Calling all Net phone applications

Customers reluctant to break off a romantic relationship in person can now have their phones do the talking: The Rejection Hotline, with its broadband phone provider partner, VoicePulse, enables customers to automatically forward unwanted suitors' calls to any of several prerecorded messages that explain that there's no love interest there.

"Hey, we've all been there," said VoicePulse CEO Ravi Sakaria, who recently touted the service alongside other new features made possible by voice over Internet Protocol (VoIP), a fledgling technology that's taking the phone industry by storm.

Interest in VoIP is soaring among service providers, which expect a spike in demand from corporate and residential customers, in part because it promises lower prices for long-distance calls. But marketing pitches for VoIP have already shifted emphasis from cost savings to new features, as the industry confronts an uncomfortable realization: Price alone may not be enough to persuade millions of customers to dump their phone provider for an untested alternative. It may, however, bring limited success, when competing with rivals offering similar rates.

Analysts predict that VoIP prices could hit bottom by late next year, putting pressure on service providers to quickly develop nonvoice features that can't be replicated on a traditional phone network.

One upshot could be a radical makeover for the lowly home telephone, held hostage by carrier monopolies for the better part of a century. New features could drive demand for more powerful handsets--such as those already found in some corporate offices--with large, interactive color screens as well as computer processing power and memory.

That, in turn, could attract a software developer community, largely lacking until now, that would be dedicated to creating VoIP applications.

"It hasn't happened yet, but sometime soon, voice will become a commodity, and these applications will become very important to set (providers) apart," said Wayne Williams, a senior analyst at InfoTech.

Brave new phone
More than a half-dozen broadband phone carriers say they plan to add new nonvoice calling features that would be very difficult to match, if at all, on traditional phone networks.

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Rejection Hotline is one of the more offbeat ideas being hatched by VoIP service providers to attract customers. Others in the wings include a "click to call" feature from Internet phone service Vonage, which promises to allow subscribers to initiate a phone call by clicking on contact listings stored on their personal computer.

Breaking an innovation log jam
Home phones have seen relatively few changes over the past 100 years, with some of the biggest developments being limited to the production of more powerful ways of making phones cordless--or to the addition of small screens that show an incoming caller's name and number.

Call forwarding, voice mail and call waiting are the most advanced of the handful of nonvoice calling features that traditional carriers now offer.

VoicePulse, Vonage, 8x8 and other broadband phone providers expect this year to see the debut of more-complex features that phones using traditional dialing methods can't support. For example, AT&T is contemplating a service that transfers calls automatically between a cell phone and landline phone without interrupting the conversation.

Historically, these applications have been devised, tested and shipped by Cisco Systems, Avaya and other traditional phone players that also sell the network infrastructure and software used to create Internet phone services. Since these companies typically target corporate buyers, the introduction of residential VoIP features has lagged.

"We haven't seen much more innovation than what you could already do over the regular phone network," said Dan Quandt, the chief financial officer of broadband phone operator VoEx.

Vonage hopes to shake things up in the next few weeks by releasing software developer tools that can be used to build applications that run on its broadband phone network.

Another effort aiming to create new VoIP applications is Digium's Asterisk, a Linux-based open-source project that is developing "soft switches," open application program interface software tools that are used to bridge a public switched telephone network and a broadband phone service. Sakaria said VoicePulse and other providers are beginning to look at this new developer community for applications and ideas.

Phones are smartening up
The rush to find killer applications for VoIP is also putting pressure on IP phone makers to smarten up their handsets and reduce their prices.

A majority of home phones still have no display screens, so broadband phone applications for now must rely on the clunky and limited dial pad interface. Some broadband phone providers have tried to open up these cramped confines by introducing Web sites for those who want the relative comfort of a full screen and keypad.

It's a much less expensive alternative than buying phones, from Cisco and other manufacturers, that are specifically designed for use over IP networks. These can go for as much as $1,000 but usually start at about $300 each.

These VoIP phones were built to perform some of the most complex tasks around. They all have large display screens, some in color, plus an extra set of buttons for maneuvering through menus or turning on applications.

"When the price of these phones drops below the $50 point, then the really cool things can happen," Sakaria said.