuang

I used to cringe each month when I paid my telephone bill. It averaged $38, and for what? Call waiting, caller ID and local phone service. That's it.

Thirty-eight dollars!

So, in the past year, when a technology called Voice Over Internet Protocol began to make waves, I decided to investigate.

Making telephone calls over a high-speed Internet line sounded cool. I already had the main ingredients: a cable modem and a router that lets me share Internet service among multiple computers, printers and other devices. Cable TV ads from Vonage - the most popular of the VOIP providers - made me think that Internet telephony had solved the terrible sound-quality problems it suffered from in the 1990s.

But what really made me take the plunge was Vonage's price - $24.99 for unlimited local calls, with all those services the phone company makes you pay for, plus 500 long-distance minutes (or $34.99 for unlimited long distance).

I ponied up the $30 activation fee and ordered the service.

Vonage sent me a do-it-yourself VOIP kit, which contained a small box that converts an Internet connection into a telephone line. All I had to do was plug one wire into a standard telephone and another into a cable modem, DSL modem or home network router. In minutes, I was ready to dial.

VOIP (which rhymes with "bop") has come a long way from just a few years ago, when phone calls over dial-up Internet connections consisted of scratchy conversations interrupted by voice dropouts. Another problem: Instead of a telephone number, you had to type in the Internet protocol number, which looks something like "64.94.219.228."

The new breed of VOIP - offered by companies such as Vonage and Packet8 - lets you use a regular telephone instead of a computer. People call your regular phone number instead of an IP address. In most cities, Vonage has an arrangement with the local telephone company so you can keep your old phone number. Or you can choose a phone number outside of your area code since, like e-mail, you can get VOIP calls anywhere there's an Internet connection.

Vonage, based in New Jersey, got a jump on the competition when it attracted $12 million in funding in May 2001. A year later, it launched and today, Vonage is the largest consumer VOIP company, although it still has a mere 95,000 customers.

Forrester Research estimates that fewer than 150,000 consumers nationwide have VOIP accounts, but the number is growing - to nearly 5 million by late 2006, said Charles Golvin, a Forrester principal analyst.

The holdup is that relatively few people have broadband at home, he said.

Without a high-speed Internet line, VOIP won't work.

"It's a question of when, not if, it will replace traditional service," said Golvin, himself a Vonage customer living in Los Angeles - with a San Francisco phone number.

Can you hear me now? Most of the time, yes. But I'll admit that sometimes it sounds like I'm on a cell phone with an annoying echo.

At other times, I realize that VOIP is not quite ready for the general public. On those days, my cable modem connection is down and, with it, my telephone service. In the last six months, that's happened maybe three times.

And while this hasn't happened to me, I've read postings on Broadband

Reports.com from customers frustrated that their Vonage service stopped working for no apparent reason.

For me, sound quality, on most days, wasn't an issue. I pay 30 percent less per month on phone bills and get more features. If I do go over my 500 long-distance minutes, I pay 3.9 cents per extra minute, a price that is hard to beat.

Another cool feature is that you can take the Vonage adapter on the road, plug it into someone else's high-speed Internet connection and start receiving phone calls. Or you can add a second phone line or 800 number for $5 a month and pick the area code of, for example, your out-of-state parents so they don't have to dial long-distance to chat. Oh, yes, calls to any Vonage user are free.

And if you move, take your Vonage adapter and your number travels with you.

Better yet (at least to me), your phone number isn't out there for the phone company to put in listings that telemarketers can use. Total number of telemarketing calls since I switched to Vonage six months ago: maybe three.

Why would I ever go back to my old telephone company?

This story also appeared in:

Rutland Herald, 2/15/04

Bradenton Herald, 2/15/04