Experts Say Applications Will Drive VOIP Growth

By Matt Hines  |  Posted 2005-09-20

Experts Say Applications Will Drive VOIP Growth

BOSTON—Executives and market watchers surveying the VOIP (voice over IP) space insist that integrated communications applications will drive future adoption of the technology among consumers, not cost savings.

Meeting at the ongoing VON Fall 2005 Conference here this week, a range of experts, and some users, agreed that emerging Internet telephony applications will convince consumers to embrace VOIP.

The concept stands in contrast to the long-held belief that VOIPs ability to dramatically reduce long distance calling bills would serve as the primary catalyst for growth in the consumer sector.

Researchers at iSuppli Corp., El Segundo, Calif., have projected that the number of residential VOIP subscribers worldwide will rise to 197 million by 2010, a dramatic increase over the estimated 4.8 million consumers utilizing VOIP tools in 2004.

People like David Beckemeyer, former chief technology officer at Internet service provider EarthLink, say that a new generation of VOIP tools will drive a majority of that growth.

"Most people in the U.S. already feel that phone calls are cheap enough, building new applications that allow them to have more control over their communications services is the key," Beckemeyer said. "Once people see those, they wont want to go back to traditional technologies."

Click here to read about the big companies that are entering the VOIP game.

According to Beckemeyer—whose latest company, TelEvolution Inc., Danville, Calif., markets a telephone adapter known as the PhoneGnome that allows consumers to receive both Internet and traditional calls over broadband connections—it will be the new capabilities driven by such tools that spur more people to consider VOIP.

For instance, PhoneGnome, and VOIP services offered by much larger rivals such as America Online Inc., Skype Technologies and Vonage Holdings Corp., boast the ability for their VOIP customers to transfer voice mail to e-mail, screen for telemarketers and launch three-way calls.

Those types of services, and even more sophisticated features that allow people to integrate all their various messaging platforms, including voice, text and video communications, will serve as a primary motivator for consumers to adopt VOIP tools in the future, Beckemeyer said.

For its part, AOL, Reston, Va., introduced its new TotalTalk VOIP offering at the conference, which displayed a number of the applications that technology providers are hyping as the future for such consumer services.

Using the systems Web interface, customers can build profiles of the people they communicate with and blend contact information across AOLs various messaging systems.

Other features allow users to split one phone line to take two simultaneous calls on both a phone and PC, block calls from people they dont want to hear from and create alerts to inform them when someone is calling one of their devices.

Next Page: VOIPs appeal goes beyond cost-savings.

VOIPs Appeal Goes Beyond


Richard Evans, one of the few consumers walking the trade shows floors, agreed that those types of tools will cause him to decide which VOIP services to purchase in the future, not the promise of savings.

"Thats the really exciting part of all this, seeing these vendors start to take VOIP beyond a cost savings thing, and make it into something that blows away the products that you can go out and buy today," said Evans, a 46-year-old computer programmer.

"I want to be able to sit down at my computer and conference people I know around the world at the click of a button, and to stay connected away from home or the office by getting my devices to communicate better."

AOL launches IM, VOIP tools. Click here to read more.

Evans, who has previously paid for VOIP services from both Skype and Vonage, said that hes interested in seeing offerings being created by companies such as AOL, Google Inc. and Yahoo Inc. that pull together IM, e-mail and voice applications, as hes interested in tying together all his forms of communication.

To some market watchers, the most attractive VOIP applications of the future will include online tools that allow consumers to build their own services from various providers, in order to create a personalized array of calling and communications systems.

For Andy Abramson, chief executive of marketing firm Communicano Inc., a big part of the attraction of such offerings will be in customers ability to service themselves, rather than buy pre-packaged sets of features.

According to Abramson, who is also a well-known blogger in the VOIP space, traditional carriers such as AT&T Corp. that are already making significant investments in Internet telephony systems will still own a large share of the calling market.

But he said they will be forced to allow customers to pick and choose their own services, and that many of those services will also be offered free-of-charge in the carriers VOIP offerings, despite the fact that they are paid services today.

"Youre talking about eliminating the horror story of dealing with the carriers," he said. "I expect that there will be a war among AT&T, AOL and all the major cable companies to win VOIP users over the next several years, and the extent to which people are given the chance to service themselves will be a differentiator."

Along with the notion that consumers will increasingly look at expanded VOIP services as a motivator for adoption, many visitors to the conference openly chided the idea that the growth of Internet telephony technologies will signal the death knell of todays PSTN (public switched telephone networks).

While most people endorsed the concept that consumers and businesses will indeed drive continued growth of VOIP systems, many agreed that there will always be a mix of traditional and Internet phone services widely used in the United States.

Brad Garlinghouse, vice president of communications products for Yahoo, Sunnyvale, Calif., criticized reports predicting the imminent demise of existing carrier networks at the hands of VOIP technologies.

Yahoo already offers click-to-talk services via its instant messenger platform and plans to launch additional features later this year. (link: /article2/0,1759,1828833,00.asp)

Yahoos Dialpad Buy Pushes VOIP Toward Mainstream. Click here to read more.

"The death of the PSTN has been greatly exaggerated, and it will continue to be integral to the U.S. communications industry," said Garlinghouse.

"The appeal of cheaper calls isnt as big a deal as some people like to think, and over the next five years there will be a different set of winners for VOIP—the companies that develop the smartest applications."

Check out eWEEK.coms for the latest news, views and analysis on voice over IP and telephony.

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