Broadband’s killer app arrives

A standard lament in the communications industry is that American consumers

have been slow to adopt broadband internet connections. DSL and cable modems

have been around for years now, but the vast majority of internet users continue

to stick with dialup accounts rather than upgrading.

The reason that people don’t upgrade is that they consider a high-bandwidth

connection to be a luxury, not a necessity. Faster web browsing is nice, as

is the ability to download pictures, MP3s and applications in minutes rather

than hours. But it’s not a reason to spend an extra $25 a month or so –

$300 a year.

In most of these cases, the reason why they’re on the internet at all is email.

Even web access is, for most people, a luxury: the reason that they’re coughing

up $20 a month to be online is that email is a necessity. And email, of all

internet applications, is the one least improved by upgrading to broadband.

Now, however, Vonage has arrived. Broadband

providers should be ecstatic, dialup providers worried, and traditional telecommunications

companies terrified. Finally, there’s a reason for just about anyone to upgrade

to broadband.

Vonage is basically a way of plugging your phone into your cable modem or DSL

connection rather than into a phone jack. Peter Rojas, in Slate, has the goods:

For $40 a month, Vonage gives you unlimited local and long-distance calls,

along with free voice mail, caller ID, call forwarding, and call waiting.

A cheaper version of the service costs $25.99 a month and includes just 500

minutes of long distance. (It’s 3.9 cents a minute after the 500 minutes are

used up.) With the average American household paying about $36 just for local

phone service, Vonage looks like a pretty good deal.

In comparison, I’m paying Verizon $50 a month, plus $16 in taxes, just for the local

component of Vonage’s service. (Tax on Vonage is only 3%, or $1.20 a month on

the premium package, since it’s classed as a data service.)

The great thing about this service is that you don’t need to plug anything

into your computer. In fact, you don’t even need a computer! The router plugs

straight into your broadband connection, and your standard home phone plugs

straight in to the router. (You then need to plug all the other phones in your

home into the same router: this might involve a trip to Radio Shack and a little

bit of time, depending on the size of your house. If you’re in a New York apartment,

it’s not an issue.)

What Vonage has done is make local phone service more or less obsolete. Vonage

makes no distinction between local and long-distance calls, and offers competitive

rates on international calls as well. The baby bells – the companies which

provide the copper wires into your home – used to have a complete monopoly

on local calls. Then other companies were allowed to offer local phone service

too, but still using the baby bells’ copper wire, and still paying them for

that service. Mobile phones offered the first opportunity to lose local phone

service completely, but you couldn’t dial up to the internet on them, and international

calling rates remain appallingly overpriced. Also, you had to change your phone


With Vonage, I can keep my phone number. I can even travel with it: if I hook

up my computer to a hotel’s dataport, plug in the Vonage router, and plug the

hotel phone into that, it’s automatically become my home phone, wherever I am

in the world. I could be in Moscow or Buenos Aires, and I would receive phone

calls for free, and make calls to the US for free, all from my home phone number.

Just think – no more overpriced hotel international phone calls! And at

10 cents a minute to Argentina, even local calls in Buenos Aires might be better

placed through Vonage.

I’ve already persuaded my friend Stefan, in Stockholm, to sign up for the service.

Even when it doesn’t cost very much, people often think twice about calling

internationally when it’s not necessary. Now, if anybody wants to call Stefan,

they can just dial a New York number, and it will go straight through to him.

This is a godsend for ex-pats, even though for some reason Vonage will only

post the necessary router to a US address.

I think that Vonage is going to revolutionise telecommunications. It’s got

good pedigree: Jeffrey Citron, the chairman and CEO, also founded Datek Online

Holdings, the fourth largest US online brokerage, and Island ECN, the second

largest global financial exchange. Pretty soon, competitors will spring up,

and prices will come down further, to the point where Vonage plus a broadband

connection will cost less than the combination of your monthly ISP charges and

your monthly phone bill. At that point, it will actually be cheaper

to have broadband than to have dialup.

