August 03

In the past month, I've done my part to undermine a monopoly. How? By making phone calls.

OK, it's a little more complicated than that. But my move into what's called "voice over Internet Protocol" (VoIP) -- making voice calls on the Net as opposed to the long-established circuit-switched system -- is a lot better for me than for the traditional phone companies whose services I've replaced.

Previously, I had two phone lines into my house, each costing almost $20 a month for the dial tone plus local calls. One of those lines was split to also handle digital subscriber line (DSL) broadband data access. In addition, I paid a long-distance carrier per-minute rates and a monthly connection charge.

Today I have one phone line, split into voice and DSL services. But I also have a new box attached to the network that links my phone to the Internet.

The system converts voice into Internet data packets -- little packages of data that go to and fro on the Net -- and vice versa. For $20 a month, the box gives me unlimited calls inside the United States and Canada. International calls are extra, but at laughably low rates such as 5 cents a minute to Japan and 12 cents a minute to South Africa.

So, for the cost of the second line, I'm getting what amounts to free U.S. and Canadian calling and lower international fees as well. This is a good deal for me by any measure -- though not so good a deal for SBC, which just lost a second line, or for MCI, which lost me as a long-distance customer. (I was getting ready to ditch MCI in any event, given that company's recent history of sleazy corporate behavior.)

I'd been considering this switch for some time. VoIP has been making technical progress, although the sound quality is often more like a cell phone than a land line and it's somewhat less reliable.

Several companies have emerged to serve what looks more and more like a huge market -- and, as you can see, at highly competitive prices.

The best-known provider of this kind of service is Vonage, a New Jersey company that has signed up tens of thousands of customers. Some of my techie friends swear by it; Mike Langberg, my tech-columnist colleague, was less impressed when he tried it earlier this year.

I signed up with Packet8, a unit of 8x8 Inc. in Santa Clara. It was cheaper, for one thing. Vonage's roughly equivalent service is about twice as much, though the company also offers a $25-a-month rate that limits the long-distance minutes. Vonage also offers features that Packet8 doesn't, such as 911 calling. I expect the two companies -- and others entering the field -- to play leapfrog.

The other reason I picked Packet8 was its terms of service, which allow business use of the phone, a necessity in my home office.

My Packet8 service is hardly perfect. Some calls don't go through, giving me a fast-busy signal that may mean the network is busy or the phone I'm calling is busy. Voice quality is not as good as on the Bell networks, and there seem to be tiny delays -- known as latency in the communications business -- on some calls, especially overseas. If the DSL goes down, say in a power failure, so does the VoIP, which is one reason why I kept my regular line.

But these are trade-offs I'll live with, and so will lots of other people. After all, we put up with lower voice quality and outrageous frequency of dropped calls with our mobile phones because we consider the mobility so useful. Similarly, we'll put up with redialing and occasional voice blips using VoIP to get much lower costs.

I'm planning to take the Packet8 box plus some related gear the next time I stay in a hotel that has high-speed data lines. Connecting it will take some doing, most likely, because hotel broadband systems generally require customers to sign in from their laptop computers, which creates configuration problems for using a Net phone like this one.

But the prospect of avoiding the extortionate hotel-room phone charges is tantalizing. I'll let you know how it goes.

Home and away, voice over IP is changing the dynamics of communications. Barring some political interference by the old-line carriers, we're in the early stages of a tectonic shift. Get ready.

Much like the remote-printer service (www.tpc.int) that used the
Internet to cheaply route faxes around the world, Free World Dialup
(FWD -- www.fwdnet.net) is making a free VoIP network that any SIP
capable device (MS Messenger running under Windows included, Cisco
ATA186, 7960, SJPhone etc.) can use to take advantage of the Internet
to make voice calls. End-users use FWD as a "directory" and we've
already seen people, on their own-initiative, connect PSTN gateways
for their local areas to FWD and offer it as a *FREE* service to the
entire community.

Although it will be a while coming, the real shift will be away from
the PSTN for most long-distance calls. ICH (www.iconnecthere.com),
which competes with Vonage and Packet8 already has free
interoperability with FWD and I expect Vonage will too, soon.

So, Dan, even if you don't get your Packet8 hardware working in that
hotel room, make sure you have a SIP softphone (MS Messenger, X-lite,
SJPhone etc.) installed on your laptop and sign up for a a free FWD
account and make free calls to 8XX tollfree numbers in the US, the UK
or the Netherlands or to any one of the 40,000+ FWD people scattered
around the world (I've spoken to people from New Zealand, Australia,
Japan, Taiwan, India, Israel, France, the UK, Sweden, Spain, Mexico
and various US states over my DSL line and the quality has been
excellent in most cases, better than regular PSTN long-distance calls!

