- "Law enforcement and intelligence agencies are
beginning
to comprehend what VoIP will do to their wiretap efforts, and they aren't
happy. Having spent $500 million to be able to tap almost any telephone
line anywhere right from a computer screen, the FBI will find it hasn't
a clue where SIP phone calls are coming from or going to."
-
- The only thing I have in common with Howard Stern (other
than the fact that we are both mammals) is that we both use Internet
telephone
service from a company called Vonage. The Vonage service allows Howard
and me to make, for $39.99 per month, unlimited phone calls anywhere in
the U.S. and Canada and darned cheap phone calls to anywhere else in the
world. It uses real phones and real phone numbers and is just like the
service you're used to, except that calls are routed over the Internet
rather than over a telephone company's network. Vonage is aimed at people
with broadband Internet connections (primarily DSL or a cable modem) and
uses a technology called voice over Internet protocol (VoIP). And it could
kill your phone company.
-
- Here is what I get for my $39.99. I get a little box
from Cisco Systems that plugs into the Ethernet switch on my home network,
and into that I plug a telephone. I use Vonage as line three on my
four-line
Panasonic wireless phone system, so line three (the free one) is available
on all six extension phones. If that sounds like a typical small-business
setup, then you must have visited my house. The Vonage line replaces my
old office phone line, saving me more on my SBC bill than I pay Vonage
and making the service effectively free. (Lines one and two are for regular
phone lines--a hedge.)
-
- I have a local phone number in my 707 area code, but
I could have chosen a local phone number in a number of other area codes,
including the oh-so-desirable 212 (just in case I wanted to pretend to
have a New York office). And for editors calling that 212 number from their
Midtown cubicles, it would be a local call.
-
- If I decide I want to change my area code I can get a
new number in a new city for a small one-time fee. If I want a local phone
number for the same phone in another area code in addition to my own,
that's
an extra $4.99 per month per number. I can live without those things, but
I do have, for $4.99 a month, a toll-free number. I also pay $9.99 per
month to activate the second Ethernet port on the Cisco box for a fax line.
That line goes not only to my fax machine but also to the Panasonic phone
system, so lines three and four are VoIP.
-
- For about $55 per month, then, I have a phone line with
unlimited local and long-distance calls, a fax line with 250 free minutes
per month, which is a lot of faxing, and a toll-free number on which my
stingy relatives can call me. And all this, of course, includes voice mail,
caller ID, call waiting, call forwarding, etc. I can even get my voice-mail
messages as audio files attached to e-mails sent to me anywhere in the
world.
-
- But wait, there's more! I can unplug my Cisco box in
California and take it to the little house we have in Charleston, S.C.,
where every year I try to perfect my heat rash. I plug it into the
Charleston
DSL line and my business line and fax line ring there instead of in
California.
I could do the same thing on a trip to Japan, too, and soon even that won't
be necessary, because I'll be able to replace the Cisco box with software
on my notebook computer--so my office line will ring at my hotel in Tokyo.
I can use a computer headset to take the call or, even better, by next
year I'll be able to plug a special phone into the USB port on my notebook.
I completely bypass the hotel phone system. Not only am I saving on hotel
charges, but my virtual phone doesn't know it's in Japan at all, so all
my calls back to the U.S. are free. Vonage founder Jeffrey Citron also
started the computerized stock-trading system Island ECN--and sold it for
half a billion dollars.
-
- If your business is bigger than mine is, an affiliate
of Vonage called Vontek can route the Internet phone right into your phone
switch. It can even set up a virtual PBX so people working at home can
all have extensions on the office phone systems no matter where they are
in the world as long as they have broadband Internet service. I might never
get out of bed.
-
- VoIP phone service has been around for years, but until
recently the voice quality just wasn't very good. Now, because computing
power is cheaper and Internet connections are faster, it is hard to tell
a VoIP phone from a regular phone--until you get the bill.
