VoIP is one of the hottest technologies out there today. VoIP phone card business has been rewarding for early movers such as Vonage and Skype. But like any other growing market, the threat of new entrants is high in this market. As a rule in economics, companies will enter this market until there is a profit to be earned. Microsoft, Google, and AOL are just a few companies that are planning to compete in the VoIP market. But there is more to come, and the battle for the VoIP phone card market supremacy is going to heat up in the next couple of years.

The VoIP telephony business is intriguing since it allows the VoIP service providers to keep their costs low and pass on their savings to their customers. Vonage and Skype are the two most famous names in the VoIP phone card business. Vonage recently had its IPO, and the investors are optimistic about the future of this company. Vonage is planning to spend heavily in the next quarters to bolster its position in the VoIP market. Skype, now an asset of eBay, has other plans in mind. Skype understands that the next couple of years are critical for all VoIP service providers. The market is expanding fast, and a small mistake can lead to a disaster for a VoIP market leader. Skype has decided to take matters in its own hands, and it has planned out a very aggressive strategy to take market share away from Vonage and other VoIP service providers.

Skype has decided to offer free calls to the U.S and Canada to its service users for a limited time. This strategy will allow Skype to solidify its position in the VoIP market. Moreover, this move will strengthen the VoIP phone card business’ barriers to entry. In other words, small companies which are thinking of entering this market are now unlikely to do so because of the difficult task of matching or bettering Skype’s newest offer. In addition, this will be a huge blow for Vonage since it charges $25 a month for a similar service. Vonage is the leader in the “hard VoIP” market. It provides its customers with a piece of hardware that allows them to use its services. Vonage has been losing money for quite some time now due to its high marketing costs. With the introduction of SkypeOut, Vonage has to spend even more money to protect its VoIP phone card business. Besides, Vonage will have to convince its investors that it is not helpless against the eBay’s newest wave of attacks. So eBay has certainly taken the upper hand in the fight for the supremacy of the VoIP market.

AOL and Google are also planning to add VoIP technology to their messenger services. So, Vonage’s position in the VoIP market is expected to come even under more pressure in the upcoming quarters. Whether Vonage can come up with its own knocking out punch against its rivals is remain to be seen. But, the VoIP market wars are bound to get even more interesting in the upcoming months.

Panah Mosaferirad began his career as an IT. After 2 years in the IT industry, he started an online venture on eBay and Amazon. During this period, he sold numerous items online and mastered the strategic aspects of eBusiness. In 2006, Panah Joined the Fox school of Business and Management’s MBA program to study e-business management.

Panah Mosaferirad is a marketing intern for Pingo’s International calling card business that provides virtual VoIP prepaid calling cards online at http://www.pingo.com/aboutus.do

Share This

Why do some people choose to use VoIP over the local telephone company service?

While there are many possible answers to the question above, I’d like to point out a few reasons that I’ve personally seen or heard of. Being a small business owner, I for one made the decision based on cost. So let’s start there.

Before switching to VoIP, I was using my local RBOC (Regional Bell Operating Company) and a large long distance provider. My local RBOC bill averaged $25.00 per month and my long distance bill could be as low as $15 per month or as high as $150 per month. The first thing I switched was my long distance provider. By switching I saw an immediate cost reduction. This was certainly a step in the right direction. Bottom line was that before switching to VoIP my monthly phone bill was $40 to $165 per month, which I was able to reduce to $29 to $100 per month. This was still not good enough given the range of the monthly cost. I needed a way to budget a fixed amount. Enter VoIP. After switching to VoIP my monthly bill including E911 fee and all taxes comes out to just under $25 a month. That, for me, was the bottom line. Cost savings.

One of my customers switched to VoIP for not only the cost savings, but also the convenience. You see his daughter was going off to college in another state. He wanted his daughter to be able to call home at anytime and not worry about long distance charges. He took the option of a virtual number. When using VoIP area codes mean little. The call is routed through your broadband connection. To a computer, area codes don’t mean anything. It’s just data flowing through the internet. By using VoIP and a virtual number allowed this customer to choose a virtual number in the same area code as his daughters. Every time his daughter calls home, she dials his virtual number (local number), which then rings at his home in another state. He gets to speak with her all the time and she pays for a local call. So in this case it wasn’t cost alone, but the convenience as well.

Here’s one last example of a family who had a son serving in the military in Europe. This family chose to use a videophone and purchased 2 such phones. When their son was sent to Europe he brought the phone with him. Since he had access to a broadband connection, he simply plugged his phone in and was able to call home. Yes, a LOCAL call! Not only that, but he was able to actually ’see’ his family. This setup consisted of 2 videophones and two accounts. His family could call him, or he could call his family. In both cases it was charged as a local call (even though he was stationed in Europe and his family was state side). If this wasn’t good enough, by using the videophone, they could actually SEE each other. This is really VoIP in action. The son in the military was still able to ’see’ the Christmas tree, participate in birthday parties and so much more.

