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Voipification


Vonage In Print News

Voipification (No, It's Not In the Dictionary . . .Yet)

June 14, 2004

By Brian M. Carney

BRUSSELS -- One of the least-appreciated advantages of living overseas is never having to answer the phone during dinner, only to hear, "Mr. Carney, we would like to offer you . . . ."

But one of the biggest disadvantages of being an expat is the phone bill. International calling is less expensive than it used to be, but keeping in touch with family and friends back in the U.S. was still taking a nice-size bite out of my budget every month -- until last January, when I sent away for a little black box called a voice-over-IP phone (VOIP) adapter and started routing my calls over the Internet.

The adapter plugs into my DSL modem, and the phone plugs into the adapter. A New Jersey-based start-up called Vonage provides the service, and voila! -- I have a phone in my apartment in Brussels that is assigned a number in the 917 area code. Friends and relatives in New York can call for the cost of a local call, and we can call them -- or anyone else, anywhere in the U.S. or Canada -- for a fixed monthly fee of around $30.

But Voip isn't just about getting a better rate on calls to the in-laws back in Schenectady. Businesses that are, like me, located in one country, but that make or receive a lot of calls in another, are taking advantage of Voip to "locate" their phone numbers where their business is -- a boon to offshoring and remote location of call centers. (Sen. Kerry, call your office.)

That's only the beginning. Voice over IP allows a phone company located anywhere in the world to compete for customers anywhere else in the world. Indeed, the little black box that allows me to keep my 917 area code spells the end for phone service as we know it.

Suppose that, due to a benign regulatory environment, low telecommunications taxes or sheer competitive serendipity, some company in a country halfway across the world offers a VOIP-based phone service that is cheaper or just plain better than the service offered by your local phone company -- whether that company is Verizon in New York or Belgacom in Brussels.

If a company in Belgium made it cheaper for you to call New Jersey from New York, there might be no reason to keep a U.S. number at all. By the same token, in a Voip world, Belgium's country code (32) could all but disappear if consumers and businesses here decided that a French or German Voip service was more economical or offered better features than anything available in their home country. Belgium, in telephone terms anyway, could cease to exist, absorbed by its larger neighbors. (And not for the first time, either.)

Even if things never go quite that far, Voip means you decide what area code -- and even what country code -- to adopt on your own. This paves the way for a degree of competition among operators that the authors of telecom "deregulation" on both sides of the Atlantic could only dream about. As the market share of Voip operators grows -- and the incumbents increasingly become VOIPers themselves -- every phone company may find itself in competition with every other operator, everywhere in the world.

But wait, there's more. Most Voip operators offer flat-rate calling plans for all calls within the U.S. (and often Canada). Voip operator Packet 8 offers flat-rate plans covering Europe and Asia as well. So a German, say, with no ties to the U.S., could decide to pay $50 per month and get unlimited calling to fixed-line phones anywhere in Europe or the U.S. -- and an area code in Beverly Hills to boot, if that's what he fancied.

Of course, friends who wanted to call them would have to call the U.S. But if, like just about everyone over 11 years old in Europe, the person in question has a mobile phone, friends who don't want to call America to reach Berlin can dial their mobile. Or get a Voip line themselves.

The Verizons and Belgacoms of the world can kiss their easy dominance of the local market goodbye/adieu; after years of failed regulatory attempts to "unbundle the local loop" and force access to "essential facilities," the loop has been unbundled and the facilities rendered nonessential -- by technology. Yes, you need a broadband Internet connection to use Voip -- but unlike the traditional phone network, there's not just one way to bring broadband to the home, and most don't involve the phone company. Cable companies are already getting into the Voip business. AT&T and Time Warner Cable both offer flat-rate Voip calling in some markets. In a sign of things to come, Verizon has announced that it will start offering Voip service shortly.

Just about the only thing that can slow down the VOIP-ification of voice telephony would be for regulators to step in and muck things up. Last year, Minnesota's public utility commission ruled that Voip was not a "data service" but a "voice service." It's both, of course, but in the American regulatory environment, one means you're free to run your business as you like, while the other means you're a quasi-utility tied down by myriad regulations and requirements. The Minnesota PUC was overruled by a federal court, but two weeks ago, New York's Public Service Commission made a similar, but more limited, ruling about Vonage.

Not surprisingly then, Vonage CEO Jeffrey Citron calls the threat of increased regulation one of the biggest uncertainties his company faces. So far, both FCC Chairman Michael Powell in the U.S. and the European Commission in Brussels have indicated they will stand aside; but absent a strong message to state regulators to do the same, expect more attempts to bring Voip operators into the regulatory fold. After all, if Voip ever did replace traditional phone service, what would the utility regulators have left to do?



 
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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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