With broadband access, Internet calling spreads

Alternative: Companies are routing more calls over the Internet. So can you, with clarity and flat rates for long-distance service.

February 06, 2003|By Andrew Ratner | Andrew Ratner,SUN STAFF

When I made my first phone call ever over the Internet to my office last month, Anthony Waytekunas Jr., longtime business clerk at The Sun, answered with a cheery "Business news."

Now I know how Alexander Graham Bell and Thomas Watson felt in 1876.

Well, maybe it wasn't quite that momentous, but the call I placed on equipment from Vonage Digital Voice of New Jersey felt like the start of something mysterious and modern that may one day be commonplace.

Vonage is a new breed of company that routes calls over the Internet instead of the traditional phone system.

Most important, during several weeks of using the service, the calls were as clear as on a wired phone (and much clearer than with many cell phones I've used).

To start, I plugged a phone into a Cisco adaptor that converts an analog signal to digital that enables your voice to travel as data over the Internet.

The phone was a standard type you'd pluck off the shelf at Wal-Mart or Circuit City. Vonage supplied a free adaptor; otherwise, it would cost about $200. The box was linked to a router, which was linked to a cable modem, tied to my personal computer at home.

It took me about 20 minutes to install and wasn't difficult. I was able to use the phone right away and to check a record of my calls by typing my account number into Vonage's Web site.

One unusual feature: I was able to choose a phone number from almost anywhere in the country because Vonage is now in about 25 metropolitan areas and covers about 110 area codes. I selected an area code in eastern Pennsylvania, where my parents, sisters and their families live. They were able to call me for free as if they were placing a local call even though they live 120 miles away.

That trick worked well for me only because I kept my regular telephone service; otherwise, my next-door neighbors would have had to pay out-of-state, long-distance rates whenever they called me. But I can see the attraction of being able to choose a distant phone number for someone with a child living away at college or even overseas just to communicate cheaply and often.

Vonage charges $40 a month for unlimited calls nationally and very competitive international rates. It has a second plan for $26 that included unlimited local and regional calling and 500 long-distance minutes, although calling between two Vonage customers anywhere is unlimited. One-time activation and shipping fees total another $40.

Only broadband Internet service is fast enough to accommodate Vonage, so people using dial-up modems - the majority by far of at-home Internet users - can't adopt it yet.

But more and more people are converting to high-speed connections. Broadband use at home grew nearly 60 percent last year, compared with a 10 percent drop in sign-ups for slower, dial-up connections, according to Nielsen/Net Ratings, a tracking service.

Internet telephony has been a force elsewhere for several years, especially in Eastern Europe, Asia and Africa, where the high cost and poor quality of phone service drove users to the Internet as an alternate means. Its use became so popular in Panama that the government tried to ban it because it threatened the existing phone monopoly.

The Internet now carries more than 10 percent of international calls and has grown 2,000-fold in five years - to 18.5 billion minutes last year, according to TeleGeography Inc., a research firm in Washington.

But it's beginning to gain in the United States, too, even if callers don't realize it. As international rates have fallen, major phone companies including AT&T, Verizon and WorldCom have farmed out portions of international calls to Internet-based wholesalers to cut their costs, said Patrick Christian, a TeleGeography analyst.

U.S. companies have begun investing more heavily in the technology, too. Among them are Internet telephony companies ITXC Corp., iBasis Inc. and Net2Phone Inc. and equipment manufacturers Cisco Systems Inc. and Avaya Inc.

Even small local phone providers such as Core Communications in Annapolis have begun considering Internet calling.

One of the leading Internet phone entrepreneurs, Jeff Pulver, recently launched a Web link called Free World Dialup to promote Internet telephony (www.pulver.com/fwd).

People can sign up for a five-digit number and make free calls to another Free World user anywhere in the world, with nothing more than a computer with speakers and a microphone and about $200 worth of equipment. About 5,500 people around the world have signed up since November.

Dan Freedman, chief executive officer of Jasomi Networks, whose software enables Internet telephony, said recent events have converged in the technology's favor. Among them: the 1996 deregulation of the U.S. phone monopoly; struggles within the industry over leasing the Bells' old-style phone network; and the increase in broadband adoption.

The Internet carries conversations like written data - in "packets" that get shipped in an eye blink between two points.

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