Why AT&T, Quest, etc. VoIP announcements are lame

December 11, 2003

VoIP is all over the news the past few weeks. Consider the following recent headlines:

Based on the above, one might get the impression that VoIP has arrived and the story is complete. While I think it’s great that VoIP is getting some air-time, let me explain why, in reality, there is very little “Internet” in these VoIP products.

Take the following from the CNET AT&T article:

AT&T plans to let customers place telephone calls using Internet technology, an increasingly popular option for businesses and individuals that’s cheaper than routing calls over the century-old telephone system.

What a hoot. What AT&T and the other telcos are offering is a way to get from your home to AT&T using the Internet. After that, the call takes the same route as any other, using that same so-called century-old telephone system to reach it’s final destination (which, by the way, is not only ancient technology, but includes a mish-mash of old and new technology, IP and otherwise).

The old telco model looks like this:

So with AT&T VoIP, the above pictuure changes to the following, replacing your local telco service with the AT&T VoIP service:

Meet the new boss, same as the old boss

So, okay, these services are using the Internet, sort of. The big sales thrust is lower costs. We keep hearing that calls over the Internet are cheaper. But, as others have also pointed out, this is a weak case (arbitrage of the traditional telco access fees), and will not stand the test of time.

What will ultimately matter about these services will be features, not price. People didn’t get wireless phones to replace their fixed PSTN service. They got them for new features (in particular mobility). For VoIP, we can imagine these features to be stuff like follow-me, smart routing of incoming calls (say one number rings all the phones in the house, while other numbers ring only specific phones), actions based on time of day, caller-ID, etc. Then maybe throw in some IM and Presence, maybe even video, etc. and suddenly it is pretty compelling, even if I’m not saving a dime.

The Telco-centric versions of VoIP they are peddling now are not the Internet-style VoIP that will ultimately develop.

To visualize how un-Internet-like these services are, consider one user using so-called VoIP from AT&T and another using so-called VoIP from another carrier offering a similar service (e.g. Vonage). Look at the path of such a call:

Is this really Voice over IP? — Hardly

The call leaves my house over the Internet to get to my so-called VoIP provider, then goes onto the century-old telephone system, then back onto the Internet again, and finally to the other party. That doesn’t seem very Internet-like.

A true Voice over the Internet system would route the call end-to-end over the net, like this:

Now that’s more like it

This is scary stuff for the telcos. What’s even scarier is that in some scenarios you don’t even need a VoIP provider at all to make it happen. More on that in a future post.

UPDATE: I have received a lot of feedback to this post, in email and other forms beyond the blog comments. See my follow-up to this post for my responses and additional details.

10 Responses to Why AT&T, Quest, etc. VoIP announcements are lame

  1. Aswath
    December 14, 2003 at 9:17 am

    I would like to clarify whether you distinguish VoIP offering from AT&T and Vonage. For example, Vonage also does not interface with other VoIP providers in the native mode. So why single out only these service providers?

  2. December 14, 2003 at 10:19 pm

    Actually you’re right. At one time Vonage supported incoming calls via SIP but I don’t believe they support it anymore.

    I mostly singled out AT&T, Quest, and the others mentioned because they are the ones making all the headlines in the mainstream press over the past week or so.

    In fact, you’re right, though, and there are other VoIP providers in the mix with similar shortcomings.

  3. January 12, 2004 at 11:43 am

    It seems to me that ATT is really just trying to capitalize on what vonage is "more like". Of course neither are true internet phone service, but ATT is just using the term internet to associate itself with vonage’s increasing market share. We sell the neighborhood, which does not use any of that marketing hype, even though it is quasi VOIP, using the internet to route traffic to the closest receiving Central Office.

  4. Ven
    February 15, 2004 at 2:05 pm

    It will be a matter of time before PSTN is removed and Internet to Internet peering for VoIP is established. However, the internet QoS (Quality of Service) needs to improve a lot more.

  5. Cheap Hotels Motels
    February 19, 2004 at 9:29 am

    Well, Overall.. AT&T and Qwest are th eworst providers in the Phx area

  6. February 20, 2004 at 8:59 am

    Currently, routing VoIP call over the internet is by best effort. There is no SLA. QoS is not enabled on the Internet. MPLS development will help VoIP development.

  7. February 20, 2004 at 9:06 am

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  8. yuezeng Cao (Jack)
    March 1, 2004 at 1:35 am

    This is a very good introduction to VoIP mode which can be operated as a business mode by Service Providers, not just as a free voice game on Internet.

    But this mode is retrieved from considerations by larger Carriers like AT&T, would any warmth friend would like to outline an VoIP business mode for Small and Medium Enterprice to operate (enter)in an opening telecom market like in China?

    With a complete VoIP solution, we would find business opportunity in this huge market together.

    Thanks with Regards

    Jack, yuezeng Cao
    contact me: yuezeng_cao@hotmail.com

  9. Steve
    March 30, 2004 at 7:14 am

    I believe that’s QWEST. Spelling aside, what’s your point?

  10. February 5, 2008 at 6:57 am

    This is an excellent article about VOIP. I have been looking for a VoIP Phone Service Provider and found one at

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