RealTime IT News

Users Weigh in on VoIP 'Must Haves'

One out of five online Americans would love to make phone calls over the Internet with all the bells and whistles of their current systems, according to a report published today.

Research firm Ipsos-Insight found the top four most desired add-on features for Voice over Internet Protocol (VoIP) service are caller ID, voicemail, battery back up and call waiting.

"Providers entering the market need to offer these must-have features to gain entry, but need to look beyond these basic offerings to differentiate themselves from the competition," Lynne Bartos, Ipsos-Insight senior vice president said.

VoIP is making headlines in the tech industry these days. A June industry survey by research firm Radicati Group estimates 279 million telephony lines, or 44 percent of the worldwide total, will be IP based by 2008. The study also found that IP telephony systems cost providers between $375 and $1,000 per user.

The Ipsos-Insight study found DSL and dial-up customers, as well as people who spend more than $40 a month on phone bills, are most likely to sign up for the latest technology in Internet-based telephone service.

"The cost savings proposition of VoIP will play a major role in drawing new subscribers into trying out Internet-based phone service," Bartos said. "This applies primarily to those with high phone bills."

However, analysts were stunned to discover that cable Internet users are more reluctant than DSL and dial-up users to try VoIP.

"In order to use VoIP services, subscribers need to have a broadband Internet connection," said Bartos. "So it is not surprising that DSL Internet users who already have this high-speed connection -- meaning one less technology barrier -- would be more inclined to try VoIP.

"What is surprising is that dial-up Internet users are more likely than cable Internet users to try VoIP, despite cable users' broadband hook-up," Bartos said.

The study bodes well for the major providers. Half of the people surveyed by Ipsos-Insight said they felt that a telephone company would be the best provider for VoIP. ISPs came in second with a vote of confidence from 35 percent, and cable companies came in last with only marginal favor (15 percent).

"Right now, it looks like telephone companies would have the advantage when it comes to the ability to capture VoIP market share," said Bartos. "Until consumers become more savvy about VoIP technology and services, most will naturally turn to familiar providers of telephone service, even if the service is Internet-based."

And even though cable companies may face an uphill battle in the emerging VoIP marketplace, Bartos said cable operators could definitely rise to the occasion.

"They have already proven they can transcend their traditional video services by offering a reliable, compelling high-speed Internet access product," Bartos said. "With solid marketing and substantial bundled offers, cable operators should be able to overcome VoIP barriers and gain market share pretty quickly."

Still, many customers are having a hard time visualizing the total VoIP package. An Ipsos-Insight study released last month found more than half (54 percent) of Internet users in the United States are still unaware of VoIP. Among those who have heard of it, the majority (56 percent) are confused about how the Internet-based telephone service really works.

On the positive side, the study found the vast majority (73 percent) is aware that they can use their Internet connection as normal while making phone calls.

But understanding levels about other VoIP advantages and limitations are mixed. For example, consumers are split almost evenly about whether they can or can't keep their home phone number with VoIP. This is a reflection of what's happening in the marketplace; some providers let you keep your home phone number and others do not. And, for the most part, consumers don't understand that they can use their regular phones with VoIP or that they can have multiple telephones connected to their VoIP service.

"Consumers definitely need to understand that making a phone call using VoIP doesn't mean throwing away their existing regular telephone, and that more than one phone or device can be connected to the service. These misperceptions could be barriers to conversion for many consumers," Bartos said.

In the meantime, Congress continues to hammer out the legalities of how and where VoIP can be regulated. A Senate Commerce Committee is meeting in Washington Thursday to discuss the VoIP Regulatory Freedom Act.

The legislation, sponsored by Sen. John Sununu (R-N.H.), would, among other things, bar state and federal authorities from regulating providers of Internet telephony the same way they regulate traditional telephone companies. A parallel bill, sponsored by Rep. Chip Pickering (R-Miss.), is in play in the U.S. House of Representatives.

And in what appears to be good news for IP vendors and SMBs, the Internal Revenue Service and Treasury Department strongly deny they are considering an excise tax on Internet telephone calls or any other IP-based services.