VoIP Getting Serious

Jim Louderback provides a lively and understandable description of how phone service works, with an eye toward the VoIP future:

To understand how VOIP works, we first need to understand POTS. Remember the tin can-and-string intercom systems we all dabbled with as kids? The original telephone network was more like that than you might think. It was basically just a huge snarl of electric string, connecting up every phone (or tin can) to every other phone in the world.

It’s called a “switched” network, because whenever you made a phone call, a series of switches created a virtual circuit between you and your callee. Dial a number, and instantly billions of dollars of equipment sprang into action, creating in essence one really long piece of string between you and your friend.

As computers became cheaper and faster, telephony scientists figured out how to turn your voice into computer-lingo, or a long spaghetti-like strand of ones and zeros, through a process called digitization. Additional technological wizardry then sliced up that spaghetti strand every few thousand digits or so, into what’s called a packet. And more magic was used to splice all those packets back together into something resembling the original conversation.

That led to combining tens or hundreds of calls — all headed to roughly to the same place — by combining all those millions of packets into a babbling brew. This co-mingling of conversations allowed one single network circuit – like your broadband cable modem or DSL connection — to carry hundreds of calls much more cheaply than all those virtual strings ever could.

Today, the average call from LA to New York starts out as a single connection from your phone to a switching center somewhere nearby. That center then converts your call into a digital spaghetti strand. The strand is sliced up and combined with thousands of other calls all going back and forth between LA and New York. In New York, a similar device recombines all the spaghetti pieces in exactly the right order (so that “I Love You” doesn’t turn into “You Love I”), and then it gets pushed down the string that’s hardwired to your friend’s house.

….If you have a PC, you’ve probably got everything you need to start making VOIP calls. A cheap headset, hooked up to your sound card, substitutes for your phone’s handset. And a wide range of software will connect you up with similarly endowed PC users around the world.

You can’t call any phone anywhere – at least not for free. Calling from PC to PC, or from Internet phone to Internet phone won’t set you back, but once you try to hook up with a POTS phone either the caller or receiver has to pay.

The good news is you don’t have to pay a lot. One vendor lets you call anywhere in the US and Canada and talk as long as you want, for just $35 a month. Another gives you 500 minutes (more than eight hours) of nationwide long-distance for $25.

Picking the right service: So how do you decide which is right for you? There are a range of different scenarios, each with different strengths.

Second Line: If you just want a second line to keep your chatty teenager from taking over your home phone, look first to your cable TV operator. The telephony service that many offer starts at around $20 a month, and it’s a cheap way to add a second line without all the hassles, or all the nasty taxes. Not every cable operator sells phone service, and those that do haven’t rolled it out everywhere. But if it’s available to you, it’s a good way to go.

Cheaper Nationwide Phone Service: If your cable company offers digital telephone service, consider adding one of the more expensive packages – which generally cost between $40 and $50. You’ll get unlimited local calling, 5000 or more minutes of domestic long distance, and more. It’s a good choice if you’re already paying for cable, and you don’t make a lot of international calls.

DSL VOIP: If you’re using DSL, or if your cable operator doesn’t offer digital phones, look into service from a relatively small company called Vonage (more on them in our sidebar). You get a local phone number, the ability to dial any POTS line, even internationally, and unlimited long-distance calling, all at rates competitive with cable. If you want to dump your traditional phone, though, beware. Many DSL providers – who typically also provide that local phone service – will charge you more for DSL without a local phone number. So far only Qwest will give you DSL at the same rate whether you have a local phone with them or not.

International Phone: Calling just a small group of people with broadband access and PCs elsewhere around the world? Consider either a SIPPhone, a black box that connects any phone up with your broadband connection, or one of the free PC to PC SIP services. We explain both in our sidebars on PC to PC and digital phone calling. With these, though, you can only call others using the same service – not POTS lines. Our sidebars also explore these options

Built-In Broadband: If you’re in college, or at work, and someone else already pays for your broadband, consider the Skype network. It’s a peer-to-peer service, like Napster, and only calls other PCs running the software. But it’s easy to set up and use, and has taken college campuses by storm.

Corporations: Today you can get big corporate VOIP systems from networking vendors including 3Com and Cisco. These systems can cut your phone bill substantially, without any noticeable loss in quality. Look for Microsoft to get into corporate VOIP soon, with a new server that’ll bring prices down even further. [Ziff Davis]

I use a cable modem for broadband and my problem with VoIP is that my service still cuts out periodically, often enough that I would not want to have to rely on it for emergency service, or even an important business call. The FCC is encouraging VoIP, seeing it as the telecommunication future.