Bit by bit, people are getting hip to VoIP

While Schuller knows what VoIP is, a lot of people don’t. In a recent Harris poll commissioned by Verizon, 20 percent of respondents thought VoIP was a hybrid automobile from Europe while 10 percent thought it was a low-carb vodka.

Overall, 87 percent of those responding to the poll didn’t know VoIP is a technology that allows phone calls to be carried over the Internet rather than a traditional telephone network.

But VoIP is gaining in recognition. Only 4 percent of Americans knew what the acronym meant last year, said Michelle Swittenberg, executive director of consumer VoIP for Verizon, which, like other traditional telephone companies, is moving rapidly to offer Internet phone service. "VoIP is growing exponentially. Forrester Research looks for VoIP to have 20 percent (of the telephone market) by 2010," she said.

The numbers range when it comes to predicting Internet telephone use.

The number of residential VoIP subscribers worldwide is predicted to rise to 197.2 million in 2010, up from 4.8 million in 2004. The residential segment is set to be the fastest-growing portion of the VoIP equipment market, with revenue expanding to $10.6 billion in 2010, up 650 percent from $1.4 billion in 2004, according to iSuppli, a research firm in El Segundo, Calif.

The number of residential Internet phone subscribers in the United States is expected to grow from 3 million in 2005 to 27 million by 2009, according to the IDC research company in Framingham, Mass.

Lower rates are attracting customers to Internet phone plans, but carriers will have to go beyond low prices to earn a market share. Companies will have to educate consumers about features and functions of services to avoid a pricing war, noted IDC.

INCREASING CHOICES

The first thing consumers must learn about VoIP is that just because the telephone calls are carried over the Internet doesn’t mean you have to sit in front of your computer to talk to Aunt Bessie.

A small adapter allows users - either business or residential - to use existing telephones with the calls traveling over the Internet instead of standard phone lines.

The VoIP service works with both DSL and cable-modem broadband connections, with subscribers able to call anywhere in the world.

There’s a sense of inevitability about VoIP - that it’s "the next big thing" whose time is coming fast.

"VoIP is the direction in which the market is heading and those service providers that continue to drag their feet will be left behind," said Diane Myers of Telecommunications magazine.

Don’t be fooled by the fact folks may confuse VoIP with a car or drink, experts say. "Right now, VoIP, while widely heralded, is not widely adopted. In 2005, we’ll see more and more people abandoning traditional phone service for a combination of Internet-based telephony and a cell phone. By 2015, Costco won’t even carry traditional phones," said William Grosso, vice president of engineering for San Francisco-based technology company Echopass.

Widespread adoption of broadband services has spurred VoIP, said Richard Evans, marketing manager for Intel Corp. "Within the past three years, worldwide broadband (cable and DSL) subscribers have grown from 91 million to 175 million, according to (research firm) Infonetics," he said.

"By 2008 the Infonetics forecast grows to 254 million subscribers," said Evans, adding that increased power and availability of personal computers have also helped put VoIP into competition with traditional phone service.

VoIP is not perfect. "There are still imperfections in (VoIP) service quality from time to time such as audio delay and dropped calls. Most phone users in the United States and in most industrialized nations take reliable phone service for granted. Can VoIP service be regarded as equally reliable? What happens to VoIP service when the power goes out?" said Evans.

That’s a concern of Schuller at OmniLEC, who has decided against offering VoIP to businesses. "We don’t think it’s a good solution for business. It’s fine for residential use but for businesses, there are problems," he said.

"I wouldn’t recommend (VoIP) to any business where there are multiple phone lines. If your Internet connection goes out, you’re out of business for three or four hours. If you’re a gas station running credit cards, do you want to take that risk?" asked Schuller.

One of the more publicized deficiencies of VoIP has been 911 emergency service. The problem in delivering 911 calls via VoIP is that neither the phone number nor the computer - sometimes a laptop - corresponds to a fixed address. That’s a problem since traditional 911 calls refer back to a caller’s address. While VoIP providers offering 911 access often require users to supply their current locations, some firms are coming up with more automated technologies.

But even after solving 911 problems, Internet telephone service can’t rely on just being less expensive than traditional telephone service, analysts say.

"VoIP must prove it is more than just a cheap replacement for (traditional) service," said William Stofega, IDC senior analyst. "To do this, carriers will need to offer services that are compelling and affordable."

Others echo the need for VoIP benefits that go beyond price.

"The residential VoIP market is moving beyond early adopter to mass market," Frost & Sullivan analyst Lynda Starr said in an interview with EnterpriseVoIPplanet.com. "Price breaks alone will not satisfy these consumers. They need value, including customer service."

Big telephone companies are not waiting to jump on the VoIP bandwagon. While Verizon offers VoiceWing, AT&T provides CallVantager service.

"Leading telcos have recognized they must move into the IP world quickly to survive. The good news is that they own much of the infrastructure and can afford to buy the expertise required. Also, replacing their old multi-billion-dollar PSTN investments with multi-million IP replacements won’t be as traumatic as they fear," said Peter Cochrane, co-founder of ConceptLabs.

The Internet makes sense as a telephone network, said David Milman, CEO of Rescuecom.biz, a national computer repair company. "VoIP is big. There are some quality issues but once these are solved, look for huge growth. In 20 to 30 years, all communications will be over the Internet," he said. "There’s a reason they call it the Web. The Internet is not set up as a hub and spoke like the telephone system. There’s no limit to how wide those pipes can get."

Technology also needs time to develop, he said. "Refrigerators in the early 20th century required you to lug a block of ice up three flights of stairs. We’re still early in the computer process. In 30 years, you’ll see a more mature industry."