Conventional phones work on the Public Switched Telephone Network (PSTN). VoIP service connects you to the PSTN through your Internet connection. Of course, as with any new technology, there is a cutting-edge factor that requires intestinal fortitude when adopting it.
One advantage of VoIP is that traditional telephone companies are jumping on the bandwagon. AT&T is marketing a VoIP package with a high-quality level of service. And New Jersey-based Vonage is a VoIP provider that is quickly becoming the ubiquitous brand name for VoIP or digital phones. Most providers are also offering Local Number Portability (LNP), which allows people to change service providers without losing their phone numbers.
The technology of the IP phone is fairly simple. The parts include equipment or software at the customer site; a high-speed network such as DSL, a T-1 line or a cable modem; a feature-rich server that adds services such as voicemail, directory and PBX features; and a connection to the PSTN.
Industry experts estimate that only 2 percent of broadband households subscribe to VoIP services, but the growth potential seems promising.
With new technology, the greatest benefits are gained by early adopters. If you switch now and let the market mature, costs are just under $30 per phone number, with significantly lower costs for long-distance calling plans than those for conventional phone systems offer. And, as competition grows, pricing and usage standards will be rewritten.
The catch is trying to figure out which fledgling VoIP companies will stay in business for the long haul.
Residential users continue to be able to only hook up one or perhaps two phones in their home that must be physically located near the cable modem or DSL connection. Under current capabilities, the standard VoIP connection is not a "whole house" solution.
And, you may get some chatter on the line, usually when the local network gets busy. The technology is improving to prioritize the voice traffic on networks over basic Internet usage.
VoIP does demand a certain Quality of Services (QoS) on the network to achieve business-class service. The nature of Internet traffic is always changing and improving, so this problem will be solved as the industry matures.
The biggest issue facing VoIP is legislation. Will this new service ultimately be controlled by the Federal Communications Commission or the Public Utilities Commission? That's one of the most important questions.
As the FCC is trying to sort through 51 separate regulatory commissions with different interpretations of how to tax, authorize and monitor VoIP service providers, FCC Chairman Michael Powell says he will try to gain regulatory control of the new service from the states because to thrive as a business, the technology needs a single, easy-handed regulator.
The FCC proposal will start from scratch with as few VoIP regulations as possible, he says. His goal is not to just modify current regulations. The bottom line is that heavy regulation will stifle innovation and perhaps limit desirable services by unintentionally throwing up barriers for VoIP.
Powell says state resistance may be caused by public utilities commissioners trying to defend their turf rather than trying to encourage new services.
Alex Desberg manages communications for several organizations owned by Doylestown Communications Inc., including Bright.net NE and Ohio.net Internet Providers, the local telephone and cable company in Doylestown, Ohio, and a soon-to-be-launched Competitive Local Exchange Carrier that will offer VoIP services to markets throughout Ohio. Reach him at email@example.com.