My only worry is that the FCC, which is the

creature of the baby bells, will cave

in to them again, and somehow come up with regulations and taxes which put

Vonage out of business. I hope it doesn’t, though. There’s a lot of excess bandwidth

in the US, the product of wildly overoptimistic investment by telecommunications

companies who thought the internet was growing much faster than it actually

was. Vonage could be the perfect application to eat up that bandwidth and get

the telecoms industry going again. Except for the much-hated local phone companies,

of course.

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2 Responses to Broadband’s killer app arrives

  1. geekatlrg says:

    Voice Over IP

    appears to be ready for prime time in the home market


    Voice Over IP (VoIP) is a emerging technology for most large businesses today

    and may even have a good ROI for smaller businesses in a very competitive

    market. However I thought voice over IP at home meant running some software from

    your computer while wearing some geeky headphones that would make you look like

    something out of a B movie about cyborgs.

    Vonage is not like that at all. Vonage actually allows you to connect a Cisco

    ATA analog to digital phone converter to your existing phone(s). Your phone

    functions exactly the same as if you are using a regular POTS line(Standard

    Analog Line Provided by Local Carrier). You do have to dial the full 11 digit

    number for all calls but all features work the same such as caller-ID,

    call-waiting, etc.

    The question is how well does it work? There will be different answers based

    upon your bandwidth and overall connection quality. I have a 2 Mb/s downstream

    and 386k upstream connection via cable modem provided by Time-Warner. I can be

    downloading at full strength and have no lag, hesitation, or dropped calls at

    peak usage times while I have another computer connected to the internet via WAP.

    What is the cost?

    Vonage has two plans:

    25.99 plan is for unlimited local and regional long distance with 500 minutes of

    free long distance to anywhere in the U.S. and Canada.

    39.99 Unlimited long distance anywhere in the U.S. and Canada and unlimited

    local and regional calling.


    in mind that most calls to Europe are generally 5 or 6 cents a minute so it is a

    bargain for many oversees calls also.

    There are positives and negatives to the service and a great deal of it

    dependents on whether you already have a good broadband connection which is




    Prices – 40 bucks for unlimited long distance within the U.S. and Canada is

    an amazing rate. The lower plan with 500 minutes is also quite good depending on

    your calling habits. Please read the bottom of the page on how referrals can

    save you money also.


    of other services – This example only pertains to me but is applicable to

    many other individuals. I was paying close to 50 dollars a month to my phone

    carrier, another 13 – 25 a month to a long distance carrier for a long distance

    plan and long distance fees. I also have two cell phones in my family where the

    majority of long distance calls are made. I now am able to get rid of the local

    phone carrier, the long distance provider, and use a shared minutes plan on the

    cell phones instead of having two separate plans which have been reduced. This

    will save me approximately 800 or more in one year. That is a nice ROI in my



    – This is where Vonage excels. It is loaded with free features such as:


    – This is nice because you can check voicemail through your phone or from the

    internet via windows media player, etc. The voicemail can be configured from the

    web to pick up after so many calls or after being forwarded to another number

    with no answer. Vonage does not limit the number of messages that you can keep

    in your mailbox and they can all be managed online. Vonage will also optionally

    email you when you have a new voicemail. You can customize the greetings and

    configure so that if you don’t like call waiting, a person calling in gets a

    message stating you are on the phone so please leave a message and you will get

    back to them.


    forwarding – This can be configured from the webpage and is better than most

    because you have the option of forwarding immediately or after so many seconds.

    The fact that there is no long distance charges means you can forward it to any

    phone number in the United States or Canada for free. You are still able to have

    the Vonage voicemail be the default voicemail if the forwarded number does not

    pick up in case you want to keep all your voicemails in the same system.


    Transfer – I have to admit that I love this feature. You can transfer your

    current call to anywhere or anyone within the U.S. and Canada. Lets say you are

    on the phone with someone and you need to hit the road. Just transfer the number

    to your cell phone and keep on going. Don’t stop there. Think of the

    possibilities. Lets say you live in Boston and your brother lives in Seattle and

    your mom lives in Dallas. Call your brother and talk to him for a few minutes

    and then say “Why don’t you talk to mom”. All you need to do is transfer him to

    your mom in Dallas and hang up. Those two will be talking absolutely free of

    charge for everyone.


