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Will A Price War Run VoIP Out of Business? 212

Posted by timothy from the could-you-hear-me-then dept.
ElCheapo writes "News.com looks at the recent price war that has erupted amongst VoIP providers. How much lower can costs for unlimited long distance go before next-generation phone services run themselves out of business? How does this compare with free services that don't offer connectivity to the PSTN? Packet8 offers service for $19.99/month, a level analysts say is unsustainable. Vonage recently dropped their rates to $35/month to match VoicePulse. VoicePulse is known to use a softswitch based on the Asterisk open source PBX. Will open source allow startups to compete with the traditional LECs?"
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Will A Price War Run VoIP Out of Business? More

Will A Price War Run VoIP Out of Business?

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  • BigZoo [bigzoo.com]'s 2.9 cents a minute makes it all irrelevant.
    • What also makes it irrelevant is how tons of people are dropping their land lines and using only cell phones, and not just young people either.

    • Re:One word: Bigzoo. (Score:5, Informative)

      by wfberg ( 24378 ) on Wednesday November 05, 2003 @10:12AM (#7395797)
      2.9 cents per minute? Feh! I can call any regular phone number in the US for 1 cent per minute..

      The kicker? That's one EUROcent.. And I'm calling from The Netherlands. Using our equivalent of a 1010 LD operator (a 4.5ct fee per call put through, no monthly fees except what I already pay my ILEC).

      Yes, prices can go down. If international calls can be terminated for less than 0.01 USD per minute, so can domestic ones.
    • Use one of the 2.9 cent phone cards. They don't have a monthly fee. I know BigZoo's monthly $0.75 isn't much, but $0.00 is better.

      There is no sign up and no credit card needed for a phone card. I currently use a MCI 625 minute $20 card. It's rechargable or replacable.

      Ok to give credit where credit is due, you can use the service cheaper for some international calling, but I don't call overseas, so a domestic card does just fine.
    • Nope. Flat rate is a different _kind_ of pricing than metered, and consumers strongly prefer flat rate, a pattern in telecommunications pricing that has been true for 150 years, as shown by the economist Andrew Odlyzko in his survey of telecom economics, Internet pricing and the history of communications (PDF) [umn.edu]. Companies offer flat-rate pricing have an advantage over companies offering metered service, no matter how cheap the metering is. (This, of course, is also why micropayments never catch on among cons

  • C'mon. (Score:4, Informative)

    by Arctic Fox ( 105204 ) on Wednesday November 05, 2003 @09:57AM (#7395676) Homepage Journal
    An article like this betrays a fundamental lack of understanding of capitalism. They wont run out of business.
    Prices will drop until companies start failing. (If in fact the low prices are unsustainable) So long as there are customers willing to pay for VoIP, there will always be business.
    If the price is too high, then they'll be out of business. If the prices are low, they can make it up on volume.

    • Re:C'mon. (Score:3, Informative)

      by chill ( 34294 )
      If the price is too high, then they'll be out of business. If the prices are low, they can make it up on volume.

      "Make it up on volume" is a phrase that usually only applies to the manufacturing sector, where fixed overhead costs like rent, electricity, etc. combined with the fact it is much, much cheaper to run 3 shifts of the same product than stop and change the line to a different product; test; calibrate; retest; ramp up production...

      The only way they will "make it up on volume" is if there is almost
      • No 'make it up on volume' applies whenever there is not a significant production cost increase for a given volume increase. With VOIP (server maintenance, customer support) this will produce s step function, if your infrastructure can handle a thounsand more customers without needing to take on additioanl staff you can afford to lower the price. just like if I can turn out a thousand more widigts for a cost per widget less than the current production cost it makes sense to lower the cost and push out volume
    • Your comment betrays a fundamental lack of understanding of basic finance. You can't make it up on volume if your cost per unit not including overhead is higher than your revenue per unit. The more units you sell at a loss, the worse off you are.

