March 16, 2006 11:00 AM PST

VoIP: Are we there yet?

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Even in these times of rapid technology development, changes in consumer behavior can be a maddeningly slow process.

Anyone who's followed the emergence of IP services since the late 1990s has endured a steady diet of hype surrounding voice over Internet Protocol, or VoIP. The dream for VoIP enthusiasts has always been the retirement of the dinosaur-age public switched telephone network in favor of a more dynamic, connectionless network using the Internet Protocol.

It's fair to say that at least part of this dream has been fulfilled. New companies such as Vonage, which offer residential phone service over IP, have become household names thanks to hefty marketing budgets that splash the company's logo all over the Web, in magazines and on TV.

Skype's free PC-to-PC calling service has also gotten significant traction, with more than 75 million subscribers. And the $2.6 billion acquisition of the small European company by eBay has definitely raised VoIP's profile. Other Internet companies, such as Google, Yahoo and AOL, are also introducing voice capabilities as part of their most popular products.

Then there are the cable companies, which are likely to become the biggest threat to the old telephone network. Time Warner Cable added 880,000 voice subscribers last year, for a total of 1.1 million voice subscribers in 2005. No one can deny that's huge.

At the Voice On the Net (VON) conference in San Jose, Calif., this week, more than 300 companies selling VoIP products and services gathered for a semiannual pep rally, claiming that VoIP is already hitting the mainstream market.

But is it really true?

Though traditional phone companies are losing access lines at an alarming rate--5.7 million in 2005 alone--the culprit stealing their customers is wireless, not VoIP.

"We don't see VoIP as a major threat to us losing residential customers," said Steve Zimba, director of converged services for BellSouth. "We see more degradation of the business due to wireless substitution. However, we think VoIP will be an important part of the future."

Problems of perception
The reality is that VoIP has still got a long way to go before people see it as a true replacement to their old telephones. Lingering questions about the technology's reliability still haunt it, as average consumers try to wrap their head around what voice over IP really means.

Photos: Touring VON

BellSouth's Zimba said residential consumers are confused about the technology. They don't see enough value in the new services that VoIP providers can offer, because many of them don't believe they need the features they currently have from the traditional phone company.

"There is a perception problem with VoIP," he said. "People think, 'You are going to put my voice on the Internet? I don't think so.' We are urging the industry to get away from selling VoIP as a technology and to start calling it something else, like broadband voice, in order to get mass adoption."

In fact, it is hard to detect whether the phone companies have moved toward residential VoIP at all in the past year. AT&T and Verizon each have their own residential IP telephony services, but neither company has been marketing them much.

Representatives of these companies were sent to the VON conference to provide an update on what they're doing, but they barely even mentioned residential VoIP products. AT&T talked more about its business VoIP service, while Verizon touted its Fios fiber-to-the-home network, which is costing the company billions of dollars to build.

"We're still selling the VoiceWing service," said Link Hoewing, vice president of Internet technology policy for Verizon. "But we're very focused on developing our Fios platform. That's the most important thing we're doing right now."

BellSouth hasn't introduced its own service, and likely won't, since it will soon be acquired by AT&T, which has agreed to pay $67 billion in stock for the local phone company. Late last year BellSouth announced an agreement to resell 8x8's VoIP service to consumers, but what happens to that deal after the merger with AT&T is still a matter of speculation.

At least one of the big phone companies has plans to move aggressively into the VoIP market. Sprint, which is spinning off its local phone business in the next few months, plans a phased rollout of new VoIP services.

But supporters of IP technology at the VON conference say VoIP is only one piece of the entire IP services market. And they're already focusing on the next big thing: video over the Net.

"While we've been watching VoIP mature and go mainstream, we're now seeing another opportunity arise," said Jeff Pulver, co-founder of Vonage and president of Pulver.com, the company putting on the VON conference. "I think that video on the Net will be even bigger than VoIP. I predict that within five years video on the Net will be more disruptive than VoIP has been in the past 10 years."

