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Tech Notes
Internet Telephony—
The Future is Here

By J. Anthony Vittal

VoIP goes mainstream, but is it for you?

Last year, I wrote twice about the future of Internet telephony—Voice-over-Internet-Protocol, or VoIP services. For those of you who missed the articles, VoIP technology enables the real-time transmission of voice signals as packetized data over IP networks that employ the Transmission Control Protocol (TCP), Real-Time Transport Protocol (RTP), User Datagram Protocol (UDP), and Internet Protocol (IP) suite. In VoIP systems, analog voice signals are digitized and transmitted as a stream of packets over a digital data network. Because VoIP is a way for carriers to reduce traffic costs on domestic and international long-distance calls, and as carriers convert to IP-based fiber-optic networks, VoIP eventually will replace the PSTN for voice communications.

According to a recent article in CNET News, about 11 percent of all voice traffic is classified as VoIP, although less than 1 percent of that traffic originates on a VoIP phone, demonstrating that legacy equipment from the days of POTS (Plain Old Telephone Service, conducted over the Public Switched Telephone Network (PSTN)) will be with us for a while. The surest indicators that VoIP technology has gone mainstream, however, are the recent introduction of VoIP consumer telephony services by major providers, the recent efforts by the federal government to impose a pre-emptive regulatory structure on VoIP services and to impose federal excise taxes on the charges for those services, and the softening of pricing for POTS to the point it is no longer profitable.

On July 2, 2004, the IRS issued advance notice of proposed rulemaking (69 Fed.Reg. 40345), seeking public comment on its proposal to extend the 3 percent federal excise tax imposed on telecommunications services by 26 U.S.C. §§ 4251-4252 to “present technology”— i.e., to VoIP services. (Four years ago, on the 100th anniversary of this excise tax, the House voted 420–2 to repeal it, but the Senate never acted.) In the meantime, last April, Sen. John Sununu (R-NH) and Rep. Chip Pickering (R-MS) each introduced legislation to foreclose state and local regulation and taxation of VoIP services. These bills also mandate law enforcement access to VoIP calls for wiretapping purposes and require the FCC to levy universal service fees on VoIP systems connected to the PSTN. On July 6, 2004, Reps. Rick Boucher (D-VA) and Cliff Stearns (R-FL) introduced HR 4757 to deem VoIP an interstate service completely subject to the jurisdiction of the FCC. Regrettably, HR 4757 also would impose a number of controversial taxes and regulations from the analog world on digital telephony.

The Marketplace
In the meantime, the “big boys” of the communications industry are wading into this market. VoIP services are available via either telephone-line or cable-TV broadband Internet connections, which you must provide. If you already have a broadband connection, adding VoIP to that connection is no different from adding another computer to the network you already have that uses that connection.

AT&T CallVantage
AT&T, which announced in the spring of this year that it no longer will market POTS to consumers, has announced its CallVantage service (—“unlimited” local and long-distance VoIP calling within the 50 states, Puerto Rico, and the U.S. Virgin Islands including voicemail with eFeatures permitting you download voicemail messages as .WAV files so you save them on your computer and forward them to anyone by e-mail. (International long-distance from 5–12¢ per minute to Western Europe; Israel and Japan at 6¢ per minute; China from 6–10¢ per minute; Russia from 6–12¢ per minute. Other areas can be higher— e.g., Afghanistan at 71¢ per minute.

Still, AT&T has some of the best direct-dial international toll rates. For discounted country-specific international prepaid calling cards, check for various options.) The service also offers CallerID features; call waiting; domestic call forwarding; call logs; programmable “do not disturb” to route callers directly to voicemail during selected periods of time; personal teleconferencing of up to 10 participants; “locate me” services that will route calls to other numbers if you don’t answer; computerized speed-dialing; a 911 service; and online call management. All of these features are available from any telephone, anywhere, for $34.99/month. (Note, however, that CallVantage does not support CallATT calling cards or AT&T EasyReach service, and that CallVantage suffers from the other limitations of VoIP service discussed below.) The rate of $34.99 is down $5/month from the time the service was introduced in May. Sign up for a one-year contract by August 31 and get the first six months at the introductory rate of $19.99/month. Service can be cancelled without penalty any time during the first 30 days or after one year.

Note that “unlimited” calling has limits: auto-dialing, continuous or extensive call forwarding, telemarketing, fax broadcasting or fax blasting, or uses that result in excessive usage (including usage in excess of 5,000 minutes [83.33 hours] per month) inconsistent with normal residential or home office usage patterns, are violations of the contract which may result in cancellation of the service. Excessive usage also may result in additional charges. Simply connect your cordless telephone base station to the Analog Telephone Adapter (ATA) provided at no charge, connect the ATA to your network, and you’re in business! (If you have multiple wired land-line extensions in your existing installation, you will need a separate ATA for each of them to connect them to the VoIP system.)


Vonage (, which I discussed in an earlier article and which achieved “Best Buy” status from PC World in May 2004, offers similar services on one of three residential plans. For $29.99/month you get unlimited local and long-distance calls to all 50 states and Canada. For $24.99, you get unlimited local and regional calls, plus 500 minutes of long-distance calls to all 50 states and Canada. For $19.99, Vonage offers 500 minutes of local and long-distance calls to all 50 states and Canada, with excess minutes billed at 3.9¢ per minute. Small business plans are $49.99/month for unlimited local and long-distance calls to all 50 states and Canada; and $39.99/month for 1,500 minutes of local and long-distance calls to all 50 states and Canada. International toll calls are billed at 5¢–$5.92/minute, depending on destination. Like AT&T, Vonage offers free voicemail; CallerID; call waiting; domestic call forwarding; personal mini-teleconferencing (3-way calling); a 911 service; online account access; online voicemail access; and your choice of area codes. Vonage uses a Motorola VT-1000 ATA, provided at no charge.

