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This story is one of those too-good-to-be-true tales that actually might be real. The acronym VoIP stands for Voice Over Internet Protocol; that’s the technology for making telephone calls over the web. Several companies have introduced services that utilize this technological capacity and they are making a commercial success of it. That’s why major cable operators are now “bundling” cable service, high speed Internet access and telephone service in a package. They can provide all three products over the single coaxial cable wire that comes through your wall at home. Telephone service over cable blows right past the “level playing field” that antitrust decisions have sought to achieve in order to provide competition for phone service on a local level. The telephone companies’ switching systems and all those copper cables on all those poles have been totally subverted by another Internet service. In the words of Peter Sisson, a former Bell Labs researcher, “Telephone service used to be based on a huge infrastructure of high-priced equipment…and now it’s just software.” VoIP is technology that accesses underutilized bandwidth to move voice communications over cable systems. “Packet Switching” technology moves audio signals along the same coaxial and fiber cables that carry Internet traffic and cable TV programming. The technology has been developed to compress video signals and to more efficiently move data bits for email, web browsing and audio conversations along shared bandwidths by isolating the information into “packets” and sending them downstream like boxes on a conveyor belt. The down sides for this product concept include the loss of phone service concurrent with the loss of power that your cable system needs, or the loss of cable service itself. If the packet switching gear isn’t functioning properly, phone calls have dropped segments in them like cell phone signals cutting in and out. Still, harnessing the Internet to challenge Ma Bell is an audacious and impressive endeavor – and it’s working. Right now, the companies offering the service allow you to plug your phone into your computer and make your calls at a vastly reduced rate than you’ll see from your local phone provider. They aren’t stopping there either. One of them already has a Wi-Fi phone out that will allow you to drop into a wired internet cafй and call anywhere in the world. So the question becomes, “Can a $4.95 per month worldwide phone service survive?” The simple answer would be “How could it fail?” The true issue here is how the phone companies respond. They are a powerful political and economic force. If they can saddle the cable operators offering VoIP with common carrier status, that would bring them into the regulatory realm. VoIP services could become enormously popular, and that will inevitably drive prices up. Just as with the video portion of cable, once we had to have it the rates went on a steady climb that continues year after year. But the beauty of the Internet is that you can switch to another VoIP provider with a half hour’s worth of clicks and one cancellation call to the cable company. With no infrastructure required other than the usual bevy of servers, there are going to be a lot of aggressive new firms that try to make themselves into the phone companies of the new millennium.

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