See more CNET content tagged:
VoIP, BellSouth Corp., IP telephony, AT&T Corp., IP

28 comments

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Verizon FIOS handicaps Vonage
Vonage runs like absolute garbage on FIOS (8Mbps down, 8Mbps up), but when I had Adelphia cable(1.5Mbps down, 768Kbps up), I didn't notice the jitter or disconnects quite as much.

Anyone else agree?
Posted by jamie.p.walsh (288 comments )
Reply Link Flag
Vonage on Time Warner
I have Vonage on my Time Warner, Road Runner cable.
There are NO problems. I am well pleased with my connection when I talk to my daughter in Alaska.

SBC (now ATT) charged me 37 cents a minute to call her. With my Vonage plan I pay $24.99 a month plus tax to talk all I want in the USA and Canada.

I can't figure out why people buy the Time Warner VOIP. In my local area they charge $39.99 plus tax for exactly the same service that I get from Vonage for $24.99 from Vonage. This "discounted" price is only available if you subscribe to all three, VOIP, Cable and Road Runner.
By the way I am not a young Geek. I turned 64 last December.
Posted by MartyC (6 comments )
Reply Link Flag
Timewarner routes calls thorugh MCI network
I was told that Timewarner routes the phone calls through MCI network. So it is not really VOIP.
Posted by Tanjore (322 comments )
Link Flag
Vonage problems
I have vonage on comcast and have had quality problems from day one. Parts of conversations drop out, weak "signal" - tech support tries but not really fixing anything. Seems like I am in the pre digital cell phone days.
Posted by 2lazy2work.com (23 comments )
Reply Link Flag
Stupid newbies pay for Vonage instead of free Skype.
VOIP quality is like walkie talkie right now. So why would anyone want to PAY for it, like I'm hearing from you guys here re. Vonage. Just download Skype for free. PC to PC calls are free; and calls to an outside line is $0.02 per minute anywhere in the world.

Oh wait. If enough tech illiterates gets on Skype, it might get bogged down. I RETRACT what I'd just typed. PLEASE. Use Vonage. PLEASE.
Posted by kamwmail-cnet1 (292 comments )
Reply Link Flag
Vonage gives you the convinience to use your current phone
Vonage gives you the convinience to use your current phone. Vonage also has some kinda 911 service.

Skype phones I have used suck. It is always not comfortable to use skype from computer.

To use skype atleast your computer should be on. Even the phones should be connected to computer. May be things have changed!!!
Posted by Tanjore (322 comments )
Link Flag
Skype is good for Nerd to Nerd Communication
Don't comment on the quality of a service you know nothing about. I'm thrilled with the quality Vonage offers and it is no where near walkie-talkie quality.

I agree with you that Skype is great. The problem is that its only great for Nerd-to-Nerd Communication. If everyone was on broadband and felt like being plugged into their computer to answer a phone call, then Skype will have a glorious future. But, there are 9 billion people on the planet and only a very tiny amount even have computers, let alone internet connection.

It's not being a newbie to buy Vonage; just realistic.
Posted by aharris2615 (2 comments )
Link Flag
Have you actually used vonage?
I don't have Vonage myself because I appreciate the reliability of my local phone service (but not the reliability of my isp) and I have a cell phone that I can make all the long distance calls I need.

That said, I installed Vonage for my girlfriend and in my many hours of calls to her, it sounds every bit as good as regular phone service.

