Google plans to keep the voice service free for the time being, at least until the end of the year–in keeping with the true dotcom sensibility of “give it to me free!”. Mind you, I’m not disparaging “free”–if they’re offering, I’m taking. I have recently discovered Skype as a means of talking for free to overseas clients, and I love it. But like the guy in the droopy pants that hangs out on the streetcorner a few blocks from my house, they only offer it for free until you’re hooked. It’s a solid business model, whether it’s carried out on the streetcorner or in the boardroom.

But the big question is what will Google VoIP do to compete with Skype, especially if the rumors are true and Skype will be bought out by Cisco? Google is the 800-pound gorilla of the Internet, but Cisco can hold its own–and a Cisco-Skype consortium would be a formidable competitor even to Google. The result can only be some very serious competition on both services and price–and when that happens, we all win.

The VoIP market is already superheated, and users are jumping up and down with excitement over the Google VoIP offering. The Cisco deal–if it’s on the level–would be a good thing for both parties, and for VoIP users as well. Skype of course, has a great service, a huge user base, and of course, incredible name recognition. It’s already become a verb–I regularly have people asking me to “Skype” them. My unofficial rule of thumb is that whenever a company name becomes a verb, they’re onto something and destined to make money. Cisco will add yet another dimension to the Skype juggernaut with their solid reputation for ultra-reliable networking equipment.

Another difference in operational theory may also come into play. Skype was started as a dotcom company, which means that when it launched, the founders followed the dotcom wisdom and offered a free service. And although they are making money, most of Skype’s registered users are still free users. Cisco is an old-line company that still believes in profits and bottom lines. At this point, I don’t think Cisco would axe the free bit, but they would certainly put a lot more emphasis on the paid end of the business. Especially since the Skype IPO is said to be worth about $5 billion, and Cisco would have to pony up some pretty big bucks to bring Skype into the Cisco fold. I’d look for many more business and professional-level services to be added to the Skype portfolio should the acquisition actually take place.

According to the article, the company maintains its bargain-basement international LD rates by avoiding offering free services, such as video chat. And I have to agree that’s where the Internet world is going. We’ve gotten accustomed to seeing the Internet as a place where you can get anything and everything for free, and that’s made it very difficult for entrepreneurial dotcoms to come up with a revenue-generating value proposition. “Free”, as attractive as it may sound, is unrealistic. But low prices? Sounds good enough to me–and it’s a value proposition that has a future. Nymgo is available as a free download as a softphone, or you can also connect it to your SIP device. If you don’t need all the bells and whistles, but just want good, incredibly cheap international long distance on a softphone or SIP device, then Nymgo has just what you’re looking for.

AT&T gave some good news to users of its VPN services this week. VPN customers are now able to add VoIP service to network solutions delivered over AT&T’s global network cloud.

This is no small thing, and the offering really highlights what the VoIP revolution is all about–and sets the stage for the direction the entire industry is taking. Customers will be able to consolidate separate voice and data networks and use a common infrastructure. Still running separate voice and data networks? What’s the point? Get with the times! More business customers are demanding, and receiving from their providers, a single integrated platform for voice, data, and video.

The telecom giant’s VoIP portfolio is interoperable with most IP-PBX systems and paves the way for unified communications. AT&T offers a good selection of VoIP services, including AT&T IP Flexible Reach (SIP trunking), and AT&T Voice DNA (hosted service). AT&T’s VoIP calling plans include both unlimited and on-net long distance, and off-net international calling, with a good selection of features and management functions.

Working on BlackBerry OS 4.2 through 5.0, you can call over WiFi without using up your cellular minutes. In the absence of WiFi, you’re not left out in the cold. TringMe will place the VoIP call over your mobile Internet if there is no WiFi, or alternately, you still have the option of switching to local access numbers or callback over the cellular network.

Once you’ve installed the app, your BlackBerry browser shows “Call Using TringMe” as an option. A cool feature of TringMe is the ability to make conference calls—just select your contacts in your BlackBerry, and conference them in, without the usual third-party dial-in number or PIN.

But we wouldn’t want the Linux camp to miss out on all the fun. Introduced in 2008, Google’s voice and video chat is one of the Internet giant’s top applications. Google made an announcement last week that it’s now available for Ubuntu and other Debian-based distributions.

If you have the right set-up, it may even be free. My home office is here in South Bend, Indiana (home of the Fightin’ Irish!). Just recently I had a talk with one of my clients in Perth, Australia over Skype–and it was truly an amazing experience. I haven’t used Skype that frequently, but since my client already had it in place, he suggested we have our meetings using this piece of technology. I went to Big Lot and bought a headset for five dollars, plugged it in, logged onto Skype, and it was clear as a bell and didn’t cost a cent. For us fifty-somethings who remember black rotary phones and operator-assisted “trunk calls” to the old country that took an hour to connect, it’s quite a revolution.

