Traditional POTS providers such as at&t and Verizon will notice decreasing numbers of residential customers while stand alone VoIP providers (such as Vonage, Packet 8, and voip.com), Cable companies, and wireless providers pick up the slack.

The launch of Packet 8’s business trunking service helped the company gain more than 1,000 new business customers (they now have approximately 12,000 business clients).

The Tennessean posted today that at&t is raising the rates of basic phone service and calling features in the hopes of increasing profits. Although basic phone service would increase by “pennies,” other features would see a much more significant increase. For example, Caller ID and Call Forwarding would increase about a dollar and bundle packs would increase about 2 dollars. Oh, and at&t reported a profit of 3.46 billion dollars — in just the first quarter.

So now, you’re a landline service provider. People are dropping landline service for VoIP and Wireless Only plans. You’re making an average of just over a billion dollars a month profit. You want that number to increase. So, you raise rates? Wouldn’t that make people jump ship even more? So, instead of making your services more attractive, you’re going to jack up prices on your loyal customers who are chosing to stay with you despite cheaper alternatives. Nice.

We love this quote:

A spokeswoman for AT&T, Dawn Benton, said the company’s decision to raise rates had nothing to do with the loss of landlines.

“Our focus is to bring greater value to our plans: a unified portfolio, greater consistency and simpler pricing right up front,” she said in a statement. “Even with these changes, we still offer some of the best values and offers in the market today.”

VoIP providers like voip.com, Vonage, and Packet8 bundle residential service and include more features than you’ll ever need. Oh, and most plans include long distance, too. Someone needs to help Dawn Benton find a clue.

The parent company, YMax Corp out of Palm Beach, Florida, released sales figures showing 8 – 9000 sales per day. The MagicJack device sells for just under 40 dollars and includes a year of free calls within the United States and Canada. An additional year of phone “service” costs an additional $19.95.

Why put service in quotes? Right now, you are unable to transfer your existing number to magicjack; and according to their website, there will be a nominal fee when LNP becomes available.

With a device that requires connection to your home computer to both make and receive phone calls, this service truly has differences with “traditional” VoIP telephone providers such as Vonage, Voip.com, and Packet8. But, at $40 for a year of service, will anyone care? If you care to read more, Michael Graves has a nice little post about Magic Jack on his blog.

F.W. Woolworth Company. Apple. Walgreens pharmacy. 

• Stores with agricultural names? (buzzer)
• Stores with automatic doors? (buzzer)
• Industry leaders who have since fallen from the top of their industry or floundered like fish at a deli? (ding ding ding)

Woolworth’s

F.W. Woolworth Company, or Woolworth’s, originated the entire five and dime concept. How big was Woolworth’s? The owner (interestingly enough named Mr. Woolworth), bought prime land in New York City and built the tallest building in the world. Oh yeah, the entire project — paid for in cash. We can’t even pay cash for a decent SUV; how sad is that. Anyway, Woolworth plowed itself into America (get it? America farmland? Plow? Oh well…) becoming one of the largest retail chains in the world.

If history teaches us anything, the bigger success you achieve, the bigger target you become. Rivals came out of the woodwork like cockroaches in Patrick’s car. In fact, after seeing Enchanted, Patrick tried to sing to his roaches to help clean the car — but that’s another story. As we were saying…

Woolworth’s became a target and competition created a rich marketplace. As others reaped the benefits of copying Woolworth’s model, the company tried to diversify to specialty stores in order to continue to earn a revenue. Well, this decision led them to buy Champs, which led them to make some other decisions that basically ended the entire company. The only thing remaining? Foot Locker stores in every mall. The great and mighty Woolworth has been replaced by an in-store basketball net and a non-flattering black and white striped uniform.

Walgreens

Walgreens (which doesn’t have an apostrophe for some annoying reason) entered the pharmacy business way back in 1901. Yes, 20 years before Al Capone, Walgreens made it’s move on Chicago — establishing a firm hold on the drug trade. In fact, while Capone was fighting hard for power in Chicago, Walgreens branched out and started to take over the world.

With innovations such as the malted milkshake, Walgreens steadily increased numbers, reaching more than 6,600 locations in 2008. And, considering that an average Walgreens store generates more than $8 million in sales, that’s not too shabby. And with all of those new CVS stores, they must really be pulling in the cash.

