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Personal Finance
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Are you ready for a Net phone?
Telephones are evolving into Internet gizmos. Will making the switch save you money?
August 19, 2004: 10:05 AM EDT
By Les Christie CNN/Money contributing writer

NEW YORK (CNN/Money) - Cable TV giant Comcast announced Wednesday that it plans to offer Internet-based phone service to its more than 20 million households by the end of 2005.

VoIPs v. Analog phone service
Only consumers with broadband can access public Internet VoIPs.
Type of service Pros Cons 
Public Internet VoIPs Price and portability Reliability and vulnerability to hacking 
Private network VoIPs More secure, consistent audio quality Less portable 
Conventional phone lines Reliability and high sound quality Price and functionality 
 Source:  

The news caused a flurry of interest in the burgeoning business of Internet telephony. It may also soon lead consumers to ask just what Internet telephony is and whether they should get in on it.

Voice over Internet protocol (VoIP) sends speech over the Internet, bypassing traditional telephone networks, and thus avoiding their toll charges.

Vonage -- the largest of the companies providing the service, with more than 160,000 customers -- has residential plans starting at $14.99 a month for 500 minutes of local, regional, and long distance calls to the United States and Canada. Its $29.99 plan gives customers unlimited U.S. and Canadian calls.

To use it, you need broadband, but for 22 million broadband users, that's not a problem. Otherwise, it's simple to get started.

With Vonage's service, the company sends you a CD case-sized adaptor that plugs into your high-speed modem. You then hook up your phone line to the adaptor and you're good to go.

You use your regular old phone to place and receive calls -- the only difference is how calls are routed.

Customers can keep their old phone numbers by filling out a form and sending Vonage a copy of their phone bill, according to Mitch Slepian, a spokesman for the company. (Until the "porting" of the number takes effect, customers may need a temporary number.)

Pros

VoIP service comes with every phone service imaginable: call waiting, voice mail, forwarding, and caller ID are all written into the software package.

It offers other capabilities, like adding local numbers for incoming calls. "You can get a hometown phone number so your relatives can dial a local number, and it's routed to your phone," explains Louis Holder, Vonage's executive vice president for product development. That makes Mom's daily call to you free for her.

Then there's the portability factor. Hit a button on your computer and calls transfer automatically to your cellphone. You can route calls from home to your office, or to both your cell and your office and pick up either one.

Take the adaptor with you when you travel and plug it in wherever you have broadband access. Your phone thinks it's back home. You can be in Tokyo and call anywhere in the United States or Canada.

As for transmission quality, Holder asserts that VoIP is comparable to conventional phones. (This reporter speaking to him recently over a VoIP system found his voice came in loud and clear, no dropouts or choppiness.)

Thomas Dunkerley, the IT communications manager for the Seattle Times, spearheaded a changeover to a VoIP system at the news company. He's extremely satisfied with the results. "We haven't had a switch go out in the two-and-a-half years we've had the system," he says, "and the sound quality is as good or better."

Getting in on the act

Vonage says its subscriber base has nearly doubled this year. Now, some major players are entering the market.

Comcast has begun trial service runs outside of Philadelphia, in Indianapolis, and will soon add Springfield, Mass. Unlike Vonage, which routes its signals over public Internet routes, Comcast's service will be through its own network, according to company spokesman Bob Smith. This will enable the company to provide its customers "significant quality assurance," he says. But going through a private network means portability is more limited -- there's no adaptor to take with you traveling. A Comcast unlimited call plan costs $39.95 a month and it does the installation for you.

The Bells are also weighing in. Verizon is launching a VoIP system, probably by early summer. It will initially route calls over the public Internet, according to company spokesman John Vincenzo, but will gradually switch over to its own network.

Time Warner Cable, a branch of CNN/Money's parent company, has already launched in several cities. Its unlimited service also costs $39.95, and the company installs the service.

Cons

Although VoIP sounds like a great breakthrough: good quality, great services, low cost, there's gotta be some drawbacks.

The phone companies don't seem to think so; John Vincenzo says Verizon is embracing the technology. "It's the wave of the future," he claims.

Still, there may be some bumps in the road. One possible issue is reliability. Has your broadband service been as steady, day in and day out, as your telephone service? If Internet service falters, bye-bye dial tone.

Then there's the system's vulnerability to attack. When voice is transmitted using Internet protocols, it relies on the same fire walls, intrusion detection systems, and partition safeguards as data, and is just as secure or vulnerable. Frequent denials of service problems would surely dampen the enthusiasm of early adaptors for VoIP.

And what about spam, or in this case, Vam -- voice spam. Imagine getting called every minute and a half by someone selling you a get-rich scheme or a date with Judy.

YOUR E-MAIL ALERTS
Comcast
VOIP
Internet Service Providers
Computing and Information Technology

Voice spam will become more common, says Ed Mier of Miercom, a leading network consultancy and product test center, but it will not keep your phone ringing. It will arrive just like spam in neat little packets on your email screen that you can delete without listening to.

Miercom has just released a special report on VoIP security in which the company sicced a team of hackers for three days around the clock on Internet protocol telephony systems. Mier says that Cisco's system came though without a scratch. "My hacker team could not break into it,'" he says, leading him to conclude that it is possible to make a VoIP system "reasonably secure."

Cautious consumers may wait for these issues to resolve, but techies and first movers are already jumping on the bandwagon. And unlike many young technologies, where early adaptors often pay through the nose to be in the vanguard, VoIP seems to be rewarding them monetarily for switching to emerging technology.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.