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Residential VoIP - No Operators

Some say the media sensationalizes our economic woes for their personal gain. Others say the media accurately portrays the extreme financial burdens we find ourselves facing. And some people say, “Hey. I don’t care about anything, I always have and always will try to save money.” With today’s world becoming increasingly digital, VoIP (digital telephone) seems like a naturally good idea.

Clearly, we at VoIP Tech Chat advocate VoIP. We love it. We love it so much, we made a website called VoIP Tech Chat. And we actually now and then have chats and write articles on VoIP (ok, that last part was a little sarcastically since both Patrick and Fred seem to have been too busy to actually talk or write lately… but anyway…).

Residential Telephone Service and VoIP

If you can read this, you probably live somewhere. Or you’re a robot… which would be AWESOME since we are desperately trying to increase our robotic readership, but seriously, most people in our “audience” live somewhere and have residential phone service. Well, we should say most people used to have residential phone service.

Ten years ago, Mobile Phones were a novelty. Today, they are viewed as a necessity. In the United States, more people have wireless phone service than have traditional landline (POTS) telephone service. And, even with higher drop rates, lower voice quality, and service availability issues, 1/3rd of the current US population live in “wireless only” households (interestingly a very small percentage live in a landline only household, with the group represented mostly by persons “well over” retirement age).

There are some disadvantages to the Wireless Only approach, including emergency calling (aka 911), coverage, name listing in directories, and cost. If you are a “heavy” talker, your wireless phone bill can be very costly depending on your usage. The advantages include calling features (such as caller id and voicemail), having your phone with you at all times, and (interestingly enough) the ability to make emergency calls away from the house.

But wait… isn’t this VoIP Tech Chat? Yes Virgina… let’s continue. VoIP generally provides advanced (and included) calling features, “unlimited” local/long distance calling, inexpensive international rates, and all at a price less than your traditional POTS landline service. The negatives with VoIP? VoIP 911 service does not compare to landline usage. Although most VoIP providers implement an e911 service, the reliability of VoIP for emergency calls does not compare to a landline. A landline simply provides better 911 service, period. (we actually wrote a pretty decent article about VoIP and 911 back in the day… )

Landline POTS telephone service remains the most reliable telephone service available. The consistently maintain five-nine (99.999%) availability and provide the best access to emergency service (911). POTS service also comes with a limited feature set (by default) and hefty price tag.

Let’s compare VoIP, Traditional Telephone, and Wireless

Verizon Unlimited Local service starts at $24.95 per month. If you wanted Caller ID, Voicemail, and Call Waiting (with Caller ID) your bill jumps up to $51.90 — which is absolutely ridiculous, considering this price is the pre-tax rate.

Vonage offers an “unlimited” Local and Long Distance service for $24.95 monthly which includes more than 25 features (such as Caller ID, Call Waiting, and Voicemail). VoIP.com offers the same package for $19.95 (or more than $30 less a month than Verizon). Now, the “unlimited” voice on VoIP providers tends to be around 5,000 minutes a month or so. If you go over it, expect a notice.

Cellular Service ranges anywhere from $30 – $130 monthly per phone depending on the options you choose. By the time you reach the high end, you’re generally getting unlimited minutes and data (mobile web, email, etc.).

For a typical household, VoIP remains a very cost-effective telephone solution; although you must remember that without good (and we mean good), high-speed Internet, your VoIP will be unusable. Many local phone companies offer a “dial tone only” line for less than $15.00 monthly. With the use of VoIP and a dial-tone only landline, you can still save more than $150.00 yearly while providing your family a reliable method of calling during emergencies and power outages.

As Billy Joel would say, it comes down to reality, and that’s fine with me. If you need to tighten the belt, VoIP can help. However if you can get by without having high speed Internet and don’t mind using the mobile phone all the time, you may be fine with becoming a “wireless only” household. Or you may not care about money whatsoever and decide to have all three maxed out.

Either way, when you do realize the benefit of VoIP and embrace the force, we’re here to help.

Clearwire, which has a history of blocking VoIP providers such as Vonage and voip.com, may not have the best reputation for early adopters.

With a history of non-net-neutrality, we would hope that Clearwire (and Sprint) both make active statements about the future of WiMax service with VoIP and the ability to choose your own provider.

We can remember helping troubleshoot many a VoIP issue with Clearwire customers affected by their blocking policies. When asked, “Why would Clearwire block Vonage but offer their own VoIP service?” we would simply say, “because they can.” Although these issues were mostly in the past (2006), we must remember that history is a great predictor.

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.

If MagicJack reaches 500,000, they will be the second largest VoIP provider; with only Vonage’s 2.5 million plus internet telephone subscribers ahead of them. The twice.com article talks about the MagicJack business plan and some of their future ideas. It’s not a bad read.

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.

By the way, for more information on how a bill becomes a law, please listen, read, and buy School House Rock’s “I’m Just a Bill.” Everyone together now, I’m just a bill, Yes I’m only a bill….

So, back in 2005 when Vonage started gaining popularity in the residential telephone game, the FCC decided that VoIP providers should be required to provide enhanced 911 to their subscribers by 2006. Well, VoIP providers did their best, but 911 routing definitely does not come in a one-size-fits-all type of system. Every 911 center has their own integration and traditionally had been controlled specifically by brick and mortar POTS companies; who weren’t super pleased with integrating their services to companies stealing their customers.

VoIP providers asked the FCC for extensions and basically Congress came in and decided that more laws should be created to help the process.

The Act (H.R. 3403) requires the FCC to regulate VoIP to 911 connectivity and ensure VoIP providers receive access to 911 and enhanced 911 centers.The bill also sets into place how much local governments can charge VoIP carriers for these connections.

So, the bottom line?

Get ready for improved access to 911 from VoIP providers and get ready for more 911 taxes on your VoIP line.

A copy of the 911 Modernization and Public Safety Act of 2007 report can be downloaded right here from VoIP Tech Chat.

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.