VoIP - A Threat to the Industry?

VoIP stands for "Voice over Internet Protocol" and it's going to change the way you think about making long distance phone calls. This technology turns analog audio signals (like the sounds you hear when talking on your regular telephone) into a digital signal (which is then transmitted over the Internet.)

So why is VoIP a threat to communications industry? Because it means that by getting your hands on some of the free software that's readily available, you can totally bypass your telephone company, and start making long distance phone calls for free!

This revolutionary technology has the ability to totally change the phone system of the entire world! Maybe you've seen television commercials for one of the pioneers of VoIP - Vonage. It brands itself as the "broadband telephone company", and offers enticing perks to customers who switch to its service, like low-cost 800 numbers, very cheap international rates (fees are waived from the U.S. to Canada, and how about .03 cents a minute to call Paris?)

But Vonage isn't the only company who is interested. AT&T is setting up VoIP calling in several areas of the U.S. and there are other major players on the scene as well, such as Skype, who is relying on viral advertising to get the word out.

One of the really interesting thing about VoIP is that there's not just one way to make a call. There are three:
1) ATA (analog telephone adapter) - is the most commonly used VoIP method right now. Using the ATA, you connect your regular telephone to your computer or Internet connection. The ATA is an analog-to-digital converter and it takes the analog signal from your phone and converts it into digital data and transmits it over the Internet.

This is how Vonage does it, and AT&T 's CallVantage will be doing it. The ATA is free with their services. And using an ATA is so simple that anyone can do it. Open the box, plug the cable from your phone into the ATA instead of the wall socket, and you're set. Depending on your computer, and where you live, and what type of Internet connection you have, you might have to also install the software onto your computer, but even my grandmother knows how to do that these days.

2) IP Phones - They look just like the phones we are used to. They have a handset, cradles and buttons. But IP phones use an RJ-45 Ethernet connector instead of the standard RJ-11 phone connectors. They connect directly to your router and all the hardware and software is already built inside to handle your IP calls. Look for Wi-Fi IP phones to be available in the near future, which will allow you to make VoIP calls from any Wi-Fi spot. (Can you see the power of that? Just take your IP phone with you when you travel, and stop in at any Internet café, hotel or other location where you can use your Wi-Fi laptop, and you can "phone home" wherever home happens to be!

3) Computer-to-Computer. Arguably the easiest way to use VoIP. Not only do you not have to pay for long distance calls, there are several companies that are offering free or low-cost software right now for you to make use of the VoIP technology. All you need is the software, a microphone, speakers a sound card and a broadband or cable DSL Internet connection, and your loved ones sound as if they're in the next room. And, except for your normal monthly ISP fee, there is no charge for any computer- to-computer call.

Most likely, you have been using the VoIP technology without even being aware of it, any time you've made a long distance telephone call recently. Many of the major phone companies are already using VoIP technology to reduce their own bandwidth. It's a simple matter of routing thousands of phone calls through a circuit switch and into an IP gateway. Once received on the other side of the gateway, the calls are decompressed, reassembled and routed back to a local circuit switch.

IP telephony is the wave of the future. It makes sense in terms of ROI, from both an economic and infrastructure point of view. It may take some time, but eventually all of the current circuit-switched networks that are in use today will be replaced by packet-switching technology. More and more businesses are already installing VoIP systems. And as the technology makes our way into our everyday language our lives, and our homes, it will continue to grow in popularity.

Forrester Research predicted that nearly 5 million U.S. households will have VoIP phone service by the end of this year. The two biggest advantages for home users so far are price and flexibility.

Currently, most VoIP phone companies offer plans similar to that of cell-phone companies - what are commonly called "minute-rate" plans for as little as $30 a month. And as with cell-phone plans, you can also get unlimited plans for around $79 a month. With the elimination of long-distances charges, unregulated charges, and all the freebies that come standard with your VoIP service, it can actually amount to a significant savings for you. For example, you may be paying extra for features like: call waiting, 3 way calling, call forwarding, caller I.D., repeat dial & last call return

With VoIP, they come standard. And then there are some advanced features that make VoIP something worth looking into. With some carriers, you can set up call-filtering options, and actually have some control over how calls from certain numbers are handled. For example, you can: forward the call to a particular number, send the call directly to voicemail, give the caller a busy signal, play a "not in service" message and send the caller to a funny rejection hotline

With most VoIP services, you can also check your voice mail on the Internet, or attach messages to an email that is sent directly to your computer or handheld. (By the way, if you're interested in any of these features, not all VoIP companies are created equal, so do a little shopping around first, because prices and services do vary).

The second benefit that makes VoIP so attractive for home and small business users is the flexibility. With VoIP you can make a call anywhere you can get broadband connectivity. Since the IP phones or ATAs broadcast information over the Internet, they can be administered by any provider. For business travelers, this means they can take their phone or ATA with them on the road, and never miss a home phone call!

By using a softphone, (which is client software that loads your VoIP service onto your desktop or laptop), you can make calls from your laptop anywhere in the broadband-connected world, with just a headset and microphone.

We could easily see here that tremendous opportunities also abound for the industry participants. It just depends on how you see VoIP a threat or an opportunity.