Those who still use the PSTN are at a disadvantage, but the conventional telcos are feeling the competitive pressure. They’ve been losing out to VoIP providers in the ILD arena, and it won’t be long before their market share disappears completely unless they get on the VoIP bandwagon themselves.

“All you can eat” domestic long distance packages are now commonplace–you pay a flat fee and you get all the domestic long distance you want. Of course, this would have been unheard of in the days of my childhood, back when if you wanted to talk to somebody in California, you had to write a letter. The flat-fee model arose out of competitive necessity, not because the telcos were nice guys–and the same thing is inevitable for international long distance as well.

State governments are under the gun lately due to the housing crisis and the recession. While the recession is technically over, recovery is sluggish, a double-dip recession still threatens, and housing prices are still dropping like stones. The result? States have no money—most notably, big-spending California. Of course, I love California, used to live there, and enjoyed every minute of it, but like many middle class individuals, simply got squeezed out by the unrealistic cost of living. But I digress.

My point is that states are looking for ways to bring in money. Here in my home state of Indiana (yes, I know—big difference from the coast!) they seem to be on a fairly even keel budget-wise, but we’re the exception.  It seems we Hoosiers just know how to keep a budget better than the fun-loving West Coasters! So how will those cash-strapped states bring in the dough to fund services? By taxing anything they can, and one of those things is VoIP.

A previous 2004 ruling pre-empts states from regulating VoIP, but Nebraska and Kansas are leading the charge to collect the fees.

WhichVoIP Team

Just a quick note to say thanks to all our readers over the last 5 years. We worked out some stats and realised we have now reached over 1.5 million visitors and six million page views since the VoIP information site was first released back in 2005.

Great news, thanks for all your support.

WhichVoIP Team

According to the SEC documents, revenue for the first six months of 2010 was $406 million, with net income of $13 million and gross margin of 51 percent. Quite a lot more than most of those early dotcoms that disappeared into the ethers so many years ago. Skype users made 95 billion minutes of calls during those first six months, and there are about 124 million active users per month. With that many users, it doesn’t take a big percentage of paid users to make a company profitable. Out of those 124 million users, 8.1 million paid an average of $96 a year.

The filing says Skype’s strategy is to convert more of those free customers to paid customers, and the company hopes to introduce new enterprise products to bring Skype firmly into the world of business.

Vonage has come out with a new app for Android and iPhone users, which lets them make VoIP calls directly to Facebook friends for free. Considering the popularity of Facebook, the new app could make a big impact on VoIP traffic in general. It’s a game-changer whose time has come. Consumers have long wanted to be able to make VoIP calls on their smartphones through a 3G, 4G, or WiFi network, but this functionality to date has been limited. It’s not because the technology’s not there—it is. It’s mostly because carriers just don’t want you to have it. The app could be a turning point for mobile VoIP.

The app can also be used by iPod touch users to make outbound calls, and later versions will also add iPad compatibility. The app, called Vonage Mobile for Facebook, lets users easily launch the app and sign into Facebook. The app then scans the friends list, and then lets you know which of your friends also have the app and are able to receive free calls. Of course, you can invite your friends to download the app for free from the Apple iTunes app store.

It’s not necessary to use your Facebook friend’s phone number—just click on the Facebook contact name to connect, and your own contact details will be displayed on the other end. Vonage is reportedly also creating apps that will support the BlackBerry, Windows, and Mac.

If you’re in a business that lives and dies on secrets, then you may want to look into this one. Infrax System, Inc. has just deployed an encrypted Android mobile phone for both voice and data applications. The secure phone is part of the HTC Desire line.

With the secure phone, users will be able to securely manage their calls. It uses a peer-to-peer connection for communicating between devices, so there is no central hub—and no single point of attack that your enemies can target. When both parties are using the encryption-enabled devices, secure VoIP mobile communications becomes a reality.

The success of a company is not measured by the number of employees, or the size of its office–not any more. The “virtual company” is a new business model. Some of the most successful companies operate out of small offices staffed by only a handful of people, with the bulk of the work being done by telecommuters, teleworkers, and contractors. Because of technologies like VoIP, a company is no longer limited by geography, and they can get the best and the brightest people, regardless of where they may be. And of course, they can also be bargain hunters, and take advantage of offshore business centers, from which you can get highly competent “virtual assistant”, programmers, specialists, call center staff, and just about everything else.

Entrepreneurs, to be successful, must switch to a “virtual” mindset. The modern start-up business plan more often than not, does not include line items for large amounts of office space and a high in-house staffing requirement. Venture capitalists are keenly aware of this trend, and they too, are demanding that the start-ups they fund pay close attention to the economies that can be gained from a virtual business model. Starting a new company? Need a call center? Doing it in-house is no longer the standard, and increasingly, you just can’t afford to run your own call center and stay competitive.

VoIP isn’t just for making phone calls–it’s the heart of the modern business.