      VOIP on a flat rate plan is a bit more complicated. You incur a per minute connection charge from the ILECs but you're charging customers a fixed rate per month. In other words, you're betting that the average monthly usage will be low enough that the connection ch
      • Since the population who would be most interested in this product are those with substantial long distance bills, this isn't a very safe bet.

        Fortunately there are a lot of suckers like me who love flat rates but never use the service all that much. It is just a good feeling to use something and know it does not cost you anything extra.

  • ummmmmmm (Score:4, Insightful)

    by Ty ( 15982 ) on Wednesday November 05, 2003 @09:58AM (#7395680)
    Yeah, blah blah blah. What's the big deal if they run themselves out of business? Just like in the post dot bomb era, a successful company, with a patient (aka actual, profitable) business plan will emerge to replace them.

  • NO. (Score:4, Interesting)

    by Anonymous Coward on Wednesday November 05, 2003 @10:01AM (#7395713)
    ntil they make something that pay's me to use it they will never EVER hurt my VOIP system.

    Mine is 100% free, I have at least 6 nodes throughout the united states that all I do is pick up line 2 in my house and dial to connect ot the other nodes for free.

    and yes it's as good or better than the telephone service using really low cost Creative VoiP blasters and fobbit.

    voip will be around as long as there are people willing to use it and have access to the hardware. and no I dont care to dial out to a landline.
    • and no I dont care to dial out to a landline.

      You say that now, but wait until the Matrix is coming for your ass.

    • Relevant Links (Score:2, Informative)

      by artemis67 ( 93453 )
      VoIP Blaster review [gamersdepot.com]
      fobbit [fobbit.com]
      InnoSphere [innosphere.net]
      • Are VoIP Blasters are back in production?

        I thought Cre/\tive had end-of-lifed that product! They still don't have it on their home page - though the gamersdepot review is recent and claims they're available for twenty bux.

        What happened?

        (And why, after the hooraw here on slashdot when Cre/\tive canceled them just as open-source software was becoming available to drive them, didn't we hear about them coming back?)
        • I asked:

          Are VoIP Blasters are back in production?

          Then I called Cre/\tive's direct sales store number and they seem to think they're not in production.

          Curiouser and couriouser.

  • wtf (Score:5, Insightful)

    by Arjuna Theban ( 143564 ) on Wednesday November 05, 2003 @10:02AM (#7395721)
    Since when does competitive price slashing drive whole sectors out of business? The ones that have a better business model and do things more efficiently will survive, others won't.

    Mind you, however, this is true where these businesses aren't competing against a monopoly which can undercut prices at their loss. In either way though, there is at least one company left providing the service of the sector.

    -bm
    • Since when does competitive price slashing drive whole sectors out of business? The ones that have a better business model and do things more efficiently will survive, others won't.

      It's not a very complicated process:

      1. Company A uses its assets from investors to sell their service below cost as a promotion (typical dot-com thinking).
      2. Company B is faced with a difficult choice. They can A) Keep their prices at a reasonable level with the intention of keeping their heads above water and instead end up o
      • This is, from my understanding of it, how much of the dot-com bubble worked.

        And as a result, there is not a single internet company on the face of the earth. No one uses the internet, right?

        Warchests only work in the short term. Eventually companies will start making profits, if only because the lossy ones will have died. Did you know Yahoo! is posting profits these days?
      • A new company will enter the market after those two companies are bankrupt...

        Sivaram Velauthapillai
    • The airlines...their little 10 year price war has cut out just about all the profits in the markets. If you recall, the US government bailed them out in 2001.

      • Re:wtf (Score:2)

        by yog ( 19073 )
        Except for Southwestern Airlines, which has been making profits all along and has needed no bailout. Maybe it has something to do with providing the right service at the right price, which AA, UA, and US appear to have forgotten how to do.

