Voice Over IP - Buyer Beware

If you haven't yet been pitched the idea of replacing your standard phone service with Voice Over Internet Protocol (VOIP) you certainly will, and likely sometime in the near future.

With the promise of lower costs and aggressive marketing (particularly member to member referral schemes) VOIP is clearly a future force to be reckoned with.

For consumers already connected to the Internet though broadband (usually cable or DSL) replacing your standard phone line with Internet-based phone service can indeed save money, particularly for high-volume callers and those who use many additional features. With bundled plans that can include unlimited local and domestic long distance calls for 20% to 30% less than traditional phone companies, the lure of VOIP is certainly appealing.

However, as with all great "deals" embracing VOIP includes some serious trade-offs to be sure. This is presumably because VOIP services are not currently regulated the same way that traditional phone companies are. In fact, the FCC recently "exempted" one such VOIP company (Vonage Holdings Corp.) from any such state telephone regulations.

After reviewing Vonage's terms of service, a few rather disturbing and unexpected facts come to light.

First of all, if you transfer your existing phone number to Vonage, they do not guarantee that you'll ever get it back should you decide to change phone or VIOP companies in the future.

In fact, they service agreement specifically states:

"Vonage may, at its sole discretion, release a telephone number that was ported in from a previous service provider to Vonage by you and used in connection with your Service"

They then list a number of conditions that must be met in order to even potentially keep your existing phone number.

A phone call to their offices resulted in strong verbal assurances that Vonage wouldn't actually enforce this right, but they declined to put that in writing or to specify any part of their Web site or terms of service that would offer a user any such protection.

I always consider such double-talk ("don't worry, we won't enforce this against you") to be a very big red flag and this was enough to prompt me to no longer consider VOIP myself.

The second issue with VIOP that should be of great additional concern to many is the lack of standard 911 emergency service provided by VOIP systems. Reading further into Vonage's terms of service you'll find that dialing 911 will not do anything at all unless you specifically request this option, and then even if you, the result is not what you would probably expect.

Vonage calls this "Non-Availability of Traditional 911" and what it means is that dialing 911 will result in your call being: "routed to the general telephone number for the PSAP or local emergency service provider."

In many areas a call to such a "general" phone number will likely result in nothing more than a recording of numbers you should call, often followed with the directions to "hang up and dial 911 if this is an emergency."

While living with this "911-type dialing service" (as Vonage calls it) will not likely present inconveniences on a day-to-day basis, clearly the potential exists for this to cost you (or anyone visiting your premises) a great deal indeed. Just try to imagine suffering a critical accident or other medical, police or fire emergency of any kind, and then remembering that dialing 911.... actually doesn't.

The interesting thing about 911 is that you probably take this service for granted, and may think you can live without it, but that may not be the case, literally.

Finally, another more minor inconvenience (but still worth mentioning) of VIOP is that when either the power, or your Internet connection is interrupted, so is your phone service.

Adding it all up, while VIOP does offer some potential savings they don't appear to outweigh the associated risks. What's worrisome is contemplating how few consumers will actually read the entire terms of service and even realize the trade-offs they're making.

None of this, however, means that VIOP doesn't have a great potential future. Assuming that either regulations or a competitive business environment will eventually force VIOP providers to enable comparable services to those of traditional phone companies, (and some may already do so) then VOIP will certainly become a more sound choice.

As it stands right now, and with the official blessing of the FCC, it's clearly a case of Buyer Beware.

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Copyrighted with all rights reserved by Stephen M. Canale