Try it, you'll like it! (Call 55555 and get a FWD volunteer -- it
rings simultaneously at 12-15 different phones around the world and
someone awake will pick it up) -- feel free to call me, I'm in
California, FWD 14818.
-Adi
Posted by: R.P. Aditya on August 3, 2003 12:24 PM

But Dan its even better ... If you go to http://www.iptel.org you can down load a fully functional open source SIP server ( the IETF developed protocol that both Vonage, FWD and Microsoft Windows Messenger uses ) and you can be your own phone company ...just like Vonage and Jeff Pulver's Free World Dial up!!!
Posted by: Richard Shockey on August 3, 2003 12:29 PM

Anyone know why the Cisco ATA box Vonage is sending out will not connect to my iBook, OS X 10.2.6, via a reverse cable? Having the same problem on a Titanium too. Testing shows the Macs to be serving IP addresses, but the Cisco ATA 186 is not recogning DHCP services from the Macs. All insights welcome.

Thanks,
jock Gill
Posted by: Jock Gill on August 3, 2003 12:42 PM

Don't the mac's automatically crossover network connections? you should just need a regular cable.
Posted by: suppafly on August 3, 2003 01:07 PM

Dan, i'm right there with you -- but from Prague, Czech Republic, 9 time zones away... ;)

I signed up with Vonage some months ago just before a friend came to visit with the cisco ata186 box.

i plugged it into my home LAN and viola, i'm now calling friends and family back in the ol' sf bay area with impunity for $25/month with a local 650 area code # in palo alto.

before i was paying 10 CZK (35 cents US) per minute using my GSM providers VoIP "by-pass" service. if i would have used non-VoIP/standard direct-dial it woulda cost 31 CZK ($1.08 US).

i believe this is an instance of Disruptive Technology at its finest.

i wonder if the telco's will have a "music industry/RIAA" type of response or try and re-invent themselves to successfully compete in this arena?

geoff
Posted by: the terminal of Geoff Goodfellow on August 3, 2003 01:46 PM

Dan, Yahoo! BB (BroadBand) here in Japan is disrupting the market by selling it's DSL service very cheaply (10Mb/sec for about $25/mo.) along with a very inexpensive domestic VoIP service. More people seem to be roped in via the VoIP promises than the broadband, but between those two features, people get hooked.

I'm using a US-based VoIP service here in Tokyo with great success. It is a local call for me to call anywhere in the US from Tokyo, and it is a local call for anyone in the US to call me in Japan as well. It really does not get cheaper than that.

International/travel use for VoIP is really the killer app. The hundreds of different phone companies and governmental organizations around the world who charge various rates for international dialing will be bumping up against the humble IP packet as soon as broadband is prevalent in their respective nations. All of that obscurity in those international agreements essentially disappear with Internet telephony.

Perhaps the place to watch the foremost trends in Internet telephone usage/pricing is South Korea, as they have something like 70% broadband usage.

I can also recommend the "VoIP forum" at dslreports.com for a good place to hear about various services and customer commentary on Internet telephony.
Posted by: Gen Kanai on August 3, 2003 04:16 PM

IP telephone is getting pretty common here in Japan. Yahoo BB offers it with a 2-months free trial. You can hardly avoid running into Yahoo hucksters at every train station shoving a modem into your hands. All domestic calls are the same price (7.5 yen per 3 minutes), and overseas calls are cheap (e.g., 7.5 yen per minute to the U.S.). Other providers have jumped on the bandwagon (such as Fusion).

For "911" calls (110 over here) and other calls that can't be handled by IP, the modem just automatically and transparently switches over to NTT's phone line--you wouldn't know it unless you were looking at the LEDs on the modem.

The quality of the service is pretty good--definitely better than the typical Japanese cell phone connection. I've had a couple of instances of echos and static that the called party has complained of (but which I couldn't hear on my end). Faxes work fine most of the time. There is a way to force a regular phone connection if you want to bypass IP.
Posted by: Debbie Trapani on August 3, 2003 04:18 PM

Yes, I did a column in May talking about Softbank/Yahoo's VoIP service and how that was looking like a harbinger for everyone's future. I like the automatic switch to the NTT 911 system.
Posted by: Dan Gillmor on August 3, 2003 05:06 PM

Dan, I can't access the website. I think you have the correct URL but the site is down. Perhaps you fed them too much traffic with your article? :-)
Posted by: Ken Kho on August 3, 2003 06:35 PM

There's a packet8 blog at http://packet8.blogspot.com/
It says, "What I find really interesting is that Packet8 decided to keep its prices 50% lower than that of Vonage in order to get customers. But they are not putting much money into marketing as a result."
Posted by: Vishi on August 3, 2003 09:34 PM

Dan, actually the leapfrogging has already begun. Packet8 and Vonage are playing catch up to a third company -- VoicePulse. Their price is mid-range (except for the cheap per-minute plan, $7.99) but their features are unbelievable. I have my phone setup so when my wife calls, it always forwards to my cell phone, but when her brother calls, it goes straight to voicemail. (Don't tell her that though!) Not to mention my Caller-ID works (didn't on Vonage or P8), I can block telemarketers with a "TeleZapper"-like feature, distinctive ringing, etc etc.

