Why Your Next Phone Call May Be Online

Voice over IP is cheap, easy, and available. Here’s how it works.

It started as a geek-out for corporate penny-pinchers. But now making phone calls using voice over Internet protocol is resonating with consumers. VoIP startups are promising cheap – sometimes free – calls to anywhere in the world. Stick wireless networking in the mix and voilà, voice over Wi-Fi. Add it all up and you get a disruptive technology that’s making conventional phone companies nervous. Already 10 percent of all calls are transmitted with VoIP, and the adoption curve is arching steeply skyward.

http://www.wired.com/wired/archive/12.01/start.html?pg=8?tw=wn_tophead_2

In the early days of VoIP, you needed software and a mike jacked into your PC to make a call. Today, a few providers offer adapters for traditional handsets that plug right into your broadband modem. Behind the scenes, VoIP works pretty much like email. Rather than connecting directly over a single open circuit, a call is sent over the Net in packets of audio data tagged with the same destination. When the packets arrive, they’re reassembled. The process doesn’t use as much bandwidth as a conventional call and is as cheap as an email.

The how-to of VoIP varies widely from service to service. The startup Skype – a spinoff of Kazaa – has the coolest approach: It pairs P2P technology with your PC’s soundcard to create a voice service. The downside? Skype users can only call other Skype users. Other providers build in more flexibility. Companies like Vonage let you place calls over a cable or DSL connection to conventional mobile and landline numbers via a digital-to-analog converter. Services like SIPphone sell a stand-alone phone that only connects to identical devices.

Regional and long-distance carriers, facing extinction, are lobbying government officials for protection. California, Minnesota, and at least nine other states are pushing for some sort of regulation, and the FCC is weighing its options. Meanwhile, big telecom is joining the party. International voice carrier Teleglobe is acquiring a VoIP wholesaler, and others are poised to follow suit. Cox, Comcast, Cablevision, Qwest, and Time Warner are also rolling out VoIP offerings. Their existing customer bases, fat pipe IP infrastructures, and coveted "last mile" connectivity create a powerful triple threat. And, as more telecommunications monopolies around the world open up for competition, the cost savings promised by VoIP seems destined to spark a market shift as dramatic as the one that followed US telecom deregulation decades ago.

So why didn’t the tech take off sooner? Poor call quality, lame user interfaces, and low call-completion rates were among the barriers. The up-and-coming providers say their services are at last ready for prime time. The growth curve seems to agree. Apparently, so does the Man.

WHERE TO GET CONNECTED

Skype http://www.skype.com
411: P2P calls are free, but you can only connect with other Skype-heads.
Users: 1.2 million downloads

Net2Phone http://www.net2phone.com
411: Ring any phone in the world with a pre-paid calling card. Long distance costs as little as a penny per minute.
Users: 110,000

Free World Dialup http://www.freeworlddialup.com
411: Calls are free to the US and UK, and supercheap worldwide. But you can only talk to other VoIPsters. PC and headset required.
Users: 72,000

Vonage http://www.vonage.com
411: Reach any conventional phone in the world using your existing handset (free adapter required). The price: $35 a month.
Users: 64,000

SipPhone http://www.sipphone.com
411: Free calls to anywhere once you buy the $80 handset. But you can only call other IP phone fans.
Users: would not disclose

– Xeni Jardin