Vonage Provides Examples Of VoIP Opportunities

Vonage is not your average startup company. Its CEO, Jeffrey Citron, started Datek and The Island ECN online trading networks. And Vonage isn't your average VoIP company, either. It can be called a bypass carrier, as it bypasses everything users need from their local phone company and uses a broadband Internet connection.

Here's how it works: When users sign up for the service, they get a router that connects to the Ethernet port on their cable modem and has an RJ11 jack for a phone and RJ45 port for the rest of a home network. If the home router isn't located near where the phone lines terminate, a user may have to do some wiring to connect them,in my case, it took about 20 minutes to pull the wires through my basement. That represents the first opportunity for VARs: Rerouting wires is a great entry point into a small business, and helping a small business rewire its phone service can be quite profitable.

VoIP is also a good motivator for businesses to obtain broadband Internet service if they don't have it already. There is nothing else to really do to set up the service, short of setting up the various calling features.

What is appealing about Vonage is the price and the control of service over a user's phone line characteristics. This is also something that will appeal to small businesses that make a lot of long-distance calls. What makes Vonage attractive is that users can make changes to their phone service via a series of Web pages, allowing them to set up call forwarding, call waiting, voice mail and just about anything else they might need. Users can also get their bills via the Web and track call usage, as well as listen to voice mail via a series of e-mail-attached sound files,handy for someone who isn't ordinarily home during the day. Again, it presents the VAR with the opportunities to sell their customers on having more control over their calling features, too.

The Web-based answering machine works just like the telco-operated voice mail. Users hear a stutter tone when they pick up the phone if they have any messages, and they can dial the voice-mail service and listen to their messages over the phone or click on the sound files on the Web "control panel" page and hear the message played over the computer's speakers.

Vonage also offers number portability, allowing users to take their phone number with them wherever they go. All users need is a broadband IP connection and their router (the home phone number is tied to its MAC address). This feature comes in handy for users who travel overseas and don't want to pay the usurious rates that hotels charge for international calls. Again, this is something that has big appeal for businesses as well.

The only major problem with the Vonage service is that the phone service is now only as reliable as the cable service: If the cable modem goes out or the cable company is experiencing network problems, or if a user loses electrical power, the user will not have phone service.

Vonage offers a fixed monthly price of $35, which includes all calls made to numbers in North America. There are other, cheaper plans for those users who make fewer long-distance calls, and all calling features,such as Caller ID, call waiting and voice mail,are included in the price.

My experience using the Vonage service so far has been mostly positive. Some of my callers say the line quality isn't always perfect, and they can hear echoes on the calls. I wasn't able to get my router to connect at one hotel that had a broadband connection in the room. And sometimes the phone rings for a while before popping into voice mail.

There is a bit of work to do to get everything set up to use the service, including having Vonage register a user's actual physical location with the local 911 emergency service computers. And you have to dial all 10 digits even when making even local calls,something many people have to do anyway in metropolitan areas with lots of new area codes. VARs will find, however, that none of these are deal-breakers for companies that are looking to reduce costs and take advantage of their existing network resources.