VoIP Trends to Watch in 2008

Five developments that could save you money or bring you better service this year.

Behind the doom-and-gloom headlines, the VoIP industry has been innovating like crazy. Much of the evidence suggests that the innovation will continue in 2008, but other forces are shaping the industry, too. Any self-respecting capitalist, even the venture type, will admit that creative destruction is as important as creative innovation. So VoIP will certainly have its ups and downs over the next 12 months. Here, in no particular order, are five VoIP trends that may affect you as the year unfolds.

1. VoIP/PSTN Integration: Casual observers may still think that VoIP simply means voice calling over the Internet, or at least over all-IP networks. More and more providers, however, are using IP switches and feature servers to provide the flexibility and functionality that make VoIP so attractive, but they are relying on conventional carriers to deliver calls to and from users over PSTN (public switched telephone network) or cellular circuits. One reason, which TalkPlus Inc. makes a point of mentioning, is that PSTN delivery provides superior voice quality with little sacrifice in cost. And at least as important is that it lets providers extend their services to people who are not near a wireline or wireless broadband-Internet connection, particularly the demographically desirable types who do most of their talking over their cellphones.

2. Shutdown of the Internet VoIP Bargain Basement: Whether or not Vonage Holdings Corp. survives or thrives, the shutdown of SunRocket Inc. has made it clear that selling Internet VoIP on price alone is an iffy proposition. Low subscription fees and thin margins require high volumes, but boosting volumes requires serious spending on marketing, as there are dozens of competitors with essentially the same product. More marketing spending, of course, makes it hard to keep prices down. The only way out of this vicious cycle is to focus on more and better features. And that, in turn, means concentrating more on small businesses as opposed to consumers, since ambitious, growing companies can both appreciate and afford at least a few bells and whistles, not to mention distinctive ring sounds.

3. Vendor-Based Calling Communities (or, Viral Goes Corporate): Global Crossing has been doing it since mid-2006, under the name VoIP Community Peering Service. Fonality jumped on the bandwagon in August of 2007, offering trixNet service free for buyers of three trixbox Pro editions. Both approaches let different customers of the same provider call each other without long-distance charges. Global Crossing customers' calls go over the provider's international IP backbone, Fonality's travel over the Internet. It's sort of viral marketing in reverse: buy the product first, then find out whether your clients and suppliers are part of your free-calling community. Look for it next time you're shopping for VoIP.

4. Smarter Integration with Social Applications: It's not enough to merely put a click-to-call button on someone's profile page. VoIP integration with social applications will only succeed if it provides the right kind of calling at the right time. Privacy and the ability to block unwanted callers may actually be the easiest part of the equation. Balancing such protections with convenience and appropriateness of the calling experience is a lot harder. Particularly important will be minimizing the amount of work the user must do to sign up, download software, transfer contacts and the like. As Yoomba CEO Elad Hemar put it, the application should work for you, you shouldn't have to work for the application.

5. Easing VoIP Transitions: One of the biggest concerns for small businesses contemplating the move to VoIP is the risk of leaping into the technological unknown. Providers have begun finding ways to ease those concerns. RingCentral Inc., for example, lets customers of its hosted IP PBX service start by having their calls delivered over the PSTN through their regular phone lines. If and when they're ready to move to full Internet VoIP, RingCentral's recently introduced DigitalLine voice will be ready and waiting.

Similarly, Junction Networks Inc. lets customers start with hosted VoIP. When their needs grow, they can transfer their settings and messages to identical software running on premise-based PBXes with no disruption of service. Expect more vendors to realize that small companies can't afford big risks any more than big companies. Betting your business on a new technology is just as traumatic with 30 employees as it is with 30,000.