Wait, what? CVS isn’t the same as Walgreens? Huh? They seem so similar. (oh and on a side note, in like 5 more paragraphs we actually talk about voip… but much like our chats, we kind of digress here and there. Where were we again? Oh yeah… Walgreens)

Walgreens established firmly the franchised corner store model and by the 1960’s had been filling prescriptions for more than 60 years. Well, in 1963 CVS/pharmacy thought to itself, “Self, anything you can do I can do better.” And, even worse, they probably sang it with a bunch of kids in a really annoying phar-musical style. Steadily, through acquisitions and growth, CVS/pharmacy has taken on the gentle giant and although CVS may have fewer stores than Walgreens, they have managed to grab a larger share of the market.

Apple

And let’s not forget our third corner of the triangle. Apple, Inc. In the 70s and early 80s, if you thought about computers you were thinking about huge spinning devices with big lights encompassing rooms, if not floors of a building — for just a single computer. Portability was not even a consideration. But hey, you could still get some wicked cool tye-dye shirts and bell bottom jeans.

As technology increased and size was determined to matter, computers became increasingly smaller. Steve Jobs started thinking that software plus hardware equals fun and profit; and Apple was born. Apple Computer, Inc. incorporated and quickly started advancing the concept of graphical user interfaces. They were the pioneer of the PC and, well you guessed it. Long story short, Apple became a giant and then BOOM! Microsoft swoops in with Bill Gates’ nerdy glasses and sweaters and Apple goes down like Rocky Balboa when first fighting Mr. T.

Apple got hit so hard, they’re not even Apple Computer, Inc. anymore — they changed their name to just Apple, Inc. But, just like Rocky, Apple refused to throw in the towel. Apple decided to reinvent itself and take on the giant replacing them. This time, by creating a new unheard of brand loyalty and innovating the marketplace with new and desired products (think iPod, iPhone, iAnything for that matter).

Isn’t this called VoIP Tech Chat?

And of course, there’s VoIP. Simply put, Vonage put VoIP on the map. The entire reason VoIP went from project to industry rests upon the giant shoulders of Vonage. And there’s that “giant” word again. We can easily argue that any company was bound to breathe life into the VoIP industry; after all Packet8’s been around for like a thousand years or something. But the bottom line is Vonage took a great amount of seed money, an enormous IPO, and created an industry for VoIP. Plus they have that jingle. Which brings us to this question: How recognizable is Vonage to VoIP?

When we walk the streets at night (trust us, not in that context, this isn’t called Fred and Patrick’s Voip Confessions after all), anyway, when we’re out and meeting new people, we inevitably get asked the standard meeting of a new person question: What do you do? Here’s how an example conversation might go:

New Person: “So, what do you do?”
Patrick/Fred: “We work with VoIP telephone systems.”
New Person: “What’s a veeop?”
Patrick/Fred: “VoIP. It’s Internet Telephone.”
New Person: Stares blankly
Patrick/Fred: “Like Vonage.”
New Person: “Vonage! Doo doo, do – do – dooh.” (singing)
Patrick/Fred: Sigh

Vonage spent millions on building an industry to make people understand that VoIP service can be used to save money on telephone bills. With hundreds of millions of dollars being spent on television, email, search engine ads, and more, Vonage has become the VoIP giant. And, it’s a ferocious giant at that.

The first to attack this giant was SunRocket. SunRocket quickly became the second largest VoIP company and followed Vonage’s game-plan so well, that they outspent Vonage and quickly built an enormous debt. The problem, however, was that SunRocket failed to get the Vonage sized pocket book before spending the money and quickly exploded; leaving the giant unphased by such an attack.

Today, smaller companies like Lingo, ViaTalk, Voip.com, and PhonePower are starting  to build a considerable customer base. And, learning from SunRocket’s example, quickly changed their attack. And, the smaller companies seem more than happy to stay as low key as possible.

Why? The highest guy on the flagpole is the target for every kid with a slingshot. Vonage is more than 10 times the size of the next biggest VoIP provider, which means that right now Vonage gets all of the lawsuits, foots all of the cost of “market recognition,” receives the most complaints, and gets raked across the coals whenever there is new legislation. 

The smaller companies are gladly letting Vonage take all of the shots and are waiting anxiously for the right time to strike. And when they do, another giant will fall.

Keynote determined (based on testing providers such as Packet8, Vonage, Verizon VoiceWing, Lingo, etc.) that most VoIP users can expect “merely tolerable” telephone service when compared to an at&t POTS line.

One of the VoIP providers tested failed to achieve any calls with an MOS score of 4.0 or better (ouch).

Why did Voip Tech Chat wait more than a month to post this news? Patrick and Fred were too busy talking about Lifelock and Ben Affleck movies. 

