August 11, 2005 10:19 AM PDT
FAQ: Demystifying VoIP
Since about 1995, when it was first offered to consumers, VoIP has become one of the world's most widely used telephony products. Current estimates put the number of VoIP users at about 5 million, although industry observers say that number will increase fivefold in the next two years.
VoIP--which enables phone calls to be carried over the Internet--also is one of the most economical phone technologies available. Many VoIP services are available for as little as $20 a month, though with some important constraints.
The key to making the most of VoIP is understanding its basic forms and what you might expect to pay for them. Here are the essentials.
What is VoIP?
VoIP refers to voice calls that are routed over online networks using the Internet Protocol--the IP that serves as the backbone of the Internet and is used to ferry e-mails, instant messages and Web pages to millions of PCs or cell phones.
VoIP tends to be relatively inexpensive. Why?
VoIP calls are just another application riding over the Internet. And these calls are unregulated. So at their core, they are no different from e-mails, instant messages or Web pages, which all can be distributed for free between Internet-connected machines. Those include computers and wireless devices, such as cell phones and handhelds, that are set up to receive online information.
Why do some VoIP services cost money, and why are some free?
A VoIP service can connect users not only with other VoIP customers but also with phone services that are offline, such as those that use traditional landline networks and wireless cell phone networks. For those calls, VoIP service providers must pay access fees to the landline and wireless operators. Those charges are passed along to VoIP customers. VoIP services that stay on the Internet--calls that are between personal computers with VoIP service--are free.
What do you need to use VoIP?
The first thing you need is an Internet connection. It can be as basic as dial-up service, but the faster your Net connection, the better the call quality is. With a high-speed broadband connection, for example, you can make calls and surf the Internet at the same time.
You'll also need VoIP software. Consumers can choose a version that loads onto a desktop or laptop computer, which allows the computer to make calls through its modem connection to the Internet. The customer uses the computer's built-in microphone and speakers, so there is no actual phone or extra adapter needed for this version of VoIP service.
But in cases where customers want to convert their home phone to a VoIP dialer, an adapter is necessary. In this scenario, the VoIP software is available preinstalled in a separate piece of hardware known as an analog telephone adapter, which is installed between your home phone and the broadband modem.
The cost of these adapters is dropping rapidly. Most are priced well below $100, and in many cases they are simply given to customers who buy VoIP service.
Who sells VoIP?
A surprisingly varied group of vendors sells VoIP. Cable operators, for example, typically sell VoIP services as part of a "triple play" of voice, video and high-speed Internet services that are all steeply discounted when packaged together. They say their VoIP services are the best because calls are carried over the cable company's privately owned network, allowing its operators to give priority to VoIP calls. That guarantee doesn't hold, however, for calls to someone who is not a cable broadband subscriber.
There's also a growing class of companies that give away VoIP software and then sell premium services, such as those that allow users to dial traditional phones using their PC-based VoIP. The most famous of these companies is Skype, a Luxembourg company that has
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