Vonage, TI Dial Up VoIP Partnership

A new pact between voice over IP upstart Vonage and chip and software giant Texas Instruments is expected to make it easier for manufacturers to build devices for Vonage’s service.

The companies said they would share code and design information with each other, and ultimately with manufacturers, simplifying the design and production of laptops, phones and other devices that can be used with Vonage’s Voice over broadband IP service.

“It will allow (manufacturers) to get Vonage-certified and use that as a leveraged tool to differentiate,” Matt Deatrick, a Vonage vice president, told internetnews.com. The first offerings built on the joint technology could hit the market in the second quarter, he said.

For TI, the deal cements a relationship with a fast-growing first-mover and its lead in the nascent industry. The Dallas IT giant provides chips and software for about 80 percent of the VoIP gateways and IP phones under development, according to a recent In-Stat/MDR report.

Although the market for VoIP equipment and devices is still developing, and will lag for several years behind circuit-switched equipment sales, VoIP chip revenue will rise from $54.9 million in 2002, to $141.1 million in 2007, according to the tech research firm.

“It’s very important for us to be involved with early adopters in VoIP,” TI spokeswoman Debbie Greenstreet said.

Vonage boasts 90,000 lines in service and is adding about 10,000 per month. The Edison, N.J., company offers flat-rate phone service cheaper than traditional carriers because voice traffic over the Internet isn’t subject to regulatory fees (at least for now).

Over the last year, large service providers looked on as privately held, venture-backed Vonage has built up its business through direct Web site sales and through partners.

As the number of broadband connections in the U.S. continued to rise (a high-speed connection is a requirement for VoIP service), cost of equipment fell and federal regulators indicated a hands-off approach, the big players are jumping in.

Most major telecoms and cable providers — including AT&T, Qwest and Time Warner — have outlined plans for VoIP service, although many are still determining how fast to implement them and how much to charge.

Yesterday, Verizon unveiled a new product that combines a wireless DSL router, cordless phone and touch screen to manage calling services over high-speed networks.

Other companies are also establishing a niche, such as Net2Phone, which works with second-tier cable companies to offer voice services.

Vonage’s larger rivals will try and use their relationships with existing customers, bundling strategies and claims of higher quality and reliability to battle Vonage.