Pennsylvania Investment Observer

New Phone Service

by Daniel J. Nestlerode

It took a long time, really over a hundred years, but I now have phone service provided by someone other than the telephone company. The service is terrific and the new caller options I have are outstanding. Times they are a-changing, as they say. But I have gotten ahead of myself.

A week or so ago I received a flier from Sam's Club (we have one in State College, PA) with a two page spread on Vonage's telephone modem. If you have high speed Internet service (I have Adelphia cable TV and Internet service at home), you can connect this new device to your high speed Internet service, plug in a regular telephone, and after signing up with Vonage over their web site, you have a new way to make telephone calls. The modem cost $40, a modest outlay, and the service runs $24.99 a month for all my local and long distance calls in the United States and Canada. Verizon recently sent along a similar offer for $44.95 per month per line. So with Vonage I'm saving about $20 a month or $240 a year.

The new phone service is every bit as clear and immediate as my old telephone service. Of course, I have only had this new technology for a week, so I'm keeping one of my old phone services for a while until I am comfortable with the Internet phone service. I'm not sure what I am worried about. Both my wife and I have cellular service in addition to our wired telephone service and now this new Internet phone service. I guess we have enough redundant ways to make phone calls.

The new service brought to you by Vonage, among others, translates analog phone signals to digital form and sends the signals over the Internet to whomever you are calling. Called VoIP, or Voice over Internet Protocol, this new service is the wave of the future. The old phone systems are fighting this new technology with every trick in the book. My son has a DSL line (Digital Subscriber Line) from Verizon for his high speed Internet service. I called him on my new Internet phone and told him about the service, while I was surfing the net and my wife was doing work while logged on to Penn State's system. We noticed no degradation in service as we used three data streams over the same cable modem. He told me that he couldn't drop his phone service from Verizon and keep his DSL line because Verizon had linked the services together. So even if he got Vonage phone service, he had to maintain at least one regular Verizon telephone line.

Digital Internet telephone service is the newest technology being rolled out to consumers. While not everyone has access to high speed Internet service, the 100 million or so people who can get this service can add telephone service to their cable telephone and Internet service. The old fashioned telephone companies seem to be in trouble, merging to cut costs and extend their useful business lives. However, from where I sit, the days of twisted copper wires running from your house to the telephone company's switching office are numbered. More importantly, I am pondering how my investment clients might benefit from this coming change in telephone services.

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