VoicePulse (, which also achieved “Best Buy” status from PC World in May 2004, offers unlimited calls within the United States for $24.99/month (residential— Special offer; requires a one-year contract) or $45.99/month (business—no term commitment.). Other plans are available. International toll calls are billed at 3¢–$5.08/minute, depending on destination.

Cable Services Providers

Cable TV and broadband operator ComCast, which took over AT&T Broadband in 2002, is the nation’s largest cable operator. ComCast will be testing VoIP service in three markets this year, and plans to offer VoIP service to half of its cable customer households by the end of 2005, and to all 40 million of them by the end of 2006. Other cable companies, including Cablevision Systems, Cox Communications, and Time Warner Cable, also have begun to offer VoIP service. Pricing should be $34.95–$39.95/month for unlimited calls to the United States and Canada.

Drawbacks and Deficiencies
VoIP service as currently developed is not a perfect replacement for POTS. Unlike traditional POTS networks that provide their own power and therefore continue to operate during blackouts, VoIP telephones require an auxiliary power source, such as a UPS (uninterruptible power supply), to run the ATA, the hub or switch, the modem, and (in some instances) even the telephone during a power outage. Even so, if your broadband service goes down, whether due to the same power outage or other factors, your VoIP telephone(s) won’t work until broadband service is restored. You also may need to spend time troubleshooting your LAN, since VoIP systems do not yet have the “plug-and-call” operability of land-line phones.

VoIP service does not yet offer local (411) or long distance (555-1212) directory assistance, x11 calling, TDD service for the deaf, or service billing on 900- or 976- numbers. In addition, some VoIP service providers do not permit faxing, and VoIP service does not yet interoperate with satellite TV decoders or security systems. If you require any of this functionality, you will need to keep at least one POTS land line, even if you otherwise move to VoIP service. Finally, if you do extensive international calling, compare rate schedules before selecting a provider, because each VoIP service has a different rate schedule for international calls.

WiFi Telephony

If you have a wireless (802.11a/b/g WiFi) network and 2.4 GHz or 5.8 GHz cordless telephones in the same environment, your probably have noticed interference (often apparent as an irritating clacking on the line) that degrades both the WiFi signal and the telephone connection between handset and base. That interference can be eliminated by using WiFi cordless telephone handsets. WiFi handsets offered by Cisco and Symbol Technologies already are on the market, but at $350–$500/each are rather costly. Vonage, however, has announced it expects to start shipping WiFi handsets by the fourth quarter of this year, which will be offered to Vonage subscribers at no charge.

Peer-to-Peer VoIP

Nimcat Networks (, based in Ottawa, has developed a VoIP technology that works on a peer-to-peer basis with other P2P-enabled instruments. Nimcat has taken the centralized call processing model and distributed the intelligence into the telephone sets, so that the telephone set becomes the call processing engine. Known as a Peer Telephony Exchange or PTX, Nimcat’s patented Peer-to-Peer (P2P) call processing solution is possible today due to the availability of VoIP telephone sets with significant processing power and the widespread availability of high speed LANs in the business office providing a ready to use distributed architecture. All features such as call set up, call teardown, conferencing, voicemail, and call forwarding are handled directly by the terminals, using the processing power available in the VoIP terminal. Simply plug the P2P-enabled instruments into your LAN, and they will self-discover each other on your VPN and will establish your organization’s internal telephone network, even if the devices are in different geographic locations. You need only one link to the PSTN at one of the locations, which will give your organization a single central telephone number, an automated attendant, and the rest of the regular VoIP features.

Scotty, Beam Me Up!

 For those of us, Trekkies or not, who thought the com badges worn by StarFleet personnel were really cool, they are here! They don’t work over anything even close to orbital range, but do work quite nicely in a single facility or campus like an office building, a hospital, or a university, with a distributed WiFi network. Vocera Communications ( of Cupertino, California, has introduced two-ounce wearable com badges, 4.2” long x 1.4” wide, using VoIP/WiFi convergence and voice recognition at the server. (The Vocera Communications Badge has just won the 2004 Industrial Design Excellence Award from the Industrial Designers Society of America and BusinessWeek.) Think of the advantage of instantaneous two-way communication within your organization. Touch the badge, speak the name of the person you wish to contact, and the server will match the name to a badge, will locate the badge on the network, and will establish a two-way voice link between the badges, which will be managed in much the same way as the cellular network manages calls between moving parties. The system even permits conferences among more than two users.

Convergence modems that support both WiFi and cellular and switch seamlessly between them already are on the market. Vendors currently are working on telephones that will support both WiFi VoIP and CDMA/GPRS cellular technologies. When implemented, users will have a single phone that will hand off on-the-fly between cells and wireless access points as users move among them. In the short term, this has the advantage of improving coverage inside structures that disrupt cellular service. Longer term, but still in the lifetime of most of us, we actually may see the Star Trek com badge become a fact of life, replacing our existing telephones with wireless communicators reduced to the size of decorative badges. Then all we will need is soundproofing (or communications implant) technology to insulate each of us from the ubiquitous conversations of others. I look forward to that day

J. Anthony Vittal ( is the General Counsel of Credit.Com, Inc., and Identity Theft 911, LLC, in San Francisco, California. A former member of the ABA Standing Committee on Technology and Information Systems and a member of various technology-oriented committees of ABA Sections, he speaks and writes frequently on legal technology topics.