-
- One technical feature that is driving VoIP phone service
is use of the session initiation protocol, or SIP. SIP comes from the world
of instant messaging, where it is used to connect your teenage daughter
to all of her online friends when she is supposed to be doing homework.
What SIP does for VoIP is create peer-to-peer telephone connections
anywhere
in the world. In other words, the phones talk to each other without the
need for any kind of phone switch in the middle. It is a phone system
without
a phone company, and the implications of that change are profound (as we'll
see).
-
- Vonage is not the only VoIP game in town, just the most
visible right now. Founded by Jeffrey Citron, who started the computerized
stock trading system Island ECN, then sold it to Instinet for $503 million,
Vonage is spending more money and getting more exposure than its
competitors.
But those competitors are worth considering, too. At www.iconnecthere.com,
for example, you can get a local number for your VoIP phone for only $9.95
per month. Another service, called Free World Dialup, costs nothing--but
offers a lot less.
-
- The strongest competitor for Vonage on a
feature-for-feature
basis is Packet8 from 8X8, a California company that makes most of its
money in the videoconferencing business. Packet8 does pretty much what
Vonage does, but Packet8 just dropped its price for unlimited domestic
calling to $19.95 per month. Can you say "price war"?
-
- Of course, this is an emerging nightmare for local and
long-distance phone companies. Some of them are responding with their own
unlimited calling plans, but they aren't quite so full-featured as Vonage's
or Packet8's. You can't take your phone with you, for example.
-
- There is no risk of everyone swooping out and buying
VoIP phones and eliminating the plain old telephone service (POTS)
overnight.
However, in the next five years there is going to be some serious worry
at the traditional phone companies about how they will make money. All
the investment in the late '90s in Internet backbone construction (much
of it by companies now in bankruptcy) is starting to look as if it might
be good for something other than pornography and trading pirated music.
"Big companies, which are traditionally where phones cost the most,
will be the first to broadly adopt VoIP," predicts John Todd, a VoIP
consultant. "Even the slightest perception that VoIP is less reliable
than normal services will cause companies to hedge their bets. However,
when you can pay 30% of what you're paying now, very often there is
considerable
interest in a new technology when the ROI turns positive in the first four
months. For some c! ompanies that are voice-intensive, this can mean the
difference between a humdrum year and a strong EBITDA positive, which perks
up everyone's ears these days."
-
- The local phone companies, or incumbent local exchange
carriers, will do whatever they can to slow the growth of VoIP, but the
fact that the phone traffic is on the Internet will make VoIP impossible
to stop. Vonage, for example, isn't a phone company at all in the eyes
of the Federal Communications Commission. Vonage, based in Edison, N.J.,
works with competitive local exchange carriers (not the local phone
company)
to acquire local phone numbers and interconnects in several states. You
could too. There is plenty of room for more VoIP phone companies, and the
cost of entry is low. For example, much of the guts of a VoIP phone system
can be built on a Linux application called Asterisk, which is free.
(Asterisk
is interesting for reasons beyond its low price. It is an Open Source
application
that supports a voice compression scheme called G.729, which can cram four
VoIP phone calls into the bandwidth normally required for one.)
-
- VoIP will have a big social and political effect, too,
especially in other countries. Blocking SIP ports will become a way of
life for many less-developed nations, as national phone monopolies struggle
to keep their international long-distance cash cows alive. Law enforcement
and intelligence agencies are beginning to comprehend what VoIP will do
to their wiretap efforts, and they aren't happy. Having spent $500 million
to be able to tap almost any telephone line anywhere right from a computer
screen, the FBI will find it hasn't a clue where SIP phone calls are coming
from or going to. Tony Soprano would have to have one. Howard Stern already
does.
-
- - Contributor Robert X. Cringely is a writer,
broadcaster,
and entrepreneur specializing in technology. Contact him at
cringely@inc.com
-
- Content provided by Inc.com Copyright 2003 G+J USA
Publishing
-
- http://smallbusiness.yahoo.com/bzinfo/resources/articles/article.php?id=
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