One of the more exciting developments is mobile VoIP. Have you ever wondered why you have to shell out those big bucks to your mobile carrier for your cell phone? It’s inevitable that your mobile’s going to go VoIP eventually, too—and that’s going to wreak havoc with those high monthly cellular bills. That’s good news for you, but not necessarily so great for the mobile carriers, who will have to get a lot more competitive with their deals.

The one thing that will push mobile VoIP into the mainstream is ubiquitous mobile broadband access. Already, this has become a lot more common, both in the US and in some parts of Western Europe. And once mobile broadband is everywhere, flat rate pricing for it will make mobile VoIP an inevitability.

Some cellular operators are still preventing you from using VoIP over their cellular networks, but that’s a losing battle—they will have to give in eventually in response to demand.

But, not everyone can take advantage of these marvelous VoIP tools. You need broadband Internet access before you can use VoIP. And granted, a lot more people have broadband today than ever before, but we people who have it, tend to take it for granted and assume that everybody else also has it. But sadly, this is not the case.

The United States’ “National Broadband Plan” has as is ambitious goal to deliver broadband to everyone in the country, but the FCC reported this month that still, between 14 and 24 million Americans still do not have access to broadband. It’s not because they don’t want it—it’s because they live in areas that just don’t have it available. We people that live in cities tend to forget—but there are parts of the country with low population densities, and it’s expensive for carriers to bring broadband to these areas.

The statistic is particularly surprising, since the FCC had made a much rosier assessment in prior years, based mainly on an inaccurate definition of what broadband really is. Previously, the FCC had defined it as a laughable 200Kbps downstream—hardly enough to run any meaningful applications, VoIP or otherwise. Now, the latest FCC report defines broadband more realistically as 4Mbps downstream and 1Mbps upstream.

Broadband everywhere may not be as far off as we think, however. Some Western European countries already have national plans to deliver broadband everywhere, and an additional $800 million in broadband grants and loans were released as part of the stimulus plan this month. In announcing the funding, the President said, “Once we emerge from the immediate crisis, the long-term economic gains to communities that have been left behind in the digital age will be immeasurable.” And on that point, the President is right on the money—whereas much of the stimulus spending has been controversial and the benefits questionable—there is no denying that spending on tech and broadband will have a positive economic impact.

Much of the new uptake will be from small to midsize businesses. According to the Heavy Reading report, SIP trunks provide 50 to 70 percent cost savings per trunk compared to TDM (time division multiplexing) circuits—a savings that can’t be ignored, especially in an increasingly competitive environment and a struggling economy. The SIP trunk growth will make up a major portion of overall VoIP growth.

The report points out that some enterprises use VoIP only for communicating within the enterprise—that is, for interoffice calls or for connecting branch offices. And while this is certainly a good and appropriate use for VoIP, it’s not the only use, by any means. The increasing adoption of SIP trunking means that enterprises are more accepting of the idea of using VoIP not just for inter-branch communications, but also for all calls—and as a full replacement for the traditional PSTN.

Smaller businesses especially can benefit from SIP trunking because of the immediate cost advantages. There’s no need for gateways and additional line cards, and no need to invest in costly PRI subscriptions—allowing small business users to make more size-appropriate buys without having to purchase lines they won’t need.

The company, after its recent merger with VocalTec, is getting ready to launch a femtocell product, which can be attached to any mobile phone. We still don’t know much about how it will be sold, but it’s likely it will be marketed in conjunction with a low-cost prepaid carrier. Tracfone comes to mind, just as a wild guess and a likely candidate.

There are still some in the industry who don’t want products like this to exist, and there is a substantial contingent who claim that it is “illegal” and have filed claims with the FCC. We can’t imagine how the FCC could block it—and in fact, it’s inevitable. VoIP over mobile phones and smartphones is just a no-brainer. It’s going to happen, and soon.

The benefit to such a product, especially over a prepaid network, is cost-savings. Of course, if you have one of those expensive unlimited calling plans, you’ll get very little incremental benefit from running VoIP on your mobile. But, if you’re like me, and buy “buckets” of prepaid minutes, you watch your calls—and VoIP could come in handy for keeping those costs down.

Just last week, Skype released an update to its own app that allows background VoIP calling on the iPhone. The new feature allows you to multi-task while you’re chatting on Skype at the same time. What it also means is that Skype can run as a background app. This is critically important, since the lack of that ability has been a limiting factor until now. If VoIP is not running as a background app on your smartphone, then you have to leave the app open at all times in order to receive or make calls, which is of course, impractical.

At the present time, iPhone owners are still able to use Skype to make free phone calls over 3G, although this is only good until the end of the year—expect a monthly subscription fee next year for everything outside of Skype-to-Skype calls.

But of course, when you’re using your smartphone, you still have a phone bill to pay, so VoIP isn’t going to eliminate those monthly charges—although you may be able to opt for a cheaper plan. What’s coming up over the next couple years? Big changes are afoot—look for more VoIP capabilities on smartphones, and for traditional carriers to get competitive with lower rates.

Thanks

John