  • VoIP (Score:2, Interesting)

    by grub ( 11606 )

    IMHO what will drive most of the VoIP carriers out of business is not the low prices but the service moving into the business, bypassing the middleman. Cisco et al ad nauseum offer VoIP hardware. It's all a matter of time.
    • >MHO what will drive most of the VoIP carriers out of business is not the low prices but the service moving into the business, --

      Here I thought VoIP was supposed to "end the phone companies' price fixing and general ripping off of customers'. I don't call $35 cheap.

  • I'll settle for 0$ (Score:5, Interesting)

    by jilles ( 20976 ) on Wednesday November 05, 2003 @10:04AM (#7395736) Homepage
    The problem with VOIP service providers is that from a technical point of view they are redundant. Skype is currently demonstrating this point in a very convincing way (good quality connection, convenient lookup service, 0$). So anyone depending on charging their customers for this is going to have some revenue problems in the near future.

    The only reason you would need an actual service provider is to connect to 'legacy' telephone networks or to offer services like voicemail. Once the traditional telecom providers figure out that there is a market for this kind of thing, they'll be in an excellent position to offer that kind of services.

    • Re:I'll settle for 0$ (Score:4, Insightful)

      by duffbeer703 ( 177751 ) on Wednesday November 05, 2003 @10:09AM (#7395773)
      The only reason you would need an actual service provider is to connect to 'legacy' telephone networks or to offer services like voicemail.

      That's a pretty big deal, considering there are like 500 million "legacy" phone lines in the US alone...

      Traditional telecom will never allow VoIP to take off... telephone companies are huge employers in just about every state. They'll lobby congress and state legislatures and have VoIP taxed out of business.

      Why? Verizon, SBC, etc are addicted to that $20-50/mo they make on residental service.
      • Right, so the only reason I can see that you even need a VoIP provider is so that you can connect to legacy POTS lines.

        I don't see the VoIP industry going out of business as they can provide services that are far below the price of POTS business services.

        Need voice mail? I have had a Dell from 6 years ago that had voice mail software used in conjunction with the modem.

        I think there will reach a day soon when we all don't have to support the massive beurocratic infrastructure that the Bells instituted.

        L
      • I disagree completely. While Verizon and SBC have a huge pot to lobby from, so does every High-speed ISP in the US (Cox Cable, Comcast, etc). With these emerging services in the near future from the cable companies, Verizon and SBC better jump on board with their DSL/VOIP offerings or else they will be left in the dust. This is going to be a customer win-win situation.
        • Nope.

          Every telecom company in history has a long track record of charging additional costs for services even though their cost for implementing them are not that expensive.

          The highest cost in telecom is placing new lines - this will remain a high cost endevor, but allowing new protocols and applications to run on those lines are far cheaper.

          DOnt be fooled. just because it does cost millions to roll out a service offering - that cost dwarfs in comparison to the cost of rolling out new infrastructure AND t
        • You underestimate the complexity of US government.

          The telcos have very close relationships with state and city Public Service Commissions (which were created to regulate Ma Bell) and state legislatures. They own or share ownership of the utility poles and conduits with energy utilities, and competition needs to go through state government to obtain access to those resources.

          You also presume that the telephone company is going to convert every line to DSL... How cheap is VOIP when you need to pay $50/mo fo

    • Re:I'll settle for 0$ (Score:3, Insightful)

      by cmoney ( 216557 )
      Maybe I'm missing something, but Skype seems to me to be just instant messaging 3.0 or something. It works just like it, you get a buddy list, and make your calls through a computer. I don't see how it's significantly different than something like iChat or talking over other current IM programs other than improved voice quality and the infrastructure is peer-to-peer.

      Also, I wouldn't want to have to rely on my computer being turned on all the time in order to get phone calls. The RBOCs always bragged about
      • Also, I wouldn't want to have to rely on my computer being turned on all the time in order to get phone calls.

        This is one area however where it probably would make sense to just have simple appliance. Internally complete computer, but designed to be small, ultra-reliable, quiet... in fact, like what my dream PC would be as well (but in this case probably with just simple LCD display).