    – Vonage currently supports caller-ID assuming your phone has it built-in. This

    works fine but does not support caller-ID with call waiting at this point.


    Blocking-Vonage allows you to use the *67 in order for your phone number not to

    show up on other persons caller-ID display.


    Dialing – This is sometimes known as “demon dialing”. You dial 5 when you

    get a busy signal and then you it keeps trying to contact the person and rings

    the phone when the line is no longer busy.


    Return – You can dial *69 and a computer voice will tell you the last person

    that called and ask if you would like to return the call. This is voice

    activated so you just need to say YES or NO into the phone.


    Service – This is a new feature at the time of the writing. You have to

    register this with Vonage by entering in your exact address and then Vonage will

    have any 911 calls go directly to your local emergency team for your area.


    Saver – This allows to sacrifice sound quality for the phone using less

    bandwidth. If you have a good broadband connection, you might as well leave this

    at full which is 90kbs.


    Unavailability Forwarding — This is the feature that allows me to get rid

    me of my local phone carrier. If your cable modem is not on or there is a

    network failure then Vonage will forward the calls any number of your choosing.

    I have it set where it forwards to my cell phone. This way if there is a power,

    I can still receive the calls to my cell phone.


    Phone Numbers – You can have multiple virtual phone numbers in different

    cities. If you live in Boston and want to make it local for your family member

    to call you in Atlanta then you can get a phone number that is local to Atlanta.

    It does cost 4.99 a month extra for each phone number outside of the first one

    you choose.


    Online Records – In case you want to see who called and didn’t leave a

    voicemail or who you or a family member has called in a month, it is all

    accessible in real-time from the web page. They have a dashboard view that shows

    all activity of incoming and outgoing calls. You can do advanced searches in

    case you want to find out who called on a certain date or how many phone calls

    were made to a certain phone number.

    Take Vonage Anywhere in the world – You can travel anywhere that has

    broadband connectivity and hook up your phone and still call the U.S. and Canada

    for free. The internet connection still goes to the Vonage server so as far as

    Vonage is concerned, you are calling from the U.S.


    Dependent on Broadband/Power – You are completely dependent on having

    power at your house and no broadband outage. The Network Unavailability

    forwarding works greats if you have a cell phone or landline but it is probably

    not a good idea to have this service without at least a cell phone in case of



    411 – There is no directory assistance available currently with this

    service. I personally never use 411 since the internet is the best way to look

    up phone numbers but this could be problematic for people who use directory

    assistance frequently.


    not have numbers for all cities – Although Vonage is constantly adding local

    numbers to new cities, they may not have one for your city. You can still get

    the service if you don’t mind having a phone number outside of your local

    calling area.


    Issues – The caller-ID does not always show the name of the person calling

    even if it shows the number. It also does not support caller-ID with call

    waiting. I am hoping that Vonage corrects this soon.


    Latency – Internet latency could affect the quality of your phone calls and

    it is possible to get the “tin can” or echo effect on phone calls especially if

    you are downloading a great deal via on your computer. I have not run into this

    issue at the time of this writing but I expect it will occur at least

    sporadically just due to the nature of the internet in general.


    one phone Connector – The Cisco ATA only comes with one functional phone

    connector. This means you will have to find a way to hook all your phones up to

    one jack. This was no issue for me because I have a Vtech cordless phone system

    which just requires one analog connection while the other phones just plug into

    individuals cradles only for power. The one base transmits to all phones on the

    system. Most systems like this support at least 4 phones per one base. Another

    way to avoid this is by going to your telephone Network Interface Box outside

    your house and make sure you disconnect the two (or four) wires and then

    plugging the Cisco ATA directly into one of your analog outlets so that they are

    all live in your house. Cisco does not recommend me this however many people are

    doing it and the principle is sound. My best advice would be to call a

    electrician and seek their advice. I have never tried this myself so I cannot

    vouch for it.


    Vonage is not for everyone. However, if you already have a broadband connection

    and have a fair amount of long distance phone calls then it may be a cost

    effective solution and give you peace of mind knowing you will not have to pay

    for long distance phone calls anymore.

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  2. Vonage says:

    There is a lot of other great

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