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Publisher's Outlook
June 2003

Rich Tehrani

At Home And On The Road: Vonage Delivers


If anyone tries to tell you that Internet telephony isn�t ready for adoption or in fact just doesn�t work, don�t believe them. Instead, try Vonage. Simply stated, Vonage is the best personal/SOHO Internet telephony solution I have seen and that�s in part due to the fact that when using this service you usually don�t realize you are using Internet telephony at all.

It is really easy to use Vonage. When you subscribe, you are sent a Cisco ATA 186, which plugs into a router/four-port switch (additional $40) which then plugs into your broadband connection. The router is not essential but is needed if you want to share your Internet connection with PCs and other devices. If you don�t have a broadband connection, you will likely want to get one with lots of bandwidth such as Optimum Online from Cablevision, which Vonage technicians especially like. (A word of full disclosure; I am currently a shareholder in Cablevision.)

Unlike most competing services, Vonage gives you an incoming phone number so you can receive incoming calls and faxes. They also take advantage of local number portability in certain areas allowing you to retain your current phone number and transfer it to your Vonage account. Another service that is bundled in at no additional cost is a professional quality voice mail system that can e-mail you when a message is received and allow you to play messages over the Web. Add to that call waiting, call forwarding, repeat dialing, call transfer, the selection of any area code you like, unbelievably low international rates, Caller-ID and -- best of all -- virtual phone numbers and the ability to control your features via the Web. A virtual phone number is a service that allows you to specify an additional number or numbers in other area codes for $5 per month. These numbers are virtually mapped to your primary Vonage number with no addition fee incurred per minute. If you have people that call you from other area codes, you can now eliminate their long-distance calls to you. This is great for businesses as well as family members such as perpetually broke students who might wish to keep in touch with Mom and Dad.

The service starts at $25.99 per month and includes unlimited local and regional calling as well as 500 long-distance minutes to anywhere in the U.S. and Canada. For $39.99 per month you get free long-distance throughout the U.S. and Canada as well as a host of bundled services. Vonage will eat all other phone companies alive with these prices and fee-based services. There is no better value in fixed-wire telephony.

I used Vonage at home for a few weeks and experienced �great� quality although five to 10 percent of my calls were of slightly worse �fair� quality. Even the worst call quality that I experienced using Vonage was much better than many cell phone calls I make. In every case that a Vonage call was not of ideal quality, I disconnected and redialed and the call was crystal clear. Other than these few calls, the service was bulletproof. Faxes too were sent without a hitch.

Recently I went to Argentina on vacation and made sure to stay in a hotel with broadband access. I brought a Linksys wireless access point/four-port switch and the Cisco ATA 186. When I got to the hotel, I learned that the broadband access was actually the output of a WiFi bridge, the Linksys WET11. The hotel supplied this bridge as a way to access their WiFi network and did not in fact have wired broadband in each room. I connected the output of this bridge into the wireless access point I brought with me. I then connected the ATA 186 to the access point (Figure 1). I started a ping session to Yahoo! and found the average reply time was 200 milliseconds as opposed to 20-30 milliseconds that I would receive over my WiFi connection at home. Bandwidth testing showed an average of about 600 Kbps throughput over the hotel network versus over 1,500 kbps using Optimum Online.

Now it was time for the real test. Over the course of a week, over 100 calls were placed and every call was of good to great quality. I tried flooding the hotel network with traffic, to see how this would affect the Vonage service and as expected the latency and lost packets increased substantially making it impossible to converse effectively. Another interesting point is that calls to America were consistently clearer than calls to Argentina.

I really feel that services like Vonage are the future. I predict that services like Vonage coupled with cell phones will be responsible for LECs losing 20-35 percent of their revenue from residential users in the next five years. LECs really have their work cut out for them. My concern is that rather than competing fairly, they will lobby to regulate Internet telephony to the point where it is not attractive. Lets hope the FCC doesn�t let this happen.

Recently Vonage decided to treat Canadian calls just like domestic calls. This means unlimited plans can call Canada for free and if you are on a limited plan and go over your minutes, calls to Canada are charged at the 3.9 cent domestic rate. Businesses benefit as well, in that Vonage offers two distinct business plans. A basic plan costs just $39.99/month and includes 1,500 local and long-distance minutes while the unlimited plan costs $69.99/month.

One great benefit of using Vonage is that you can see the details of all of your phone transactions immediately online. This is a great feature, and that is just the beginning of the things you can do yourself via the Web. For example, you can change your phone number for a $10 fee. You can change the address that is notified via e-mail when you receive a voice mail. You can change the amount of time that elapses before a call is forwarded into voice mail. The range of this option is instant to 50 seconds. If the Internet is down, you can specify that calls are forwarded to another telephone number. You can change the amount of bandwidth your telephone calls take up. You can turn call waiting on or off. By now you should get the idea, this service is very flexible and loaded with great services.

For those of you that are concerned about sound quality, it is obviously affected in limited bandwidth situations. I have tried punishing the service at home. I have downloaded as many songs as I could to see if I could destroy the quality of the telephony service. I couldn�t knock the quality. In normal use, most broadband connections with throughput of at least 1Mb/s should be good enough for Vonage to work well.

The account I received was a demo account, which was being used by someone previously. For whatever reason my service did not work right away and I was forced to call tech support. Generally, I would prefer ingesting poison than calling tech support. I am not too patient and waiting 45 minutes for a live agent that often knows less than me is not something I look forward to. Not so with Vonage. I spoke with a few tech support people and they were first-rate. The wait was minimal. I am pretty sure that these tech support people were not aware that I was with the press and as such I believe that a typical person should receive excellent service as well.

I racked my brains trying to improve this service. There are only a few suggestions that I have. For some reason, you are required to call a different number than your own phone number for voice mail access. This requires the learning of a second number, which is less than ideal. While on the topic, it would be ideal to allow call screening and the ability to barge in on a caller in your voice mailbox.

Vonage has a great service and is an incredible value. This is the type of service the industry has been waiting for. Vonage proves that there are still incredible opportunities to make money in the IP telephony space. They have done an amazing job and should be commended for offering such a great service at such a reasonable price.

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