        So, it need not be what is now your work station. It should be more like, say, your router/switch/cable modem. It just


    • And what do you think Skype's ultimate objective is? The way I read an interview/announcement was that Skype would eventually come to represent everything its creators said was wrong with the current telecom industry.
  • "Will open source allow startups to compete with the traditional LECs?"

    Nope, but it could put the commercial service providers out of business.

  • Yes, they'll run themselves out of business. The "winner" will probably be some free open source software. I was thinking of investing in these companies, because they're clearly the wave of the future, then thought better of it.

    It still leaves the issue of how to pay for maintaining the internet.

  • I dont get it (Score:4, Interesting)

    by luckytroll ( 68214 ) on Wednesday November 05, 2003 @10:08AM (#7395764) Homepage
    I always imagined that at some point someone would come up with a standard cheap widget that everyone could plug into their POTS jack which would enable a distributed P2P style of VoIP system - Sure, sometimes you might have to wait a few minutes to dial out on your voice line while its in use by the commons, but its a small price to pay if you get to dial anywhere in VoIP or POTS land. These centralized services remind me of Napster - centralized services, legislatable out of existence.

    • Sure, sometimes you might have to wait a few minutes to dial out on your voice line while its in use by the commons, but its a small price to pay if you get to dial anywhere in VoIP or POTS land.

      So...going back to the old party line system? Where you have to wait for the other guy to finish? mmm...I don't think so.

    • I always imagined that at some point someone would come up with a standard cheap widget that everyone could plug into their POTS jack which would enable a distributed P2P style of VoIP system

      How many people would like making phone calls over a network where other people could listen in on your calls by simply picking up an extension to the line the destination computer is using?

      That aside, the real problem is that this doesn't solve the POTS to VoIP interface. If all you're doing is VoIP, you don't c

  • Competition saves, regulation kills (Score:5, Insightful)

    by dada21 ( 163177 ) <adam.dada@gmail.com> on Wednesday November 05, 2003 @10:08AM (#7395768) Homepage Journal
    It won't be competition that drives a market away, it is excessive regulation, government mandated monopolies, or a lack of desire for that service or product by the purchasing public.

    I doubt that people will lose the desire to use VoIP, so that third occurence is unlikely. But government overregulating, or enforcing a company's "right" to be the sole provider of the service, both could happen (and probably will). I see ads on TV all the time for "$40 a month unlimited phone service!" but I know the last time I had such a deal, I paid $50 for the service, and $35 or more for all the government taxes and fees on top of it.

    It is ridiculous.

    I dumped my wired phone service because of these fees, and I am about to dump my cell phone service for the same reason. I have enough IP connectivity wherever I am that that I will happily switch to a VoIP company that allows me to transport my Wi-Fi based phone to any network and immediately get connectivity. But when they start getting taxed heavily, I'll move on to the next format.

    Honestly, 80% of my communications have moved to instant messaging of some kind. Its loggable, it takes thought to write messages, and I can communicate with 5 seperate conversations at once. I used to use almost 3000 minutes a month on my cell phone, now I am down to 1000 minutes, but I send probably 10,000 text messages to various people.

    I'm betting many of you will eventually drop the over-taxed, over-regulated services for ones that get the work done faster, cheaper, and with fewer government intrusions.
    • I cannot agree with you more. As a college student, I NEED voice connectivity, but getting a landlind is ridiculous. How often am I home? Not enough to justify 40USD+/month for shoddy local service. I have a cellphone w/ a loaded minute plan and thats ALL I need. I'd LOVE to have a VoIP phone in my apt so people can order pizza, etc w/o asking me to do it w/ my cellphone. I was going to buy a Linksys Net2phone router, but even Ebay has a hard time keeping those in stock.
      Anyway, VoIP is what I want NOW
    • Your assertion that the market will be driven away by "Government mandated monopolies" and "excessive regulation" shows that you have no understanding of the modern regulatory environment. I think you will find that competition is one of the highest priorities of the federal (and state) telecom regulators in both the US and Canada.

