VoIP Edges Into Telco Services

Today's hope is to update that phrase with "IP telephone." And thanks to Voice over IP (VoIP), an Internet telephone finally is beginning to work like a telephone, only faster, cheaper and, in some cases, more powerful than its POTS predecessors. Numerous start-up companies have emerged around VoIP, existing juggernauts like Cisco and the telecom carriers have developed products and services around the technology, and everything seems in place for a VoIP revolution.

Well, almost. While companies and carriers have made tremendous progress in furthering the technology, some bugs remain. For example, in July, Internet phone-service provider Vonage suffered a service outage--albeit its first one in about 18 months--renewing some concerns that the Internet phone network still hasn't been perfected. The outage affected approximately 200,000 Vonage customers, rendering them unable to place calls for some two hours.

It's the fear of incidents like those that make some people hesitant about switching completely over from a traditional telephone network that now purports to be better than 99 percent reliable. And keep in mind: Even if an IP telephone itself is functioning, you still need a broadband connection to run it. You can't call 911 directly from a VoIP connection, and if the power goes out, so does your phone.

The rules about VoIP also change as you cross borders. For example, Panamanian broadband customers pay a 12 percent tax on VoIP calls, and the Panamanian government imposes five-figure fines on Internet cafs that allow customers to make Net phone calls. Here at home, questions have been raised recently about potential VoIP service taxes. In July, it was reported that the IRS was considering invoking a decades-old telecom services law to enable the agency to levy an excise tax, though IRS officials have denied they're considering such a measure.

Still, as was the case with Linux, many users are willing to endure some VoIP headaches given it's as much as 80 percent cheaper than regular calls. That is one of the primary factors that caused Gartner to predict that VoIP will replace roughly 17 percent of North American phone lines by 2008.

Carriers are onboard. In July, Sprint signed a deal with a regional cable provider to offer voice services to more than 60,000 customers in California, Montana and Nebraska. AT&T and Verizon Communications have launched similar services, and Cisco has been hyping its new IP phones. The devices cost $500, feature full-color screens and unprecedented computing power.

"Cisco has been looking at convergence and is launching a very aggressive campaign around the phones," says Tom Shaw, president of Wide Area Management Services in Santa Clara, Calif. "You can get class-five features on this thing, like in a call center. It's like putting a switching port on your desktop."

As resellers explore whether to take on VoIP technologies, one thing they'll want to consider is how to pick the right provider. Companies such as 8x8, Skype and Vonage have made headway selling IP telephony, but because they don't own the infrastructure, they provide few opportunities for VARs to bundle in value-added services. That is likely to become a crucial issue as IP phone service becomes more of a commodity and the larger companies offer IP telephony as part of a larger package of cable TV and Internet services.

The moral? As VoIP usage increases, so will its security costs, which carriers will pass on to its partners and customers. As with all new technologies, resellers need to take this into account and figure out the best way to educate potential clients about the positive and negative features.

"We're always continuing to look for new services to provide," says Mike Higgins, managing director of Tekmark, a provider of security, consulting and quality-assurance services in Edison, N.J. "The danger of new technologies like VoIP is that they're often bought by customers who don't understand the risks."