Internet Telephony Attracting Mainstream Users

Internet telephony, known as "voice over Internet protocol" or VOIP, has grown to be a mainstream application that could someday replace traditional phone service. The market for VOIP is broadening to include regular households who don't care how it works but are attracted by the low cost.

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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

Internet telephone service, once a toy for computer geeks, has gone mainstream. More than two million Americans have made the switch to Voice over IP, or VoIP, services which use digital technology. Innovative start-up firms got the trend started by emphasizing the low cost and ease of use. But established companies are attracting a lot of new customers by stressing that their version of VoIP is the same as plain-old telephone service. NPR's Larry Abramson reports.

LARRY ABRAMSON reporting:

For true digital pioneers, there's only one way to make the jump to VoIP; it's called skype.

(Soundbite of telephone dialing; ringing)

KEVIN DELANEY(ph) (Burlington, Ontario): Hi, there.

ABRAMSON: Skype distributes a software program that makes it easy to talk for free to people like Kevin Delaney in Burlington, Ontario. Like 54 million others worldwide, Delaney was drawn to skype by the price--computer-to-computer calls are free--by the voice quality and by the community that has grown up around the service.

DELANEY: I have a lot of friends on skype now. I've met a lot of really interesting people. And there's language-learning groups on the forums that meet at certain times, and you can practice language with each other. It's really interesting.

ABRAMSON: Delaney is only 15, probably not the average for skype users, but his unvarnished enthusiasm for skype is typical. Skype made it possible for him to get his own phone line. It inspired him to found his own start-up company, which makes applications for skype. Many people maintain their regular phone line for local calls or emergencies, but for true believers like Kevin Delaney, that's a sacrilege.

DELANEY: I don't remember the last time I used a landline since I got skype. For local calls, I use skype.

ABRAMSON: Skype makes its money by charging fees for special add-ons, like the ability to call regular phone lines. The service has taken off in Europe and Asia, but in the US much of the growth in Voice over IP technology is coming from suburban families in places like Silver Spring, Maryland.

(Soundbite of dog barking)

ABRAMSON: Greg Waldo(ph) has to consign Rosy(ph) the basset hound to the back yard, then he shows off the Voice over IP setup he got from VoiceWing, the digital telephone service offered by Verizon. Waldo was drawn by the promise of unlimited calls and a 50-percent drop in his phone costs.

Mr. GREG WALDO (VoiceWing User): I'm also curious about technology, but I have a very level-headed wife, and she expects a payoff in terms of my technology. So...

ABRAMSON: It just so happens that Waldo is an electrical engineer at Lockheed Martin, but he didn't need a degree to install the system himself. Skype users have to buy their own special headsets. VoiceWing connects to the same telephones the Waldos have always used. Greg Waldo says he scarcely takes advantage of the computer interface, which lets him track his phone calls like e-mail.

Mr. WALDO: And I have missed calls, incoming calls and outgoing calls. So if I called someone and for some reason I've lost the phone number, you know, I'm able to come and retrieve that.

ABRAMSON: Verizon won't say how many customers have signed up for VoIP, but the phone companies are clearly behind other Voice over IP enterprises in getting into the game. Joe Laszlo with Jupiter Research says phone companies can't really attract new customers with VoIP; it just helps them keep the old ones.

Mr. JOE LASZLO (Jupiter Research): If a customer calls and says, `I want to cancel my phone service because I'm switching to my cable company or another Voice over IP provider,' the phone company at least has a counteroffer they can put on the table.

ABRAMSON: But for cable companies, cheap voice communications lets them offer complete packages of video, high-speed Internet and phone services. Theresa Mastrangelo of Broadbandtrends.com says that helps cable steal restless customers from its rivals.

Ms. THERESA MASTRANGELO (Broadbandtrends.com): The cable operators today certainly have the upper hand because it is easier for them to add a voice component to their infrastructure than it is for a telco to add the video component.

ABRAMSON: Cable and telephone companies still have a long way to go before they catch up with skype and with Vonage, still the US leader with over a million subscribers. But many analysts feel that companies offering nothing but VoIP will have a hard time keeping up as phone and cable companies throw their marketing muscle into the competition. Whoever emerges on top, VoIP is slowly pushing aside older phone technologies that have been around since the beginning. Larry Abramson, NPR News.

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