      Rather than trying to enforce a company's "right to be the sole provider", regulatory bodies are implementing complicated pricing regimes, unbundling local copper loops and fac
      • I think you will find that competition is one of the highest priorities of the federal (and state) telecom regulators in both the US and Canada.

        This is probably not entirely true, as industry lobbyists have too much influence over that regulation. Any appearance of competition is not true competition--it's only that which the industry and the regulators allowed for their short-term benefit. The telephone industry needs to be deregulated almost entirely (and gradually) to let it recover from prior govern
  • Why is this unsustainable? Those rates aren't all that amazing.
    I checked out Packet8 and I noticed that even after paying twenty bucks a month calls from the US to Taiwan are still five cents a minute. That's not so special.
    Using a calling card and a modem to auto-dial I can quite conveniently call to the States from Taiwan for about twelve cents a minute and there's no monthly charge at all. If you're going to talk for less than a few hours a month, that's still cheaper.
    Let's see, twenty buc
    • I checked out Packet8 and I noticed that even after paying twenty bucks a month calls from the US to Taiwan are still five cents a minute. That's not so special.

      I'm not so sure. To have a phone line in your home in the US is about $23-$28 per month. $19 isn't bad considering I can use my cable internet connection and it includes all north american calls. 5 cents a minute to Tiawan isn't bad either.

  • Voice (Score:3, Insightful)

    by locarecords.com ( 601843 ) <david AT locarecords DOT com> on Wednesday November 05, 2003 @10:12AM (#7395793) Homepage Journal
    Voice over IP is the next big thing and the bidding war is part of a general plan to drive the smaller less well capitalised firms out of business. This will leave the larger companies better positioned to roll-out all sorts of differentiated (and profitable) services.

    Having relatives in Norway and an avid user of iChat with iSight I can tell you that this has reduced our telphone bill by a huge amount. Once others catch on VoIP and video services are going to go mental...

  • No, what is going to get interesting (Score:5, Interesting)

    by AbbyNormal ( 216235 ) on Wednesday November 05, 2003 @10:14AM (#7395811) Homepage
    is the emergence of high-speed internet providers jumping into the ring. My cable network recently got upgraded to a pretty decent speed and while chatting with a technician I found out that the company will soon be offering VOIP package that will be less than our current Phone company. Hmmmm.
    Ten times as many features, less price, all in one package. Good bye Verizon! Your lack of DSL in my area, disturbs me.
    • It disturbs me too. I live in the Dulles corridor, the so called internet capital of the world, and I can't get DSL. Comcast is doing a really good job here, but it sucks not having an alternative. And yeah, when Comcast comes knocking to offer their VoIP phone I am going to ditch Verizon for good.
  • When Costco is selling phonecards for long distance at 2.9 cents a minute, then we're not that far from long distance and local calls blending together.

    For most people, for $20, you can get almost 10 hours of long distance. I suspect that 10 hours will carry most people's long distance needs for several months.
    • Right. My land line phone gives me 5 a minute long distance and 10 a minute to family overseas. If I went through the hassle of getting VoIP and persuaded everyone else to, I could save myself maybe... oh, $3 a month? Pardon me if I don't run out and buy VoIP software immediately.

      OK, they say, but what about the monthly fee you're paying for your landline or mobile phone? Well, yes, it would be nice to not have to pay that, but until everyone's using VoIP, I'm gonna have to have a phone. So until everyone

  • There's a lot of room for a price war (Score:5, Interesting)

    by Halvard ( 102061 ) on Wednesday November 05, 2003 @10:21AM (#7395869)

    I'm the president of an business only ISP and we've been looking at adding voice services for 4 1/2 years. We sell select office buildings where each tenant gets separately firewalled service. I was offered wholesale long distance last year by Worldcom for an insanely low rate of about 1/10th of a US cent per minute. Yes this was to be tied to a voice circuit terminated in a colo we were already it. So for about US$250 per month and US$0.00014 per minute in excess of 500,000 minutes, it's easy to be able to afford long distance bunding even without VOIP for long distance. Even if that's about 1/5 the number of minutes in a 30 day month, it's kind of like bandwidth; a T-1 goes a long long way for a lot of people especially if you minimize bandwidth usage.