Besides, who wants to have to sit at their computer to talk on the phone?
Posted by mwa423 (78 comments )
Link Flag
Vonage vs. Skype
Vonage is not for newbs, but for people needing a traditional phone service. Personally, I've moved all over the world, and I've taken my same number with me for the last 6 years, and it's (Vonage) been great.
As for Skype, what's the difference between that, MSN, Yahoo, Google, etc. etc. etc. chat service? Nothing. It's a fun chat toy, not a communications service.
If you're having jitter problems with your Vonage, it may be your Vonage device. Stay away from the Linksys routers, try the D-Link stand-alone.
Posted by Lonestaar (1 comment )
Link Flag
VOIP not even close to being there yet
It is a service for those tech enthusiasts that don't mind dropped calls, choppy lines, really bad service but can tell their friends about some cool features and sticking it to the big phone companies rate program. As the old saying goes: you get what you pay for. Bottom line, I've gone back to the old twisted pair technology both at home and the office and I am not likely to do Internet calls anytime soon.
Posted by louisbrouillet (1 comment )
Reply Link Flag
I disagree - my Skype works great
I disagree and I'm hardly a tech enthusiast. I'm an American who works and lives in Africa. The quality of the calls I make home to the US is amazing. No voice delays, hearing your own voice or static. It has cut out maybe two or three times in the last year. Less often than the regular phones lines do. And, its FREE. And hell yeah, I do tell all my friends.
Posted by MMurphey (1 comment )
Link Flag
Changes in consumer behavior
I think it's hilarious that the subject line of this story focuses on consumer behavior. Gee, when will consumers embrace VoIP technology? Answer: when VoIP proves itself to be a reliable means of communication.

Consumers were also slow to adopt cell phones in years past, that is until issues of service quality were addressed.

Consumers will be slow to adopt VoIP as long as it's painfully obvious that you're talking to someone using it. A recent conversation with a client of mine who uses VoIP was like talking into an echo chamber! UGH! He didn't have to tell me his company was using it.... I could figure that out quite easily!

Fix the quality issue and you'll see people flocking to VoIP providers in DROVES!
Posted by dvinedivva (1 comment )
Reply Link Flag
No Free Trial at Vonage
It took Vonage 3 weeks to port my old phone numbers to Vonage. I tried everything to get decent clarity for a week. Vonage blames Comcast and Comcast blames Vonage. I finally gave up and ported my numbers back to my old reliable phone company. Now Vonage says I owe $ 162 for the modem and a disconnect fee. It was supposed to be a free trial. The billing department is helpless.
Posted by larryjenson (8 comments )
Reply Link Flag
Just started using VOIP through cable company
Last week I switched one of our two Verizon landlines to OptimumVoice, which is the VOIP service from my cable provider(Cablevision). I had been getting my tv and broadband from them for a while and they offered the VOIP for $14.95/month provided you keep the other two services. I get unlimited calling in US, Canada and Puerto Rico. It was a 10 minute install--disconnect my Motorola 4200 modem, replace with a Motorola 5120(has 2 phone jacks), connect phone cable to nearest wall jack and done. Back feeds all the other jacks in the house. I still have my original Verizon land line as a second line. No problems at all. We also have Verizon FIOS in our area but no reason to use them yet (hopefully the competition will keep prices in check)

Ken
Posted by kjharris (8 comments )
Reply Link Flag
The big problem is "no naked broadband"
We use DirecTV for television and Verizon for phone and DSL. We also use OneSuite.com for long distance. ($0.029 per minute, any time any where in the lower 48 and Alaska.)
After trying Charter Digital Cable for a month, I dropped it because the TV picture was so bad compared to satellite. If I could stand the loss of quality in TV, I would drop Verizon altogether and go with cable but that's not likely any time soon. Satellite broadband is too expensive and unreliable in our area, so there's no way I'm going to swith to that service. As long as I have to keep paying for Verizon local service in order to have broadband, no naked broadband means no VoIP for me.
I think this situation may be affecting many people in the same way, thereby delaying the acceptance of VoIP.
Posted by El Kabong (100 comments )
Reply Link Flag
VOIP And The Masses
There's a lot of things to consider as to why there are QoS issues, which is why people tend to stay away from it.

First, how many ISPs want you to use their VOIP service? And how would they "force" you to use it? Cripple the other services, reduce routing priority to third party servers, and sometimes just outright blocking access.

Then, mix that with broadband requiring other services, its tough on consumers. They tell us its to "subsidize" the cost, but that is just a line. In the end, you pay more for "subsidized" hardware and connections.

Even bellsouth has managed to block the "no phone line required" DSL providers by using proprietary SLAMs, and in turn charge you $5 to $15 more for access depending on the service you get in comparison to the other providers.

