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An abbreviated version of this article originally appeared in NOW Magazine's May 20, 2004 issue. It can be accessed at www.nowtoronto.com/issues/2004-05-20/goods_next.php
An Update on Consumer VoIP

Despite the brilliant advances of telephone service on the Internet, it's sadly not time to kiss Ma Bell goodbye and shove her out the door just yet.

Voice over Internet Protocol (VoIP) has been around for a few years, but, until recently, disappointed most people who experimented with it.

Two people having a conversation using inexpensive microphones and speakers (or earphones) were typically frustrated by slow Internet connection speeds, inefficient software and computers that couldn't adequately keep up with digitizing and transmitting two-way audio signals.

Fortunately, that's not what it's like anymore. Conversations over VoIP are now indistinguishable from those held over traditional circuit-switched phone networks.

To maintain sound quality and manage variances between computer types and speeds, most VoIP solutions now use hardware solutions instead of software. A 'black box' voice gateway sits between a high-speed modem and a computer, and your existing phone gets plugged into it. Your computer doesn't need to be on all the time; as long as your DSL or cable modem is on, your phone will work.

Once your account is configured, your black box and a phone can be used anywhere you have net access (home, work, school, café, hotel, etc.). If you're traveling in Bangladesh and can locate a high-speed Internet connection, then you can make and receive local calls from Toronto.

VoIP used to be strictly for making calls from computer to computer, but has now been integrated with the North American Numbering Plan (NANP) to provide universal access to and/or from the Public Switched Telephone Network (PSTN). You can use VoIP to make a call from your computer to any phone and the signal gets routed through the Internet.

Instead of having to build expensive infrastructure, new phone providers can offer their services over any broadband connection. That means the formidable barriers to entry for home telephone provision, gigantic dams holding back a vortex of pent-up consumer demand, are going to break wide open.

The Primus TalkBroadband package starts at $15.95 a month (with $139.95 Voice Gateway hardware purchase or $19.95 a month if you rent it) for basic phone service, which is about 20 per cent cheaper than Bell's offer.

Another option is Vonage, a New Jersey-based VoIP provider that already has 125,000 subscribers in the U.S.. They launched across Canada in late April and are offering subscribers their choice of Canadian or U.S. area codes (or toll-free numbers). The Vonage Basic 500 Plan is $19.99 a month and includes 500 minutes anywhere in the U.S. and Canada. All the add-on features that the incumbent gauges people for (such as voicemail, caller ID with name, call waiting, call forwarding) are included in all their packages, and their Unlimited Plan is $45.99 a month for unlimited calls anywhere in the US and Canada.

Despite the call quality and low rates, you shouldn't replace your existing phone plans without understanding the negative side of buying into the current technology. Due to how VoIP works, 911 service doesn't. If you pick up your phone in a panic, dial 9-1-1 and scream out for help before the fire engulfs you, the operator won't know whether you're calling from Bangladesh or Toronto.

Also, just as cell phones were useless in last summer's blackout, VoIP phones have the same power dependency; while the land-line network has proven it can withstand almost anything. Pick up a pay phone and you get a dial tone. No questions asked.

And then there's the hidden cost of still having to pay for broadband. It's a non-issue for those for whom broadband is plumbing, but it means that cost comparisons aren't necessarily fair.

Finally, there are CRTC regulations to consider. Their preliminary "non-binding" decision in April states that existing telephone rules apply to most Internet phone calls - in respect to tariffs, privacy safeguards and 911 service. The implication is that VoIP services may cost a few extra dollars a month, if the providers abide by the ruling. The CRTC, however, is currently re-evaluating that situation, and there is no ETA for a binding decision.

By the time the CRTC makes up its mind, other countries' services may have run an end-game around our own companies through clever marketing, competitive pricing and establishing customer bases. Ma Bell should watch out, because this isn't a one-horse town any more.