    Couple that with a soft phone switch like Asterisk with it's pseudo-TDM devices and you've got an incredibly inexpensive solution. Your real costs are advertising and support, not long distance.

  • Okay so all the dumb companies that sell a product below cost will go under.
    The companies that sell at a sustainable rate will survive.
    In perfect competition, there is no profit. We're getting pretty close for long distance.

  • Not unless they ban encryption (Score:4, Interesting)

    by anti-NAT ( 709310 ) on Wednesday November 05, 2003 @10:34AM (#7395982) Homepage

    The moment end-to-end encryption and authentication is enabled, either via tunnels or by just encrypting the IP payload, no authority trying to assert control over VoIP will be able to identify one application verses another e.g., VoIP verses HTTP verses SMTP.

    They will have to either ban encryption, or ban all applications, which is the equivalent of banning the Internet.

    Deploying encryption in this manner will actually restore the Internet to its original design - an application agnostic network, whose sole job is to just make a best effort to deliver bits between the hosts at the edges. Only the hosts should know and will know what applications the Internet is being used for.

    The technology already exists, albeit in early forms :

    • DNSSEC
    • Opportunistic tunnel setup within IPsec

    This will also obselete firewalls, proxy servers, NAT, and any other devices that perform applications processing within the Internet. The only applications processing devices left will be those at the edges. Security, aka firewalling for example, will be deployed on each edge device.

    Steve Bellovin (one of the Wily Hacker authors) wrote about distributed firewalls in 1999, here : Distributed Firewalls [att.com]

    • The moment end-to-end encryption and authentication is enabled, either via tunnels or by just encrypting the IP payload, no authority trying to assert control over VoIP will be able to identify one application verses another e.g., VoIP verses HTTP verses SMTP.

      Doesn't VoIP use RTP for the voice data? Your provider could easily identify & either block or otherwise impede the RTP packets, especially if they were offering a QOS VoIP solution and didn't want a level playing field (versus on open source,

      • So? Set up opportunistic IPsec and a tunnel is automatically set up between whenever you communicate with someone also so configured, and 3rd parties can even determine the type of packet within the IPsec wrapper -- much less block based on it.

    • The moment end-to-end encryption and authentication is enabled, either via tunnels or by just encrypting the IP payload, no authority trying to assert control over VoIP will be able to identify one application verses another e.g., VoIP verses HTTP verses SMTP.

      I agree, you will always be able to initiate a connection between any two points that you control and talk privately (between friends). How do you propose to talk with someone else you've not talked to before? Call for a Pizza? Call the Police?

      I

  • A friend of mine said his company (which he owns) charges $8.00 per month and $0.03 per minute anywhere in the US. He's expanding...

    • Re:$8 per month (Score:3, Interesting)

      by pigscanfly.ca ( 664381 ) *
      Do you have the url?
      Also does that allow for dial in (can people call me?)
      • Do you have the url? Also does that allow for dial in (can people call me?)

        No, and Yes. He is in Michigan (only I believe), but calls can come and go anywhere. He also converts incoming FAX to email for you. He's tied to the traditional phone network and the net, this allows calls to cross between the two. I'll have to find more info on signing up...

  • VoIP is only a means to an end (Score:3, Insightful)

    by G4from128k ( 686170 ) on Wednesday November 05, 2003 @10:43AM (#7396062)
    I would not worry about VoIP operators surviving or not surviving (unless you are invested in them). People don't want VoIP, per se, they want to make cheap phone calls to their friends, family, business associates, etc. VoIP is only a means to that end.

