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Filter - Cynthia L. Webb
VoIP: The Next Household Word?

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_____About Filter_____
Filter looks at the day's top technology news through snapshots and analysis of what the world's media outlets are covering. Washingtonpost.com's new Mon.-Fri. feature is penned by technology reporter Cynthia L. Webb. If a technology story breaks, a company falters or triumphs, or there's a new trend in technology, Filter wants you to know about it.

_____Filter Archive_____
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Apple Thanks Its Lucky iPods (washingtonpost.com, Jul 15, 2004)
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Apple Stews Over Beantown Expo (washingtonpost.com, Jul 13, 2004)
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By Cynthia L. Webb
washingtonpost.com Staff Writer
Monday, July 19, 2004; 9:35 AM

More companies and consumers, especially in urban areas, are tapping into VoIP. That's shorthand for "voice over Internet Protocol," which is nothing more than industry lingo for a simple but extraordinary concept: using the Internet to make telephone calls.

Using the Internet instead of the telephone network has its perks, but there are still plenty of stumbling blocks keeping it from becoming the de facto way of making phone calls. The San Jose Mercury News produced a series on the VoIP phenomenon that looks into all these facets. Here, according to the Merc, are some of the advantages: "Software applications can be added to phones, turning them into mini-computers for such tasks as tracking inventory or looking up a number on the company directory. It also offers potential big savings by allowing companies to change the way they manage their phone systems."

And some more: "In addition to voice mail, call waiting and caller identification, Internet phone customers can retrieve voice mail online as e-mail. They also can arrange conference calls with point-and-click ease on their computers and sometimes even pick their area code. Allen Long, president of Long and Associates consulting firm in Castro Valley, said today's Internet phone price savings may shrink, especially if authorities decide to regulate the service. Federal and state regulators are weighing whether to treat the technology as a phone rather than information service. If it's a phone service, the government may require payment of access charges and universal service fees."

The Merc also noted some of the drawbacks, and they are significant. "A traditional phone system for a 50-person company may cost around $30,000. The cost of an Internet telephone system could range from about $35,000 to $75,000 depending on its features, estimated Mike Plumer, senior director of sales for AltiGen. ... With corporate budgets still tight, the price tag of putting in a whole new phone network is holding back many companies from embracing Internet calling when the old system isn't broken," the paper wrote. "Security is another top concern – a company's phone system is vulnerable to the same attacks as its personal computers. Experts even warn about the possibility of 'voice spam' – imagine hearing: 'You have 98 new voice messages.'" The paper also ran a helpful sidebar VoIP's pros and cons.

Another Merc article noted some other potential snags. "[C]onsumer advocates caution that residential customers should weigh potential downsides of the new technology – limited 911 emergency functions, home-alarm incompatibility and dead lines during power outages – before signing up," the article said. "It's very attractive if you're a heavy phone user," Janee Briesemeister of Consumers Union told the paper. "But it comes with some risk in terms of reliability, particularly in an emergency situation."
San Jose Mercury News: Companies Cautiously Switch To VoIP (Registration required)
San Jose Mercury News: VOIP On The Verge (Registration required)
San Jose Mercury News: To VOIP, Or Not To VOIP (Registration required)

CNET's News.com also wrote about potential VoIP problems: "Protecting your home could get tougher, as well. Some home alarm systems have trouble with broadband connections, or their manufacturers don't yet trust the reliability of the Internet. Also, there's still no way to guarantee VoIP phones will work when power is lost, and not all VoIP providers offer 911 service. During a power outage, a VoIP phone is only as good as any battery backups on hand, because delivering power through the broadband connection isn't possible on a wide commercial basis. An emerging alternative broadband-delivery technique, broadband over power line, will solve this problem, but wide deployment is years away."
CNET's News.com: The Price of VoIP's Thriftiness

The VoIP Wave Machine

Drawbacks aside, some people are expecting VoIP to continue making waves. "Today people look at it almost as a fashion statement, but the reality is that the fundamental shift to [Internet]-based telecommunications will change the face of telecommunications forever," Internet phone pioneer Jeff Pulver told The Washington Post. "The Internet calling experience is still clunky. Sound quality can be spotty, and it doesn't work at all if the high-speed Internet connection is down. But early adopters of the technology are willing to put up with a few glitches in exchange for big savings and the satisfaction of thumbing their noses at the nation's dominant regional telephone companies."
The Washington Post: Dialer's New Choice (Registration required)

Washington Post technology columnist Rob Pegoraro reviewed three VoIP services, rating the set-up and call quality of service of AT&T's CallVantage, Vonage and 8x8 Inc.'s Packet8. His conclusion? "These services aren't for everyone. If you make very few phone calls in the first place, you'll save money by getting a low-end land-line plan. If you make a lot of calls, you may still come out ahead by picking the right calling-card plan – the VoIP services often had great international rates, as low as 2 or 3 cents a minute to Europe or Japan, but I found cheaper rates to other countries, such as India. You should also consider whether, instead of spending $20 or $30 a month on VoIP, you would be better off using all or part of that cash to upgrade your cell phone's calling plan," he wrote. "But for anybody looking to add a second or third phone line, or who routinely spends hours a month on long-distance calls, VoIP looks like the way to go. It's here, it works (well enough) and it will save you real money. And I expect it will get better in a hurry. You'll soon see cable or DSL modems with built-in VoIP circuitry, eliminating the confusing setup – followed by VoIP phones that include their own WiFi receivers, so you can make calls using any available WiFi signal."
The Washington Post: VoIP Options Answer The Call (Registration required)

Fortune Small Business focused on Vonage and its chief executive, Jeffrey Citron. "Citron made the technology accessible, turning a regular phone into an Internet appliance about as complicated as an answering machine. And his phone service is cheaper because he avoids traditional phone companies' expensive infrastructure and overhead and he circumvents portions of Baby Bells' and rural phone companies' pricey access fees. Citron's drive to make the technology appeal to laymen has been especially apparent in Vonage's marketing. 'VOIP was a bad word in the industry; it meant crappy technology. Outside the industry people don't care about acronyms,' Citron says. 'We called it "broadband phone,"'" the article said. "Consumers seem to be picking up Citron's message. In the year since launching its VOIP service, Vonage has become a $36-million-a-year business, growing 50% a quarter for the past three quarters. Citron expects the company to show a net profit in the second half of this year. To solidify Vonage's roughly 65% market share, Citron has penned deals with retailers such as Amazon and Best Buy. He has also signed partnerships with five cable companies and two Internet service providers so that Vonage can bundle its service with their broadband or Internet access."
Fortune Small Business: Talk Gets Cheaper

Fortune also reported that "Cable television giants are jumping into the same body of water: They've just started to offer phone service using Voice Over Internet Protocol technology, or VOIP (pronounced 'voyp'). AT&T, which invented phone service, is in the game too: It hopes to ride VOIP back into the local phone business. And Cisco Systems, which has long dominated the Internet router market, is betting big on the technology. It wants to be to the new Internet-based phone network what Ma Bell was to the phone system of the 20th century: chief architect and equipment supplier. Like most revolutions, this one isn't going to happen overnight. The most optimistic forecasters predict a scant three million American homes will use VOIP by the end of next year. But what's clear is that VOIP is at an inflection point. A vision of how change might unfold comes from the Yankee Group: Starting in 2006, the research firm predicts, VOIP will really take off, and by the end of 2008 some 17.5 million users, or about 16% of U.S. homes, will be VOIPing—the beginning of mass-market acceptance."
Fortune: The Future Is On the Line (Subscription required)

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