Internet telephone comes online in Springfield

by Jill Henry

SBJ Reporter

jhenry@sbj.net

Springfield residents who use broadband rather than dial-up access to the Internet have a new option when it comes to making local and long-distance phone calls, and they will likely have even more options by the end of the year.

Kansas City-based Nuvio Corporation Jan. 15 introduced its Voice Over Internet Protocol services to the Springfield area. VoIP technology allows broadband users to bypass the use of traditional landlines. VoIP replaces landlines in the customer's home, and local and long-distance telephone calls are sent and received through the broadband connection. Nuvio officials said both the caller and the person receiving the call will use the telephone itself in the same way.

"This is just like your phone service," Nuvio CEO Jason Talley said. "It looks and feels like your phone service. You have caller ID, three-way calling, call forwarding all of the things you would expect when you pick up the phone and call."

In order to use VoIP technology, customers must have broadband or DSL access, which Nuvio does not offer. Nuvio provides customers with an adaptor, similar to a modem, to plug into their computer. Regular household telephones may then be plugged into the adaptor to route phone calls through the broadband connection. VoIP customers are then able to place calls to any other phone, regardless of whether the recipient uses VoIP or traditional phone service.

Unlimited service

VoIP has the potential to pass savings along to customers, Talley said, with unlimited long distance minutes in some calling plans and using broadband or DSL connections for a second purpose. "You're able to make more benefit of the costs that you're currently paying for your Internet," Talley said.

In addition to standard features like caller ID and call waiting, number portability is also available, allowing customers to use their VoIP services anywhere in the world. "Let's say you were going overseas for two weeks but needed to keep in touch with people," Talley said. "You pack your terminal adaptor in your suitcase and when you get over there, you plug it in to the high-speed Internet access and nobody knows it's any different. It's instantaneous. Our system does not care where you are."

Mediacom is making plans to offer its own VoIP product to Springfield area customers, possibly in the second half of 2004, although an exact date has not been determined. Mediacom's VoIP product is similar to Nuvio's.

Calvin Craib, senior vice price of business development at Mediacom's Middletown, N.Y., headquarters, said Mediacom's technology would be a "hybrid" of Internet protocol technology and traditional voice technology.

"The (Internet protocol) portion of it would run on our existing networks wherever we offer video and high-speed data service. The customer, the ultimate consumer in their home, would need to have a cable modem which currently delivers our Internet access business and would now also be used for a telephony business," Craib said.

Roll out, response

Mediacom anticipates rolling out a product similar to those already offered by cable television companies Time-Warner in the Kansas City area and Cablevision in the New York City area. "Each of their products is what we refer to as an all-you-can-eat product," Craib said. "It's a bundle of local and long-distance minutes that can be up to unlimited calling for somewhere in the $35 to $45 price range." Craib stressed that Mediacom has not yet set prices for its VoIP product.

Jim Maiella, spokesman for Cablevision, said the company's VoIP product, Optimum Voice, has been well received by New York City area customers, though sales numbers reflecting the rollout won't be available until the company's fourth quarter figures are released in March.

Maiella declined to comment on an average cost savings per Cablevision VoIP customer compared to traditional landlines.

AT&T will introduce a residential VoIP product as well. Kerry Hibbs, AT&T spokesman, said the company plans to establish VoIP service in about 100 markets by the end of the year.

Business users

Another type of VoIP, targeted for business use, may soon be offered to Springfield area companies.

Shawn Dainas, spokesperson for SBC, said its product is currently available in more than 30 markets, including Los Angeles, Dallas and Chicago.

"By the end of the year we'll be in most cities' major metro markets so we're moving pretty fast to get the service out there," Dainas said, adding that SBC hopes to introduce VoIP service in Springfield this spring.

SBC's business-only VoIP utilizes a T1 or T3 connection rather than the broadband connection required for the residential services offered by other companies. Business-only VoIP is similar to PBX phone systems, and moves a company's phone system from landlines to T1 or T3 connections.

Regulation

The FCC is currently studying the VoIP industry. At issue is whether VOIP is a telecommunications service and should be regulated as such, or an information service requiring no regulation.

"We're not prejudging anything," said Michael Balmoris, FCC spokesperson. "We haven't stated one way or another what the commission is going to do, besides there are a whole host of issues surrounding this, and we are opening (the forum) up and hoping to solve the issue."

California, Wisconsin and Minnesota consider VoIP a telecommunications service, and made the decision to regulate the industry, similar to regulations governing telephone services.

FCC Chairman Michael K. Powell, in his opening remarks at the all-day FCC Forum on Voice Over Internet Protocol held Dec. 1 in Washington, D.C., said, "As one who believes unflinchingly in maintaining an Internet free from government regulation, I believe that IP-based services such as VoIP should evolve in a regulation-free zone."

And VoIP is expected to evolve steadily. The New Millennium Research Council issued a report in December estimating that by 2009, 40 percent of phone calls made within the U.S. will be placed over the Internet. The Stamford, Conn.-based Meta Group estimates that, within two years, 30 percent of U.S. businesses will utilize VoIP.

Taxes and fees

VoIP may save money for its customers, but the bypassing of traditional phone lines may create new problems for the telephone industry. Revenue associated with traditional telephone services fees and taxes, including Universal Service Fund fees, access fees, local number portability, wireless number portability, federal, state and local taxes may be not be generated by VoIP.

"We're paying those charges right now," Talley said. "Nuvio pays those charges when we purchase circuits from the telephone company, so universal service charges are being collected. We are not collecting them from each individual user. We do not fall under that regulatory directive."

Phone companies may be short-changed in another way.

"Long distance companies currently pay per minute charges to local telephone companies for use of the local telephone company facilities on long distance calls and that's a significant revenue stream for local telephone companies," said John Van Eschen, manager of the telecommunications department of the Missouri Public Service Commission. "In voice over the Internet applications, some providers are avoiding those charges."

Van Eschen said there are issues concerning 911 systems and VoIP as well, including whether 911 call centers will be provided with information needed to identify where calls originated. Also of concern, Van Eschen said, is the possibility of unequal regulatory treatment between companies. "This could put pressure on customers of local telephone companies to pay higher rates" to local companies to make up for lost revenue, he said.