    If you look at telco equipment makers, like Lucent, one big new feature is ICD (Internet Call Diversion) that cross diverts standard voice calls on to the internet. CLECs, ILECs, PSTNs can buy this stuff to merge POTS and VoIP and offer free local voice service and low-priced long-distance that just happens to use VoIP.

    I'm sure VoIP will become widely adopted and be almost invisible because it will be the most cost-effective way to carry voice communications. Whether any of the current VoIP service providers survive is irrelevant.
    • You're totally right... in fact, most long distance calls anywhere in the world are already happening over IP, and have been doing for a long long time. The real losers are the big old digital ISDN type equipment vendors... I had a major telco with a lot of Ericsson equipment tell me you couldn't get 2mbps through regular copper wire over more than about 500m because they'd only tried the wrong kind of equipment to do it. We had MDSL modems running 1mbps (symmetric, no less) over a standard twisted pair ana

    • If you look at telco equipment makers, like Lucent, one big new feature is ICD (Internet Call Diversion) that cross diverts standard voice calls on to the internet.

      Hmmm...a flashy new term for something that's been around for quite a while. I'd wager that it's basically nothing more than a PSTN gateway that handles VOIP. You can buy inexpensive gateways that do the same thing, for around $300 or so. They're very good for SOHO and home use. I'd mention a specific company, but I'm so thoroughly disgusted w

  • My VoIP thingy arrived yesterday! (Score:3, Interesting)

    by defile ( 1059 ) on Wednesday November 05, 2003 @10:58AM (#7396209) Homepage Journal

    I opted for VoicePulse because they have a really extensive web interface that lets you do all kinds of neato stuff, like call filtering and emailed voicemail notifications.

    The plan I'm on now is approx $15/mo, which is unlimited local with 200 minutes long distance. They offer a $45/mo plan with unlimited national long distance.

    The call quality is *very* good, and there's no latency at all. Mind you I've had it for less than 24 hours at this point. I even started a huge full throttle file download and there was no perceivable degradation.

    I guess the downside of this is that voicepulse only provides support via email. And I don't know if this is just a fluke or if this is going to be common, but I can't seem to make calls for up to 2 minutes after having just come off of a call (incoming calls get busy signal?).

    I'm seriously considering dropping my landline.

  • Will open source allow startups to compete with the traditional LECs?

    Simply, no. Just because one company is using an open-source designed SS doesn't bridge the massive logical divide that has open-source enabling competition in the phone space. Stop the Slashdot pandering. What's enabling competition is a demand by customers for cheap, 'good enough' phone service that offers an alternative to the LECs (who are wont to keep prices inflated and have notoroiously lacking customer service) coupled with the

  • Hard to beat unlimited service for $24.99 (Score:4, Informative)

    by ronmon ( 95471 ) on Wednesday November 05, 2003 @11:05AM (#7396276)
    My local telco (Bellsouth) offers unlimited long distance to all 50 states for $24.99 a month [bellsouth.com]. I don't use long distance much, but my roommate does, and he was paying upwards of $85 / month with our previous ATT service.
  • I was just wondering if anyone knows how the VoIP calls are routed to the PSTN.
    Does, say, Packet8 have a gateway on each continent that hooks into the PSTN.
    So when I call USA -> France it might use the nearest gateway in the UK? Just wondering.
  • I am a very happy user of Vonage. The savings is a lot more than just the charge for long-distance. My real expense came in the form of my local dial-tone service. I live in a suburb of St. Louis. My fees before ever dialing a long-distance call were about $60/mo. That got me:

    *Local Dial-Tone
    *Metro Area Calling (in other words if I didn't want to be charged long-distance for calling outside of my immediate township such as neighboring suburbs or St. Louis city {keeping in mind I am only about 15 miles
  • I just read my phone bill. $49.95 from AT&T for all you can eat local and long distance calling. $20 in supposedly mandated taxes. I did a little digging and found out from a friend that carriers often mark up the taxes and pocket the profit. My question is how good is voice over IP? Is it good enough to yank out my existing line and make the jump?

