Business VoIP

2007 was both a good year and a bad year for Voice over IP (VoIP). The half-full or half-empty perspective depends on one’s vantage point. This year VoIP became less of an novelty and more mainstream, resulting in some high-profile lawsuits and a decent amount of consolidation. During the past 12 months, VoIP changed from a “new technology” to, in many cases, a commodity. People now care less that VoIP is based on new technology and more that it works for them—enabling more affordable, more efficient communications.

 

Overall, this shift is a positive thing for the VoIP industry, even if some growing pains were involved. It seems clear that VoIP is not going away, but instead is often seen as less attention-worthy as the industry settles down, finding a more permanent shape.

 

Here are a few, just a few, highlights of VoIP-related news during 2007. These are the big rocks; for stones and smaller pebbles, spend some time exploring TMCnet.com, where a wealth of VoIP news resides. You might want to start with Rich Tehrani’s blog.

 

One thing’s for sure; 2007 was a rough year for VoIP provider Vonage. The trouble started in February when a case originally filed in June, 2006 by Verizon got underway. Verizon claimed Vonage was infringing upon its patents. The technology in question was pretty integral to Vonage’s operations, and as a result it looked like the company might not survive the legal battles.

 

After many months of struggles, Vonage and Verizon finally settled the case in October, for a maximum of $120 million in damages. By then, however, Vonage was reeling from a legal loss to Sprint and battling a similar lawsuit brought by AT&T (News - Alert). (The AT&T case was settled in November.) Making matters worse, in mid-December Vonage was hit with another patent infringement suit, this time from Nortel (News - Alert). The company ended the year still on pretty uncertain ground.

 

 

2007 also was a bad year for VoIP provider SunRocket. Even worse than for Vonage, in fact: the company unexpectedly (and without prior warning to customers) shut down its VoIP service in mid-July, leaving more than 200,000 customers stranded.

 

Quite a few other VoIP providers stepped eagerly into the void, offering special programs and rates for former SunRocket customers. These included Nuvio, Packet8, Net2Phone, and ViaTalk. Toward the end of July, it was announced that TeleBlend, a division of USA Telephony (run by United Systems Access Telecom) was buying out the assets of SunRocket, and rescuing those customers who still hadn’t picked a new VoIP service.

 

 

Microsoft made much-anticipated waves in October with the launch of its Office Communications Server 2007, a unified communications product that included Internet telephony functionality. Although the VoIP functions in OCS 2007 were aimed at big businesses, the release was nonetheless seen as Microsoft’s move into the IP communications market, the expectation being that the software giant would eventually prove a pretty formidable competitor for even small VoIP players.

 

Many, many companies weighed in on the impact of OCS 2007, including Nuvio, Nortel, IPitomy, BlueNote Networks, Mitel, Zeacom and Epygi.  

 

 

The U.S. Federal Communications Commission issued several rulings during 2007 of importance to the VoIP industry. One of these came in March; the FCC said rural telecom operators must make their networks available for use by VoIP providers. The ruling clearly was pro-consumer, the idea being to foster more competition and more choices for subscribers.

 

In another March ruling, the FCC said VoIP providers, especially cable operators who offer VoIP services, are exempt from state regulation of their operations. The ruling said such providers could not have their VoIP rates regulated by state governments, nor could states insist that the provider get certified before starting a VoIP service.

 

Consumers landed another win in November when the FCC ruled that VoIP providers must offer number portability for customers wishing to keep their existing phone numbers when switching to a new voice service. The ruling more specifically said a customer’s number must be ported within 48 hours of him or her signing up for a VoIP service. While this might mean an increase in VoIP rates (to cover the cost of porting numbers), it was nonetheless a positive development for consumers.

 

 

2007 saw a fair amount of consolidation in the VoIP market. For example, after a bit of hemming and hawing in 2006 over a buyout bid from former CEO Steven Miyaylo, IP-PBX provider Inter-Tel (News - Alert) in April of this year gave the go ahead to be acquired by Mitel.

 

Another VoIP-related deal during 2007 was NEC’s acquisition of IP-PBX maker Sphere Communications. NEC bought Sphere for $42 million, thus expanding its presence in the U.S. IP-PBX (News - Alert) market.