This is where fighting the restrictive practices is important. Remove the bundling requirements, remove the proprietary crap, and make it unlawful to block access to other companies' services. This way, I can get my internet connection my way, use my own phone service, and not run into the crap. And with proper configuration for routing, no problems.

Right now, I am going through Earthlink, with Vonage. People tell me its clearer than my line with Bellsouth used to be. Then again, I managed to track down the few problems and screamed at them to fix em.

now its golden, but it should be this way from the start for everyone. Until that happens, its going to be a limited market.
Posted by FusedAndCondazed (26 comments )
Reply Link Flag
Probably in the days to come
"Nothing is permanent except change", is most applicable to these technological developments. It is only about the time period of change and adoption. VOIP is certainly making its presence felt, probably to match and eliminate the general telephony might take years or a decade. Yet VOIP has begun its journey and its progress is good.
<a class="jive-link-external" href="http://www.buckleupnow.om" target="_newWindow">http://www.buckleupnow.om</a>
Posted by itispals (56 comments )
Reply Link Flag
VoIP or VoW ?
The truth is that the digital-pots business model is absolutely the same of traditional phone companies and doesn't add real new value perceived by the end user.

www.lucafiligheddu.com
Posted by filosnet (1 comment )
Reply Link Flag
glub..glub..glub
Whats that sound? Are you talking underwater? NO.....its the sound people make when they talk on Vonage phone service.
Posted by larryjenson (8 comments )
Reply Link Flag
glub..glub..glub
Whats that sound? Are you talking underwater? NO.....its the sound people make when they talk on Vonage phone service.
Posted by larryjenson (8 comments )
Reply Link Flag
I'm sorry
I really feel sorry that you signed up for Vonage. i did the same mistake. Never worked in my case and still have to pay and pay and pay...
Posted by Aman157 (2 comments )
Reply Link Flag
.....
Glubb? That would have been an improvement for me if the line would have made "glubb" or any noise. Signed up and never received any service. Still go to pay, pay and pay.
Whoever reads this, stay away from it!

Andy
Posted by Aman157 (2 comments )
Reply Link Flag
Vonage and Comcast
You know the only 2 days I had quality problems with vonage, I had recieved 2 calls and 1 Mail from comcast (My internet provider) wanting me to switch to there more expensive one, when I told Comcast I would switch my phone and internet to sbc before I did that, all my problems went away.
Posted by jonjra (2 comments )
Reply Link Flag
VIOP is here
Skype's ( <a class="jive-link-external" href="http://www.highspeedsat.com/skype.htm" target="_newWindow">http://www.highspeedsat.com/skype.htm</a> ) free PC-to-PC calling service has also gotten significant traction, with more than 75 million subscribers. Internet Voice, also known as Voice over Internet Protocol (VoIP), is a technology that allows you to make telephone calls using a broadband Internet connection instead of a regular (or analog) phone line. Some services using VoIP may only allow you to call other people using the same service, but others may allow you to call anyone who has a telephone number ( <a class="jive-link-external" href="http://www.highspeedsat.com/voip_faq.htm" target="_newWindow">http://www.highspeedsat.com/voip_faq.htm</a> ) - including local, long distance, mobile, and international numbers. Also, while some services only work over your computer or a special VoIP phone ( <a class="jive-link-external" href="http://www.highspeedsat.com/voip-phone.htm" target="_newWindow">http://www.highspeedsat.com/voip-phone.htm</a> ), other services allow you to use a traditional phone through an adaptor.
Posted by jordan357 (19 comments )
Reply Link Flag
CLASS ACTION LAWSUIT
There have been two class action lawsuits from investors and another one from customers

<a class="jive-link-external" href="http://www.consumeraffairs.com/news04/2007/03/vonage_class_action.html" target="_newWindow">http://www.consumeraffairs.com/news04/2007/03/vonage_class_action.html</a>
Posted by ENCHANTEDMERMAID (4 comments )
Reply Link Flag
 

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