The Baby Bell Albatross: VOIP

When Judge Harold Green split Ma Bell into smaller monopolies over 20 years ago, little did he know he was creating a seven-headed monster in the place of one. Leave it to the march of technology and a boost from "number portability" to solve at least some of the dominance problems. One last hurdle remains, but we’ll get to that.

As things are shaping up, it appears that the Great Equalizer in the telecom world may be VOIP (Voice Over IP or Internet Telephony as it is variously known). VOIP is doing to long distance what cell phones did to pay phones. If that wasn’t enough, along came the double-whammy of Number Portability (keeping your phone number when you change telecom providers) coupled with the fact that almost every person in America with broadband service also owns a cell phone. Now the Baby Bells (aka RBOCs) are fighting to keep just their home phone business in major markets. If you didn’t know, number portability now permits you to transfer your home phone number to either a cell phone or a VOIP provider.

By way of example, in Atlanta, the home of BellSouth, a single residential phone line with all the bells and whistles (caller ID, call waiting, call forwarding, etc.) now costs just under $50 a month after adding almost 30% to the basic rates for fees, surcharges, and taxes. To suggest that these fees are beyond the control of the RBOCs is disingenuous considering that most of the regulatory agencies have been firmly ensconced in the hip pocket of the Baby Bells for decades. Assuming you already pay for high speed Internet service, for half (or less) the cost of a BellSouth line, you now can subscribe to any of several VOIP services which provide equivalent "features" plus unlimited local and long distance calling throughout the United States and Canada.

For under $20 a month, BroadVoice now includes free long distance calling to anywhere in the U.S. plus 20 additional countries including most of Europe, Australia, China, and Taiwan. For $5 more, you get another 14 countries. One of the best, but not cheapest, VOIP providers is Vonage. Their residential offering gives you unlimited calling in the U.S. and Canada for $24.99 a month, still about half what BellSouth charges. If you can live with 500 minutes a month, it’s $10 cheaper. But remember, every local call and incoming call counts against your minutes. Another good provider at the $19.95 level with unlimited calling in the U.S. and Canada is Packet8. They were the first provider to offer 911 services for an additional $1.50 a month, something most VOIP providers do not yet have. Vonage now has 911 service as well. If you have a cell phone, 911 is probably not a concern. If not, it may be worth considering. Another advantage offered by many VOIP providers is the ability to request an additional phone number in virtually any area code. Additional numbers typically cost $5 a month. If most of your incoming calls come from one area code, this is a major plus with VOIP.

What’s involved in setting up VOIP service to replace existing local phone service? You’ll need broadband, but you knew that. Don’t cancel your local service until you have signed up with a new VOIP provider and your existing number has been transferred to your new VOIP account. Your VOIP provider will handle all of this and notify you when it’s safe to cancel your existing local phone service. Next, plan how you will use your VOIP service. If you want to use the service from multiple phones in your home, then you’ll want to sign up for a plan with a device called a terminal adapter, a little black box that plugs into your broadband router (for Internet access) and a phone jack somewhere in your home. Don’t try this on the existing phone wire in your home until you have disconnected your Ma Bell line, or you’ll burn up your terminal adapter! For the short term, you can plug a cordless phone into the terminal adapter and get by until you kiss Ma Bell goodbye. Once you safely connect the terminal adapter to a phone jack, other phones in your house will work as usual except you’ll dial 1, then an area code, and then a number to make every call. If you live in an area that already requires 10-digit dialing (like Atlanta), then adding an additional 1 prefix will not be a big deal. It should be noted that a few new firewall/routers now include the terminal adapter functionality in the router; however, it usually locks you in to a specific VOIP provider. With this approach you lose your flexibility to switch providers without ripping out your home (or office) network and starting over so I’d recommend sticking with a separate terminal adapter.

If you plan to use VOIP as a backup to your existing local phone line, some other options are available. Skype, which works in conjunction with your PC or Mac at this time, is a free VOIP service so long as you make calls to other Skype users. Calls to regular phone numbers cost about 2¢ a minute. This includes local calls. Regular phones cannot yet call Skype subscribers although other Skype users can call you as long as your computer is on. Unlike the major VOIP providers where quality is almost indistinguishable from a typical long distance call, Skype calls vary in quality depending upon the microphone and speakers or USB phone attached at both ends of the connection. A better option for a VOIP second line (particularly if you plan to use it mostly for low-cost long distance calling) is IPconnection, a service offered by PC Connection. With this service, you pay $24.95 a year for a phone number. You can call anyone else with an IPconnection phone for free during the year. Other calls are roughly 2.9¢ per minute to about 100 countries. Incoming calls through one of several access numbers in California (not toll free) are free for you although they may not be free for folks calling you from outside California … unless the caller has free long distance calling with their cell phone, of course. I wouldn’t recommend any of IPconnection’s USB phone offerings (which require a PC); however, the terminal adapter and the RJ45 phone work well with exceptional voice quality.

A final option for VOIP service is to acquire a VOIP WiFi phoneset (see inset). With this option, all of the VOIP "smarts" are built into the phone instrument. You can use the phone to make or receive calls from any Wi-Fi location assuming you have rights to use the wireless network. The hardware is currently available for use with IPconnection, BroadVoice, and perhaps soon in the United States with Peerio, a peer-to-peer telephony solution which may grow to rival Napster’s popularity. The remaining hurdle is integrating VOIP WiFi into existing cell phones. A slightly different approach with a cordless phone but still requiring a PC as a host is offered by Skype. And, for under $50, here’s a just-released black box called rapidBox that let’s you use regular phones or cordless phones with Skype.

Finally, here are a few possible drawbacks of VOIP service, and this list is by no means exhaustive. 911 availability already has been mentioned. Voice quality is something you will have to judge for yourself. With the reputable providers, there is almost always a 30-day money-back guarantee so you have nothing to lose by experimenting until you find a service that meets your needs. Faxes don’t work through Internet telephony although there are a number of very low-cost fax solutions that you can find using your favorite search engine. Distinctive ringing with multiple phone numbers has not yet been implemented as far as I know although this certainly may change in the coming year. As mentioned, you can obtain multiple phone numbers in various area codes at very little additional cost. Last but not least, when you kiss Ma Bell goodbye, your number will soon drop out of the local phone book. Shortly thereafter it will drop out of most of the web-based directories since these pull their data from local phone books. There needs to be a way for on-line directories to distinguish between someone who has disconnected a phone number and moved versus someone who has switched their number to a cell phone or VOIP solution. The RBOCs shouldn’t retain exclusive control of whose phone numbers are public and private. This obviously needs to be addressed perhaps by local governments, and there are some task forces working on this. Of course, for many of us, dropping out of the phone book may be a blessing rather than a curse.