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Internet phone service attracts wider use

By Michael Bazeley
Knight Ridder Newspapers

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This might be the year that changes.

Internet phone service — where you make calls through your broadband Internet connection using a regular telephone — is picking up steam. And for the first time since mobile phones hit the market, the technology could make people seriously rethink Alexander Graham Bell's 127-year-old invention.

Want calls to your home phone to find you wherever you are? Done.

Want to automatically send all your calls straight to voice mail while you watch "The Sopranos"? Done.

Want to take your home phone and number wherever you travel, or send a voice-mail message via e-mail? How about programming your own "hold" music? Done, done and done.

Internet phone service — also known as VoIP for voice over Internet Protocol — has been widely available to consumers for more than a year through small companies such as VoicePulse, Vonage and Packet8. So far, Americans have been slow to sign on.

About 25 million homes have broadband access where VoIP would work, but only about 200,000 have bought the service, notes Jeff Pulver, founder of the free VoIP service called Free World Dialup.

"If anyone thinks we've gone mainstream, they should reconsider," he said recently at a Silicon Valley conference dedicated to VoIP.

But the next 12 months could see a breakthrough. Vonage is moving its service into hundreds of Circuit City stores across the country. AT&T has now formally entered the market in two states (more will follow soon). And other big names will enter the market by the end of the year, including Time Warner cable.

Pulver's Voice over Net conference, known as VON, gave an overview of where Internet phone calling is headed. Some highlights:
 
There are several packages available to consumers, from $20 to $40 per month for local and long-distance calling. AT&T and Vonage have to be considered the leaders. Though AT&T's product has just been introduced in only two states, the phone giant has a nationwide network and more marketing muscle than all the other VoIP providers combined.

Called CallVantage, AT&T's service is $39.99 a month. Many early users like the pricing of VoIP, which can be cheaper than regular phones. But the real bonus are the features it offers, including voicemail, personal conferencing and call logs.

Who's buying?

Although young males are typically the first to flock to new techie services like VoIP, AT&T is marketing the service to youths, young adults, harried moms and people who work at home.

"I know many busy women like myself that need this," said Cathy Martine, AT&T's senior vice president for Internet telephony. "Students, they see the future opportunity of conference calling, the ability to collaborate as a group and send files to each other in real time."

Also new is a much smaller company called Broadvoice. The company is touting value, with a $19.95-per-month plan with unlimited U.S. calling, and $9.95 per month in-state plans. Basic features include three-way calling, do-not-disturb and voice mail.

The service can also integrate with your Microsoft Outlook e-mail program, allowing you to dial directly from your address book. For an extra fee, you can even program your own hold music from an mP3 player or other device.

"We think we represent a new value," CEO David Epstein says.

Cable companies have been dabbling with phone service for years. But they're moving slower, taking time to build a "sturdy" service that can compete with local phone companies, said Rick Cimerman, senior director of the National Cable & Telecommunications Association.

"Our focus is not on all the fancy features," Cimerman said. "We'll get there. But for now, it's 'Roll out the service in a reliable, hardened way.' "

Business market

VoIP has actually been available to business customers for some time. But more companies will crowd into the field, particularly if AT&T and other telecommunications giants squeeze them out of the residential market.

The company 8x8 of Santa Clara, Calif., for example, just launched its Packet 8 Virtual Office service as an alternative to PBX or Centrex services. For $39.95 a month per extension, companies get business-class voice mail, an auto-attendant to answer calls, conference-call bridge service, "hold" music, three-digit dialing and unlimited U.S. and Canadian calling..

"The whole idea of this is: make yourself, make your company, look bigger than you are," said 8x8 CEO Bryan Martin.

Other companies are selling portability to business users.

LongBoard, another Santa Clara company, touted its OnePhone service that allows workers to use the same phone in and out of the office. Company President Gary Tauss showed off a Pocket PC phone and PDA combo that can make both cellular and Wi-Fi calls, depending upon which service is available.

The phone and the LongBoard service is designed to allow people such as hospital workers to always be in contact whether they are at their desks or in their cars. Users can start instant conference calls with other workers through a desktop computer.

"In hospitals today, you get a pager, a cellphone and a PDA," Tauss said. "This is all in one."