And Adi has a great point with the softphone idea. VoicePulse is already connected to FWD so my VP phone number can be forwarded to my FWD account which then rings on my laptop -- exactly what you would need while traveling. So basically I get the software low-bandwidth Free World Dialup solution BUT my softphone has a real phone number.
Posted by: voipman on August 3, 2003 10:33 PM

I think Mike Langberg's column on Vonage problems is dated. I've had Vonage for a couple of months now and have experienced none of the problems he mentioned. The Vonage voicemail system works great and they support 911 calling now, too.
Posted by: Michael Connick on August 4, 2003 12:21 AM

Hi Dan,

There is a story that is scheduled to run in the August 7th issue of the San Jose Merc that covers Free World Dialup (FWD) in detail.

Please give FWD a try and my hope is that you will better understand why we feel that the Free World Dialup movement is helping to redefine communications one day at a time.

At the moment, we have over 42,500 subscribers in 150+ countries. We have been adding new services each week. These days besides calling other FWDers, you can also call "toll-free" numbers in the US, UK and NL for free.
Posted by: Jeff Pulver on August 4, 2003 05:23 AM

"Landlines, how quaint."

VOIP to a PC is a hitech implementation of a dead technology. VOIP to a wireless laptop is vaguely interesting, but still loses to the convenience and form factor of a cellphone. There's a reason that europeans don't bother much with landlines anymore...
Posted by: Mark Eichin on August 4, 2003 06:19 AM

After jettisoning my Qwest/AT&T services (with whom I'd been spending $230 per month on average since I cover half the U.S. and call a lot) I went with Vonage for $39.95 per month. Pretty decent ROI, heh?

I was *so* impressed with the quality of service (QoS) -- even with the few limitations you've described -- that I began to evangelize it internally at the company where I work. Many of my colleagues hail from India and several took my advice to buy two Vonage instances, ship one of the Cisco ATA's to India, and then dial a local phone number to call their families! (The Vonage box will 'ring' the phone wherever it happens to be hooked up to the internet).

There is a bit of latency and the QoS not as good as a circuit switched network...but often the call is perfect (or so I've been told). This is certainly a new and interesting twist on the old "call back" scheme that circumvented local telephone monopolies in other countries and it makes me wonder when -- and if -- local governments will be able to 'detect' voice packets somehow and squash this innovative use of the internet?
Posted by: Steve Borsch on August 4, 2003 07:00 AM

I have a packet 8 telephone system connected via a wireless high speed internet connection in the hills of northwestern virginia. Believe me, the clarity, quality and consistency of the service far surpass anything ma bell, verizon or anyone else has ever been able to deliver to our little neck of the woods. You are right, it is the wave of the future and it is nice to be on board at the outset. As for 911, simply use a cell phone that is not connected to any service and it has to ring 911; the other solution I have found is to enter the local police station, fire station regular telephone number into my phone and then one can hit speed dial and it rings. cheers, the little ole stallmucker
Posted by: malcolm winter on August 4, 2003 07:19 AM

One other thing to point out about Vonage, the excellent customer service. Everytime I've had a problem with the box, Vonage has responded within 30 mins to an email I've sent them or have been very helpful on the phone. Plus you don't get a stack of junk email to your home account (unlike Verizon, which is still sending me crap months after I had them disconnected).
Posted by: Paul Guinnessy on August 4, 2003 07:24 AM

I use Vonage...it's great, and cheap, and I haven't had to deal with Verizon once since moving to my new apartment. Life is good.
Posted by: jason on August 4, 2003 08:13 AM

Just ordered it. If you go here...

http://netphone101.com/

You get a $20 discount coupon off the shipping cost, etc.

With ActiveWords (http://www.activewords.com/) my long distance bill runs something North of say $200 per month or more. This is a slam dunk if it works as eveyone seems to say.
Posted by: Buzz Bruggeman on August 4, 2003 08:51 AM

Just signed up for VoicePulse with a coupon... Total: $18.22! Talk about low startup cost!
Posted by: Anna on August 4, 2003 10:46 AM

One advantage of Vonage that has not been mentioned yet is that they can (if possible) capture your existing landline phone number and assign it to your Vonage account. Packet8 at this time cannot do this.

