Calling the Future-Making phone calls over the Internet saves money, but it’s still a bit of a parlor trick. Now there’s technology to bring Net phones to the masses.

Early Internet phones didn’t make sense for most people — they could connect only to other Internet users and required an always-on connection. But times have changed. More people have broadband today, and there are finally Internet phones that can speak to non-Internet phones, offering interesting value propositions for both consumers and broadband providers.

By: Rafe Needleman Business 2.0

Take Vonage. http://www.vonage.com It offers a $40-a-month service that connects a regular telephone to a high-speed Internet connection via a small Cisco VoIP (voice-over-Internet Protocol) router. Vonage’s value-add is the interconnection it provides between the Net and the global phone system. For the most part, the Vonage service doesn’t require people to change the way they use the phone, and it offers some interesting advantages over the old systems. The monthly fee covers unlimited nationwide calls.

And since Vonage phone numbers are assigned to routers, not buildings, if you move across the country and take your router with you, your phone number and area code come along too (just like with a cellular phone). Vonage also lets you retrieve your voice-mail over the Web and, in the future, via e-mail. I tried the system at home and found the voice quality to be excellent; notably, the system didn’t suffer from the awkward lag (latency) that plagued earlier voice-over-Internet solutions.

It’s still a tough end-user sell: Most people with broadband already have a working telephone. Also, Vonage can’t yet access emergency services like 911. To date, it has only 5,000 users.

But if Vonage can get broadband providers to sell its service, it may yet have a future. For DSL providers it doesn’t make a whole lot of sense (DSL runs over phone wires, which would make sales confusing); for cable providers that sell broadband, however, offering Vonage would be a way to compete with the telephone companies. VoIP also has a few financial advantages for now — mainly, the Federal Communications Commission considers it a data service, freeing it from many of the tariffs, taxes, and access requirements of the traditional telephone business. In addition, setting up Vonage coverage in a new community costs less than a 10th of what it costs to set up a regional telephone central office, according to Vonage CEO Jeffrey Citron.

Will Vonage-like technology compete with phone companies? In the long term, I’d hope instead for a seamless blend of technologies. Many phone companies today are primarily marketing engines that buy access from other firms. So why shouldn’t some of that access be based on a more contemporary and flexible technology?

Rafe Needleman