Oh, and Asterisk Voip News posted that a cool new IP Phone with a huge video screen is coming soon.

Voip Trunking provides a method of connecting POTS equipment or conventional telephone equipment with a Voice over Internet (VoIP) network. Vonage, Voip.com, and Packet8 already ship out phones and adapters (or ATAs) for their residential services. These ATAs are essentially VoIP Trunks.

Many companies already offer Business VoIP service to “any” device. For example, both Voip.com and VoicePulse (along with many other providers) offer a BYOD (bring your own device) business service; allowing a user to connect their current equipment to the provider’s network (Voip.com also provides BYOD residential service). Packet 8 however seems to truly embrace the non-voip office. 

Most other providers require some knowledge or existing experience with integration. BYOD plans basically are geared towards a user who knows what they want and can either integrate the service themselves or hire a consultant for assistance. Here’s where Packet 8’s offering differs. VoIP-News reports that Packet 8 will be including installation of the Trunking service to the customer’s system. Of course, this is not free. With installation costs of $1,500.00 (including the internet voip trunk gateway), it may be cheaper to get a consultant to integrate a different provider.

However, for Packet 8 to sell the installation, device, and connectivity as one package — well, that’s a really good idea for a non-tech savvy office.

Sometimes, to discuss VoIP, we must discuss what VoIP is not — in this case, VoIP is not POTS.

POTS is the common nickname and acronym for Plain Old Telephone Service – you know, the “traditional” phone jack in your wall. The POTS system uses technology that is basically unchanged since the early 1900’s. The wires may be upgraded, sure there’s more features, but the telephone technology in use via POTS is essentially the same technology introduced before there were airplanes, highways, or even household refrigerators.

Background, aka Trivial Knowledge that Patrick would call Interesting

The telephone was invented by Alexander Graham Bell, who along with Thomas Edison, created a method of transferring voice over long distance through the use of connecting wires. Basically, one telephone would be physically connected to another.

Operators manually connected the two-parties together allowing the transfer of voice to occur. Human operators have since been replaced with automatic exchangers; where a computer determines the party you are wishing to talk to and making the connection. This device for automatic transfer is sometimes referred to as a telephone switch and the POTS engineers like to call their telephone network a Public Switched Telephone Network, or PSTN.

VoIP vs POTS

At VoIP Tech Chat, we are huge (no fat jokes please) proponents of Voice over Internet. Go Know. Of course, if we didn’t believe so strongly in Internet Telephone, then having a VoIP Tech Chat website would be a pretty stupid idea.

VoIP differs from POTS in many ways. Fundamentally, the end result is the same. In both systems you pick up a phone, dial a number, and talk to the other party. Other than that, the systems are extremely different. VoIP is digital and does not use wires to physically connect devices. VoIP works by digitzing your voice, sending it over the Internet to the destination, and then having it return to audio on the other side. (If you haven’t done so, you should really read “What is a VoIP?” by Patrick and Fred. It’s a great read and even mentions George Michael)

Like anything, both VoIP and POTS have their own Pros and Cons. Despite POTS technology remaining virtually unchanged since the early 1900’s, the reliability of POTS is unmatched. In fact the level of reliability achieved by POTS is the quintessential “five nines” reliability standard. This means, that with POTS, you can expect to have an outage for less than 6 minutes a year. (That’s why at&t and Verizon engineers make big change)

Now, let’s contrast five nines reliability to VoIP reliability. First, remember that VoIP requires a synergy of several service providers to get a dial tone. (Editor note: first quintessential and now synergy? Wow. Today must be vocab day at Voip Tech Chat) The two main players in VoIP are your Internet Service Provider and your VoIP Service Provider.

Let’s say for example that you were using Vonage as your VoIP provider and Comcast as your ISP. Comcast home Internet service has a 99.9% uptime average; which is very high for the industry. In fact, it would be hard pressed to find an ISP that provides you better than 99.9% uptime. Of course, even though 99.9% uptime is amazing, this translates to 44 minutes of downtime per month. Vonage doesn’t list their uptime average (in their defense, most VoIP companies do not list their uptime. We couldn’t find any for Vonage, VoIP.com, or Packet 8.). So, let’s assume Vonage has a 99% uptime (which is being generous according to the posts we read from users). This translates to an additional 7 hours of outage per month.

For reliability, there is no better choice than POTS. (Which is why many people keep a landline active for 911 service) But if you’re an average phone user willing to weigh Cost against Reliability, VoIP starts to look amazing. Of course, we’ll cover VoIP advantages in another article.