Also, Vonage allows you to have virtual numbers in any of their supported area codes. I have a virtual number in another state so my mother-in-law can call my wife for free. Packet8's solution is to get two DTAs with two numbers - one for your home area and one in another. They do not offer virtual numbers.
Posted by: Richard Berry on August 4, 2003 11:08 AM

Want to make free phone calls anywhere in the world, over dial-up or broadband with NO fees or connection charges EVER? Try this. It has better clarity than a phone, easier to use, has voice mail, it can conference 3 or more people at once and is simple to use. For a one-time yearly fee of $ 29.95, there's nothing on the planet like it! Try it on a free trial basis too.
Posted by: Bill Sager on August 4, 2003 06:54 PM

Bill Sager's post was intriguing.. "try this", he said, but without stating what "this" is. Bill, please, we're dying to know!
Posted by: Grady Davis on August 4, 2003 08:56 PM

that's because whoever edited this removed the URL. Its www.flashtalk.com.
Posted by: Bill Sager on August 5, 2003 08:30 AM

Flashtalk has nothing to do with what Dan was writing about. It's just a software program that allows you to talk over your computer while online with someone else using the same software.

You get no phone number and can't even use a phone. You can't use flasktalk to dial a regular phone. There are dozens of free programs that let you do the same thing (including Microsoft Messenger or, better yet, X-Lite from xten (add the dot-com to get there).

Using X-lite with FWD is light years ahead of a program like flashcom.

Flashtalk is basically the same VOIP that has existed for years, an updated version of two cans and a string. What Dan wrote about is something that's real close to totally replacing your regular phoneline (and some people have done that) Flashtalk is useful in very limited circumstances.
Posted by: PatoLoco on August 5, 2003 09:42 AM

A friend of mine in Florida recently enrolled in the Packet8 program ($20/mo--unlimited calls to anywhere in US & Canada). He has another land line that today went tits up when a rainstorm moved through the area--its been out for over 4 hours now but guess what--the Packet8 telephone has not missed a beat!!!
Posted by: Malcolm Winter on August 5, 2003 03:40 PM

Dan, all the VoIP markets have great advantages for customers, residential or business. We do the same thing but with a different business model. We lease and support gateways and let business and enterprise have all the free calls they want within their organisation worldwide (nothing cheaper than that), and we charge them only for calls they make outside of their organisation network at VoIP rates only (Like you mentioned, we also suggest to them to keep connected to their existing telco as redundancy). Have a look at an article today in The Australian IT newspaper here in Sydney.
http://australianit.news.com.au/articles/0,7204,6924690^15320^^nbv^15306,00.html
We can offer any business worldwide the solution for half the leasing rate stated, and we will look after it.
Posted by: Bill Marlow on August 12, 2003 01:09 AM

check out U.S.News & World Report, 11 Aug 2003, page 58--good writeup on VOIP, especially Packet8, the leader by far.
Posted by: malcolm winter on August 12, 2003 07:19 PM

I read whatthe response to Flashtalk.com. I did read about http://xten.com/faq.php#lite and it looks very cool. However, FT is not a phone replacement. Its meant for the masses, so you don't need to be tech savy to deal with it-just download, install it and add a friends email address who also has this and you can talk. No adding proxys, needing an account or finding a server. It doesn't call a phone, but hey, for a flat fee of $ 19.95 a yr. (this will be an option soon) w/o all the set-up, etc, its just easy and works.

Most people on the planet don't even read the Silicon Valley news and most understand IM or VoIP. FlashTalk is like instant messenging but you talk, not type. Yet, have you ever tried to use MSN messenger or Yahoo to make a call? Its not really designed for that-they are and were originally designed for typing. You can do it, but you still need to find the buttons, and figure it out. Most of all, nearly everyone of these products do NOT traverse firewalls like FT does.

The closest thing I have seen to date is AOL's new 9.0 AIM, but that requies for now you pay AOL their monthly fee.

Just some thoughts...
Posted by: Bill Sager on August 13, 2003 06:57 AM

and with Flashtalk, you DO NOT need a broadband connection.
Posted by: Bill Sager on August 13, 2003 07:00 AM

Thanks Dan!

Does anyone know if/how I can use one of these VoIP services with a multi-line [keyless] phone system? (We've got a 4 line cordless panasonic system in our office, just noticed ATT doubling our long distance rates over last few months, and we're shopping hard for alternatives.)
Posted by: Gil Friend on August 14, 2003 07:40 AM

Does this approach work equally well with cable as with DSL? I'm wondering whether there might be upstream speed/capacity constraints that would affect VOIP quality if I use cable?
I also have a newbie question about networking for this scenario. With my dial-up ISP I'm using a proxy server and an HPNA network. If I go to broadband, do I need a router or can I use my proxy server for that? If I use a router with dhcp, what happens to my "hard wired" IP addresses that currently connect devices in the HPNA network -- must I update them every time the dhcp leases expire?
Posted by: Marty on September 14, 2003 06:46 AM