“I would buy a 60-minute calling card but after only 30 minutes the card would expire,” Hamirani said. “I was in the middle of telling a story to my cousin and the line was cut. I knew I was getting ripped off.”
His frustration inspired him to start a company offering consumers a cutting-edge alternative: Internet calling. After enlisting the help of colleagues, the San Francisco-based Hamirani co-founded Vonics Digital (www.vonics.com), a “voice over Internet Protocol” (VoIP) provider with a unique menu of cheap long-distance rates for South Asia..
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* VoIP Technology
VoIP, pronounced “voyp,” is a technology that converts voice or fax calls into data packets for transmission over the Internet. The call goes through the user’s local telephone company to a VoIP provider, like Vonics. The phone call then goes over the Internet to the called party’s local telephone company for the completion of the call.
Calls can be placed to any regular domestic or international phone number in at least three ways: (1) directly from a computer using a microphone, (2) through a traditional phone equipped with an adaptor that connects to an existing high-speed Internet connection, or (3) through a new breed of phones with built-in VoIP technology. In each method, a broadband Internet connection is required in order to place calls. Callers can also use their computers while talking on the phone.
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* Plans and Features
VoIP technology has existed for years but the earlier applications were not easy to set up and the sound quality was poor. That has changed. Today, a consumer can easily sign up online with one of a dozen VoIP companies for a flat monthly fee starting around $20 for basic service. Sound quality, the greatest challenge once facing this industry, has markedly improved. “VoIP calls on the Vonics network are actually clearer than phone calls through traditional carriers like AT&T;, MCI, and SBC,” said Hamirani.
Many VoIP providers offer plans that mimic mobile phone services in which users can make unlimited calls for a preset number of minutes and incur long-distance charges (at much lower rates than even traditional landlines) for calls that exceed the number of minutes in the plan.
However, most VoIP providers also offer flat-rate plans that permit users to call anywhere in the world for an unlimited number of minutes. This option—unlimited calling at a flat rate—is perhaps the most unique feature that distinguishes VoIP service from mobile phones and traditional landlines.
To distinguish itself from other VoIP providers, Vonics focuses upon the needs of Indian- and Pakistani-American consumers—a population virtually ignored by other companies. For example, Vonics offers unlimited calling plans to India and Pakistan for as low as $25 a month.
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* Pros and Cons
When switching to VoIP, users can often retain their existing phone number. VoIP providers also permit users to select a new phone number in an area code different from the area in which they live.
Because VoIP is digital, it can also offer features and services not available with a traditional phone. For example, Vonics offers a “Secondary Virtual Phone Number” which is a second phone number selected by the user, prefixed by any area code, that will forward calls to the user’s primary phone. This way, a user can set up a local phone number for clients or family members residing in a different area code.
Vonics also offers extra add-ons such as a dedicated virtual fax line, toll-free phone numbers, the ability to assign multiple phone numbers to one account, and real-time online account management.
However, VoIP is not yet a substitute for traditional landline phone service. Unlike traditional phones, some VoIP services don’t work during power outages (though backup power is available with some VoIP plans). Not all VoIP services connect directly to emergency services through 9-1-1. And VoIP providers may or may not offer directory assistance and white pages listings. But these shortcomings are temporary. For example, Vonics recently joined a minority of VoIP providers that now offer both 9-1-1 emergency service and directory assistance.
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* Industry Growth
At least 400,000 U.S. households switched to VoIP in 2004. Forrester Research Group predicts that 5 million households will embrace VoIP by 2006. In anticipation of this predicted growth, Vonics and other VoIP providers are racing against the clock to develop their nascent companies and expand the reach of their networks to provide consumers with all of the coverage and features they currently enjoy through mobile phones and traditional landlines.
Vonics recently announced partnerships with major telecommunication solutions providers, such as Global Crossing, XO Communications, and Level 3, in order to expand its network to over 500 major cities in over 50 countries on six continents—a network that provides connectivity to all domains connected in Europe, the United States, and Latin America. “These partnerships will help to give our customers services identical to those of traditional phones,” said Hamirani.
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* Regulation
In addition to a menu of plans offering unlimited, worldwide calling at a flat rate, the other major distinction between VoIP and traditional phone service is that VoIP is still an unregulated industry. This is one of the main reasons VoIP service is so inexpensive in comparison.
The Federal Communications Commission (FCC) does not regulate the Internet or the services provided over it. In February 2004, the FCC found that an entirely Internet-based VoIP service was an unregulated information service. This means federal, state, and local jurisdictions are as of now unable to tax VoIP users as they do for mobile and traditional phone service.
This is good news for Hamirani who believes VoIP service will attract millions of new users and shake up the telecommunications landscape. “Internet calling will make people realize they don’t need to feel cheated by phone companies,” he said.
Sanjay Shah is a freelance writer based in Los Angeles.