Net Phoning is Starting to Make Sense

My expectations were not high when I started to set up my Vonage Internet
telephone service. Past experience with Internet telephony had convinced me that
the technology offered neither convenience nor quality. So it was a pleasant
surprise to find that Vonage’s service was all but indistinguishable from that
of my local phone company, Verizon Communications.

Setting up the service requires no special skill, though the amount of fuss
varies with the kind of broadband setup in your home. You can order Vonage
online or get a kit for $90 from major electronics retailers. The service, which
uses a technology called voice over Internet protocol (VOIP), starts at $15 a
month, though most people will find a $35 unlimited plan the most attractive. In
many locations — nationwide by yearend — you can keep your existing phone
number. The $35 price covers all the extras that phone companies typically
charge for, including caller ID, call waiting, and voice mail (accessible from
the Web).

The kit consists of a box that looks exactly like a modem and a network
cable. If you have a simple arrangement at home, say, a single computer
connected directly to a cable or DSL modem, you simply plug the Vonage box into
your modem, then plug your computer and one or two phones into the Vonage box.
If you have a home network, things get a bit more complicated. For the best
voice quality, Vonage recommends plugging its box into the modem and then your
network router into the Vonage converter. This won’t work with some more
complex setups, such as those that provide a direct connection to an office
network. But I found the quality was still quite good when I just plugged the
Vonage adapter into a port in my existing network. In the worst case, you may
have to fiddle with some router settings. Vonage’s instructions offer lots of
help.

There are a couple of flies in this ointment. One is that the Vonage box has
only two wired jacks, meaning there’s no simple way to connect the multiple
phones that most of us have scattered around the house. One solution is a
multiphone cordless system since that requires only one phone jack. Later this
year, Wi-Fi wireless phones that connect directly to Vonage over a wireless
network will hit the market. Vonage also plans an adapter that will make it
simpler to connect the service to existing phone wiring, a task that is possible
now but tricky. Another issue is 911 service. Unless you register the physical
address associated with your phone on Vonage’s Web site, the company cannot
route 911 calls to the correct emergency center.

In the home, VOIP is mainly a way to save on phone bills—typically about
30%. For business, it opens possibilities not available with most phone systems.
I tried a ZIP 4x5 phone from Zultys Technologies, a maker of business systems
that can handle 5 to 1,200 lines. The ZIP, which costs $350, connected over the
Web to the phone system at Zultys’ Sunnyvale headquarters, simulating the
setup for a home or small branch office.

Although the ZIP looks just like a standard desk phone, it’s really a
Linux-powered computer. It acts like an ordinary office extension (handling up
to four VOIP lines, plus an optional standard phone line) but is also a
firewall, router, and Ethernet hub. It works with a PC, where a Windows-based
directory shows the status — available, busy, away — of everyone on the
system and you can dial any contact in Microsoft (MSFT ) Outlook just by
clicking the contact listing. A very nice feature lets you send some incoming
calls to voice mail while forwarding others to a mobile phone. And you can use
the ZIP with any wireless Bluetooth headset for hands-free conversations.

After using the Zultys system, the phone on my desk feels about as up to date
as a rotary dial. I’ve long been skeptical of the convergence of telephones
and computers, but my experience with these products suggests that their time
has definitely come.

By Stephen H Wildstrom
in BusinessWeek. Copyright 2004 by The McGraw-Hill Companies, Inc