Experts Say Applications Will Drive VOIP Growth

Industry watchers believe that applications, not pricing, will drive consumer adoption of Internet phone services.

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."

/zimages/3/28571.gifClick 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.