Will Enterprises Take to AOLs VOIP Phone Service?

On the VON show floor, analysts say America Online's new service will help accelerate the use of voice over IP, but they question whether it will stand up to the coming flood of options-and whether businesses will find it secure enough.

SAN JOSE, Calif.—America Online Inc.s disclosure on Tuesday that it will introduce a voice-over-IP telephone service will definitely add credibility to the technology, but it is unlikely to provide the long-term growth engine that would ensure the companys survival.

This was the view of three telecommunications industry executives who were attending the VON Spring 2005 conference here who have long been looking for a business catalyst to jump-start the acceptance and use of VOIP (voice over IP).

VOIP is still at the early-adopter stage, although acceptance is starting to pick up, said Mark Hung, director of strategic marketing at Atheros Communications Inc. in Sunnyvale, Calif.

"I think it is awesome" because AOL has the experience and the infrastructure to introduce VOIP technology to a mass market, Hung said.

"I think that AOL can only help accelerate that ramp-up" of VOIP use, Hung said. "If AOL cant succeed, then I think that the VOIP community had better figure out who can," he said.

/zimages/1/28571.gifClick here to read more about AOLs plans to offer VOIP phone services.

AOL CEO Jonathan Miller disclosed in his VON keynote presentation Tuesday that "within the next 30 days," his company will formally introduce a VOIP service integrated with its familiar AOL Instant Messenger console.

The AOL service is likely to prove especially popular with teenagers, college students and their parents who want to stay in touch with them, said Anthony Dalby, a planning engineer at Alltel Communications Inc. in Little Rock, Ark.

Dalby said college students used to using IM to stay in touch with their friends are likely to become ready users of a long-distance Internet phone service that they can access anytime for a flat fee to talk to a friend at a school across the country.

The same thing is true for their parents, even those who dont worry as much about the expense of calling their children long distance, he said.

But AOL will "really have to force their hand to get into the business sphere," Dalby said, because enterprises will prefer to use "their own VPNs, their own IP Centrexes or their PBXes for VOIP" because they will have greater security, he said.

Dalby also questioned whether AOL will be able to capture a hefty share of the VOIP market in the same way it dominated a massive portion of the dial-up Internet access market in the mid-90s.

AOL certainly helps add credibility to the market, but Dalby said he thinks it is a market with fundamental differences. Other big companies, not the least of which are SBC Communications Inc. and AT&T Corp., are getting into the VOIP market, he said.

Other large phone companies will likely follow suit, at the very least to try to protect their customer bases, he said.

Next Page: "AOL is the company that people are migrating away from."

John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s eWEEK.com since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...