  • Defending the status quo, a little. (Score:4, Interesting)

    by dbrower ( 114953 ) on Wednesday November 05, 2003 @11:23AM (#7396442) Journal
    The phone companies monopoly, while historically profitable, is a dual edged sword. They get the monopoly advantages, but have limited return on investment, caused by regulated rates. The investment model is based on really long depreciation times for the physical plant. They are obliged to serve areas that are probably not economically viable to support -- like all the places that don't have cable TV, but do have phone service. They are obliged to provide 411 services, and to be usable in the face of power outages.

    VOIP isn't carrying those burdens, and is often parasitic on the phone company physical plant for wires. So there is a lot of good reason for the phone companies to be unhappy with interlopers that might mess up their regulated economic model - which they can't change by law.

    It is one thing to say the RIAA/MPAA should die, because their economic model isn't guaranteed; but the phone company model IS guaranteed by the law that gives the monopoly.

    I don't think I have any problems with VOIP provision that does not interconnect to the regular network. At the point there are gateways, it seems like those become perfectly appropriate points of regulation.

    -dB

  • please, the mobile phone market has been having price wars for years - are you trying to tell me that mobile phones are going away as well then? or internet connectivity for that matter?

    i'm sure VOIP will follow both those trends by consolidation and purchasing to form some BIGVOIPS who can utilise larger user bases to generate profit of volume of calls rather than the small guys making slim margins with fewer clients.

  • VoIP and 911 (Score:2, Interesting)

    by oregonbound ( 721681 )
    Until the emergency dispatch centers and the VoIP providers find a good, consistent, work around for 911 calls, this may prove a serious stumbling block for widespread adoption. While some (Vonage for example) allow you to register your location and transmit it to the dispatch center, others don't. I'm not a fan of regulation in general, but this is one issue that really needs to be addressed by the industry and if not by the industry, then by the government. Paul

    • Re:VoIP and 911 (Score:4, Informative)

      by otis wildflower ( 4889 ) on Wednesday November 05, 2003 @01:18PM (#7397599) Homepage
      Hear hear.

      I had a fairly serious problem with this a week or so ago (rowdy teens fighting and throwing each other on my car, no damage, but I didn't want to get in a brawl in my bathrobe...), the 911 person was confused, even though I had registered my # with Vonage's 911 system.

      In the meantime, I may just plug my spare phone into my landline and use it for 911 only.

      (OH, and for NYC vonage folks, you can contact the city via 212-NEW-YORK, since 311 doesn't work.)

  • open apis? (Score:2, Interesting)

    by Doc Ruby ( 173196 )
    When will I be able to connect from my Smartphone (mobile) over the air, via my VoIP service, to the Asterix PBX on my home LAN, to use my homebrew multimedia conferencing SW in a call to 3 other POTS callers?
  • One of the things to remember when we read stories about the latest in the VOIP technology is that there is a fundamental difference between the land-line service (telephony) Ma Bell offered and most of us grew up with and the newer (voice-over-I.P. or voice-over-anything for that matter) service places like Vonage offer. And the difference has nothing to do with how the information is carried.

    Telephony tends to be a regulated environment, with the network provider controlling everything up to the service

  • In the end, VoIP will be a device, not a service. You'll buy a handset and a base station at WalMart, and will be able to talk forever for free to anybody who has a compatible unit. After a while, the cellular and landline companies will have to make their systems accessable from the Internet to stay in business.

    You'll have to have DSL or a cable modem, of course.

  • VoIP isn't next generation; it's a temporary situation until landlines are phased out more completely.

    Everyone I know uses a cell phone nearly exclusively. As soon as international calls are part of the plan at a free/economical rate, landlines/long distance (and voip) are completely done for.

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