There are many reasons for switching to VoIP and the examples above are certainly not inclusive. Whatever your reasons for considering this service, chances are there is a provider and plan to fit your needs.

FullService Broadband Provider. Unbiased, informative information on broadband technology made possible through Try Right Technology, Inc.

Copyright 2006

Share This

Now we have accepted that VoIP is no longer just a phone service, it has become feature rich as it merges with computer configurations. The VoIP’s existence has changed considerably over the last few years, coupled with the availability of broadband connection to the Internet, plus leaps in multimedia technology in which virtual operations with remote sites becomes more enhanced, makes VoIP service a viable alternative to traditional communication offerings.

Cost savings is not the only driving force for VoIP implementations, enterprises have to consider some business aspects that VoIP can bring about. VoIP creates potentials for applications that could not have been done before. Collaboration, integration, and interactivity between employees and applications are one of the several business benefits that enterprises can derive from VoIP adoption. Nevertheless, amid euphoria of VoIP technology, there are three important aspects to look at before a company goes VoIP. In the following paragraphs I will summarize the aspect of security, stability, and interoperability that play a key role in the successful implementation of VoIP.

1. Security

VoIP implementations may expose new security risks and challenges that somehow become greater concern than quality and cost-efficiency among vendors and users. VoIP networks are vulnerable to all the same security risks as traditional IP data networks, including:

• Denial of Service (DoS), viruses, worms,
• Toll fraud and unauthorized access,
• Spoofing, and port scanning.

It is recommended that organizations should adopt a layered, defense-in-depth security strategy to address the issue with the increasing proliferation of new Internet-borne attacks and malicious activities in recent years. In this architecture, the network is segmented into secure zones protected by layers of firewall, intrusion prevention, and other security services. This strategy allows the organizations to logically split and secure voice and data networks in front of individual voice and data components and between interactive points in the network.

2. Stability

One of the main issues of VoIP is the amount of bandwidth required for each call. There must be adequate bandwidth reserved and the quality of the link must be well maintained throughout each call to ensure the users are not affected. As the very nature of VoIP call is real-time, any disruption during the call would be easily noticeable and unacceptable. The two issues that enterprises usually have to deal with here are bandwidth and quality of service (QoS).

VoIP calls need a data transmission speed of 64kb/s to produce the quality of voice comparable to that of a normal telephone call. That 64kb/s channel needs to remain open and unaffected for the duration of the call. Theoretically, VoIP installations would not allow such a huge bandwidth to be allocated for VoIP alone. Therefore, there needs to be a compression taking place to compact the voice data into a considerable size before it gets transmitted over a packet switching network. G.723 codec that is incorporated in VoIP standard protocol H.232 can take a 64kb/s stream of data and squash it down to a mere 5.5kb/s or so. Generally, for VoIP to work reliably over WAN links, there has to be low jitter, low packet loss, a considerably high-speed connection between the endpoints, and less than 200ms delay.

3. Interoperability

Compatibility between VoIP equipment from different vendors is a very important aspect to boost the use of VoIP products. Without standardized quality of service mechanisms businesses would need to buy all the equipment and the QoS server from the same manufacturer. The VoIP world seems to be divided between many vendors with reluctance to establish interoperability and some who are trying to be end-to-end supplier but at the same time worried about interoperability. The protocols used in VoIP communication are still considered fairly complex in comparison to most of the other protocols involved in Internet applications. SIP (Session Initiation Protocol - a signaling protocol for Internet conferencing, telephony, events notification, and instant messaging), that is regarded as simple and elegant the other protocols, is still not efficient.

On the bright side, however, SIP is approaching status as an IETF (Internet Engineering Task Force) standard, after several years of work. With the recent version, it has achieved a greater amount of stability and changes are becoming smaller and smaller. Phone switch companies such as Nortel have recently begun supporting SIP, and now the manufacturers of handsets and related devices will soon ramp up their support. Motorola, Avaya, and Proxim have made collaboration on the creation and deployment of IP telephony solutions that will deliver new extents of communication mobility and network connectivity.

Finally, with these three VoIP aspects covered, businesses will be able to maximize their investment by applying it as the backbone of internal communication such as phone conversation, videoconferencing, instant messaging, faxing, etc. Another area that will widely make use of VoIP is call centers, in which Web contacts, virtual operations with outsourcers overseas, and remote sites, such as home agents, all could improve the customer experience. New VoIP applications that we have not thought about may also come into existence as the services generates more business and profits for companies.

Al Falaq Arsendatama is web entrepreneur specializing in technology and finance.
Please visit Direct TV vs Dish Network Comparison for free guide on selecting a satellite TV network.

Share This