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Original Article

VOIP Grows Up

Internet-based telephone services are finally ready for the mainstream, but what about your pocket?
Network World, 10/24/05

The Voice over Internet Protocol (VoIP) telephone revolution is upon us. In 2004 alone, there was a marked increase in the number of home and home-office VoIP subscribers, due largely to an increase in low-priced monthly service packages from both startup companies and veteran telecom industry players alike.

Signing up for VoIP service means that for a low fixed monthly fee-usually $19.99 to $29.99-you can make unlimited calls within the United States, and usually Canada as well. By contrast, unlimited calling plans over regular phone lines typically start at $49.95. VoIP service providers also tend to throw in a lot of services for free that usually cost a lot more with plain old telephone service (POTS), such as voice mail, caller ID, call waiting, and call forwarding.

A VoIP subscription also gives you area code flexibility. With a mobile VoIP handset, you can take your office phone with its New York City area code with you to San Francisco, for example. Similarly, you can get a number with an area code for a place where you have friends and relatives; when they call, they’ll pay only local rates.

How VoIP Works:

Conventional telephones operate over the public switched telephone network, with a copper wire connection running to each end of the call. With VoIP, a telephone adapter converts your voice into a digital signal and then sends it through the Internet to the person at the other end of the line. The most common method is to plug your regular phone into the telephone adapter, which in turn gets plugged into your router. The adapter is usually provided for free by VoIP service providers.

Another way is to use a VoIP-enabled phone, which comes equipped with an Ethernet jack instead of a phone jack. You connect the phone directly to an Ethernet port on your router. New VoIP phones are starting to come with built-in Wi-Fi, meaning that you can use your handset at home but also take it-and your phone number-to any Wi-Fi hotspot in the world.

Drawbacks Remain

The downsides are few but significant. Since VoIP is an Internet-based service, the quality of your calls is dependent on the quality of the connection, and setting it up in the first place requires some technical know-how. It’s nothing an average computer user couldn’t handle, but it’s more complicated than just buying a phone and plugging it into the wall jack, especially if you want to integrate it seamlessly into an existing wireless computer network.

In addition, 911 emergency phone systems in most cities cannot trace calls from VoIP lines yet. There are initiatives in place to fix the problem; many cities expect to sort it out over the next year or so.

Finally, if your electrical power goes out, your VoIP lines go down, whereas a standard phone would stay up and running. Companies like Linksys are fighting back by designing VoIP routers with battery bays underneath, supplying users with up to eight hours of talk time should a blackout occur.

VoIP Goes Portable

While most analysts are impressed with VoIP technology so far, there’s a consensus that road warriors should wait awhile. “VoIP really is about mobility,” said William Stofega, a senior analyst for VoIP services at IDC. “[It’s about] freeing the tethers and being able to get any message, any call, any piece of content wherever you are. Do we have all the pieces? Not quite yet.”

“Dual-mode cell phones incorporating a wide-area technology (GSM or CDMA) plus Wi-Fi is a killer combination,” said Craig Mathias, Principal at the Farpoint Group. “It allows the cellular companies to augment their voice and data offerings in high-density areas inexpensively, and it will allow them to eventually displace the wire-line incumbents in the enterprise as individuals use their cell phone as their only phone.”

But what if you have multiple employees in different locations, some with mobile VoIP and some without? GotVMail offers a service that sits on top of whatever phone services you have and ties them together with a PBX-style, multi-mailbox front end. “We view ourselves and our customers view us as an enabler of VoIP,” said David Powers, director of communications for GotVMail Enterprises. “We have any number of customers that are using VoIP service to save money principally on their outbound, but they need that front end for when a prospective customer calls them while they’re in a meeting or on the road.”

A stumbling block for mobile VoIP is how to transfer a call from Wi-Fi to GSM and back if the caller moves around. “A lot of people are portraying that you do this via signal-strength monitoring,” said Jeff Paine, vice president of strategic marketing for UTStarcom. “The problem with that is you could have five-bar Wi-Fi signal strength in a network that’s totally congested. Signal strength alone probably won’t do it.”

There are also peer-to-peer VoIP services, such as Skype. These have been around for a while, and essentially let you make free calls from your PC using a headset, the built-in sound card, and a small desktop application.

“Skype is interesting and has a lot of potential,” IDC analyst William Stofega said. “Where Skype makes a lot of sense is if a traveler has a laptop and finds a free Wi-Fi hotspot, they can plug in and do the things they need to do.” He points out though that some work needs to be done, both in terms of quality of service and security.

Most experts agree that mobile VoIP is something that businesses will embrace first. “With issues such a s the ability to roam between cellular and Wi-Fi, technical issues regarding the handoff, billing, and so on, I see it primarily as an enterprise and business play right now,” added Stofega.

New Hardware, New Applications

Hoping to get more home users as well as business travelers to jump on the VoIP bandwagon, a number of vendors are rolling out new gear for the home and for the road. For instance, Vtech’s Ip8100 2-handset base station gives you a fully integrated solution that doesn’t require a separate router. The base station plugs directly into your broadband cable or DSL modem; Vonage provides VoIP service as a tie-in with Vtech’s product.

UTStarcom introduced its F1000 VoIP phone, which is about the same size as a typical mobile phone, in January. “It’s clearly a cordless phone replacement-who needs a desktop phone?” asked Paine. “The other primary application is when you travel. Throw it in a bag when you go, and if you’re in a Wi-Fi hotspot in Singapore or New Zealand, turn the phone on, register, and make and receive calls.”

Wi-Fi phones are indeed versatile, but early sales aren’t promising. According to a study by Infonetics Research, only 113,000 Wi-Fi handsets were sold in all of 2004. “Wi-Fi phones are viable for a while, since they’re cordless phones, after all. But the dual-mode handset will be the vehicle of choice essentially everywhere: home, work, and out and about,” said Mathias. A dual-mode handset basically doubles as a cell phone and Wi-Fi phone.

The N900iL manufactured by NEC, although currently only available in Japan, is an indication of mobile VoIP’s future. “It’s a dual-network handset that runs on both the FOMA 3G network and corporate wireless LANs,” said Karen Lurker, manager of corporate communications for NITT DoCoMo USA, the vendor that markets the phone directly to companies in Japan.

Video Solutions exist as well, but they’re stationary-only for now, at least in the U.S. One such product is the Packet8 VideoPhone, a $500 VoIP phone with a built-in color LCD. You’ll need a separate account through Packet8 on top of your broadband service.

Bye Bye Landline

VoIP has virtually exploded in popularity in the past 6 to 12 months, generally due to heavy marketing from both established companies (AT&T, Comcast, Verizon) and startups (Vonage, Packet8, Viseon). One thing seems nearly certain: the eventual demise of the landline.

“It’s clearly the future; the copper loop is dead,” Mathias said. “It will take 15 to 20 years for a complete transition to IP telephony, but it’s going to happen.”