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Story URL: http://www.silicon.com/research/specialreports/voip/0,3800004463,39126440,00.htm

Vonage launch video phone service
More bad news for teleworkers…

By Ben Charny

Published: Thursday 09 December 2004

Internet phone service provider Vonage will sell video phones and a video phone service sometime before the end of March, its chief executive said on Wednesday, stamping an important imprimatur on a market once derided by comparisons to the futuristic TV cartoon "The Jetsons".

Vonage Chief Executive Jeffrey Citron didn't provide an exact date for the service's debut - first quarter 2005, he said - nor did he release pricing details. For a general idea on what a Vonage video phone service might cost, one can look to videophone provider Packet8, which sells unlimited video calling for $30 a month. Packet8 videophones, which have embedded cameras to capture the caller's image, come heavily rebated.

Vonage has partnered with broadband video equipment maker Viseon to develop the videophone. Vonage will release a videophone that resembles the VisiFone II, a phone developed by broadband video equipment maker Viseon. The VisiFone II debuts in January.

Videophone service is the latest add-on from Vonage and other providers of VoIP - voice over Internet Protocol - a cheap telephone service in which phone calls use Internet Protocol (IP) to travel over the public internet, or privately owned high-speed networks based on IP. The calls are much cheaper than traditionally placed ones mainly because of IP's efficiencies, plus most IP calls have so far avoided regulation, while traditional phone companies must collect fees and taxes from their customers.

VoicePulse, another VoIP provider, is also planning to add a videophone service "very soon," a spokesman said. He said details were not available.

Videoconferencing over broadband is very small market. By year's end, revenue from sales of video-calling gear will be little more than $40m, though that adds up to a 23 percent annual increase from last year, according to analysis company Point Topic.

But Citron said recent developments in chip designs and videophone manufacturers coming together over standards has helped drop equipment prices to much more affordable levels. Also, he adds, broadband connections are becoming fast and reliable enough for the service.

"Historically, it's not a product we were interested in," Citron said. "The quality wasn't great, there wasn't a reliable enough network, and it was incredibly expensive. We think those barriers are being eradicated."

Ben Charny writes for CNET News.com.