VoIP Delivers, Mostly

January 24, 2005

In the past several years, we have seen significant changes in the telecommunications market. These changes have included significant reduction in prices, more competition, and new technologies like Voice over IP (VoIP). Overall, the consumer has apparently been the beneficiary in all of these changes—or has it?

Packetizer™ has long been a proponent of VoIP technology, providing pointers and technical information to engineers, marketing people, and consumers alike. As you can imagine, when the new VoIP service providers started to enter the scene, we were thrilled. At last, the vision of VoIP was being realized for the consumers to enjoy.

Just like everybody else, though, we did not immediately rush out and switch our phone service to VoIP. After all, it was still relatively new. Perhaps more than others, we knew the technology wasn't perfect and we certainly didn't want to be the beta testers. But, as the market matured over the past year or so, our confidence in the technology as a viable alternative to traditional PSTN service grew and we made the switch.

We have some good news and some bad news to report. First, the good news: VoIP works extremely well! Actually, through the broadband connections we've tried, it works much better than we had expected. We've tried service from three different service providers: AT&T CallVantage, Time Warner, and Vonage. We were pleased with the results from all three service providers. Packet loss was minimal and voice quality was nearly flawless. We heard reports from other people who tried VoIP that said voice quality was lower than what one gets with the PSTN. We did not perceive a significant difference. We will not say there was no difference, but it truly was virtually the same: it was excellent.

There is more good news, of course: the cost savings is amazing. It's truly amazing. Whereas a traditional telephone company would charge a fee for the phone and then add a per-minute charge for each phone call, these "next generation" service providers are moving toward a flat-rate model for domestic calls. Of course, there are per-minute options, but even the costs per-minute are lower than traditional PSTN services. What's more, those days of "long distance plan" options are gone: you pay for what you use and not a penny more. Some service providers even offer free calling to other countries. The current leader in international VoIP services for the money is BroadVoice, with a flat-rate plan that allows customers to call 35 countries at no cost beyond the monthly service fee. We are impressed.

However, with all this good news comes the bad news: if you are not handy with wiring or troubleshooting a computer, you might find VoIP to be more trouble than its worth. Most of the VoIP service providers provide a box (called an "analog terminal adapter", or "ATA") that you connect to your network, plug in a traditional telephone, and then make calls just like before. But how do you connect all the other phones in your house? The first thing you have to do is go to where your current PSTN phone company has the wiring connected to your house or apartment and disconnect their wires: if their wires are "live" and you connect your ATA into your home wiring, you can cause damage to equipment. You then need to make sure that the wires are properly "tied together" in the box at your home to ensure that all of the phones are on a common circuit. After that, you plug the ATA into any phone outlet in your house or apartment and all the phones should work. Easy enough? OK, right there I know we just list a few million potential customers. (Ed: I did wire my house properly and, even though I understood what I needed to do, it was still a pain. If you want to avoid wiring issues, you might want to consider buying a wireless phone that has multiple satellite phones or even buying the newer Wi-Fi VoIP phones coming to market.)

There is even more bad news: "service" is not necessarily the best. No, we don't mean "VoIP service", but "service". In the United States, if you have a problem with your telephone, you can call your local telephone company and they will fix it. They might charge a fee (especially if you caused damage), but you would most certainly get your issues resolved. We have not had such good experience in this regard. We've noticed that customer service agents are often slow to respond, not knowledgeable in the technology, or simply incapable of carrying out a service request. We've had this trouble most with Vonage, in particular.

We contacted Vonage three times via e-mail to get answers to questions over the course of several months. We received a response to the first question, which was related to low amplitude on the Motorola ATA they provided. After about a week, we were contacted and asked to unplug the ATA and let it reboot, as they were replacing the firmware. Response time was slow, but at least we had a solution (though we never tested it in the same configuration where we were having trouble). The second two questions, unfortunately, were never answered. I asked a second time and got no answer from customer service. Oh, well. I suppose they had more important customers to answer.

We actually have multiple business lines with Vonage. Vonage advertises that if you get a business account, you get a free fax line, which we did. When we added the second business line, it was actually $5 cheaper. We thought that was a nice reward for existing customers until we discovered that the "free fax line" is per account, not per line. We discovered when we tried to add a fax line to our second business line that the cost was $10, which meant that the second fax line would cause the second line to cost $5 more than just opening a whole separate account. So, we decided to contact Vonage on the phone regarding this issue (since e-mail was ignored the last two times).

After waiting on hold for what seemed like an eternity, we just hung up the phone. After all, we do have more important things to do. We then called back a few days later and waited again. This time, the wait was not as long. We explained the situation to the customer service representative who was also completely surprised by the fact that adding the second fax line would cost $10. He told us that he thought that the fax lines were free with business accounts and had to check with his manager. After waiting just a few minutes, he came back to give us the bad news: our understanding that adding the fax line to the second phone line would cost more than a separate account.

So, we asked Vonage to split our account into two accounts. After all, $5 is $5. We will certainly pay for service, but we don't want to pay more than we ought to have to pay for service. After several days and several e-mail exchanges, the conclusion was that Vonage does not have the technical wherewithal to split our business account into two separate accounts. Further, if such action was taken, we would lose the telephone numbers associated with our second line.

The lack of customer service just might be enough reason to deter a few more million customers. This is particularly true for business account holders, because phone failures equates directly to lost revenue. Our recommendation: go with a service provider that will provide service with your VoIP service. The technology is definitely ready for "prime time", but shop carefully. Packetizer offers a forum for discussing VoIP service providers and would encourage people to post comments there to provide guidance to others.