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VoIP—What's the deal?
Many a purchaser breathed a sigh of relief when long distance phone charges took a nosedive a few years back. As new competitors joined the market, prices were driven down to mere pennies a minute. Now we’re ready to go further with Voice-over Internet Protocol (VoIP).
Don’t be intimidated by the fancy name. It just means making calls over the Internet, so once you’ve paid your monthly Internet connection fee to your provider, VoIP would enable you to make calls for free (in an ideal world.) In the real world, the calls are still going to cost you money on top of your cable or dial-up Internet fee. Here’s where it gets a little bewildering.
VoIP providers such as Vonage offer different packages, depending on where you want to call. So you can phone anywhere in your province for one price, or pay $5 more to call anywhere in Canada and the US. The last time I checked, it didn’t cost me more to e-mail my friend in Newfoundland than it did to e-mail the guy across the hall, so why should VoIP, which also uses the Internet, be any different? That one we’ll have to leave to the marketing gurus.
Pricing complexity aside, VoIP promises cheaper rates than traditional phone lines, and it’s also more feature-rich. Some providers claim the sound quality has surpassed that of traditional landlines. Major players in the market include Bell Canada and Telus Corp. but the cable companies (who also provide Internet cable connections) are poised to join the party too. Here’s where it gets interesting.
The telecom companies are upset over a May ruling by the Canadian Radio-television and Telecommunications Commission (CRTC). It prohibits traditional phone companies such as Bell from lowering their VoIP prices to beat out newly-come competitors. The idea is to give new entrants to the market, such as cable companies, Internet service providers and new VoIP firms, a chance to establish themselves in the market without having to worry about predatory pricing from the phone companies (these new companies aren’t subject to the ruling so may price their service however they see fit).
Eventually, there should be adequate competitors in the market, allowing the CRTC to perhaps ease up on price controls. At the moment, Bell Canada, SaskTel, Telus Corp. and Aliant have petitioned the federal government to have the price controls pitched. It could take a year before they know if they’re successful or not.
What does that mean to purchasers? It’s not certain if telecom companies will offer VoIP on a contract basis. But if they do, proceed with caution, says Rod Sherkin of Toronto-based ProPurchaser.com. If not, you may find yourself stuck in a long-term deal with a telecom company, at a time when prices are buoyed up by the CRTC decision, only to watch prices plummet a couple of months later if the ruling is reversed or diluted. You’ll be forced to wait for your contract to expire before cashing in on cheaper deals. It’s an exciting technology, but keep an air of caution about you as the VoIP providers come a-courtin’.
Lisa Wichmann
Editor
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