It's January 1, 2005 and you can now officially take down the holiday lights wrapped around your window sills. You'll need the extra juice for what we think is in store for VoIP this year.

Before we do the crystal ball thing, let's take a look back at our 2004 Predictions and see how we did.

A look back at '04

Prediction: The industry shakedown begins. Look for the big boys (AT&T and the cable cos.) to start swallowing up the independent VoIP providers.
What happened: There was no significant swallowing to speak off in 2004. In fact, more VoIP providers have joined the fray. There are, according to a recent report, more than 400 Internet telephony service providers in North America alone. And the closest thing to a shakedown last year came on Septemeber 30 when three major VoIP providers (AT&T CallVantage, BroadvoxDirect and Vonage) tangled in a one-day price war that seemed to have little effect on the prices the 397 or so other providers charge.

Prediction: Many new VoIP enabled routers hit the market. Following Motorola's and DLink's leads, Linksys, Cisco, Netgear, Zyxel, SMVC and others release new products with VoIP ports, QOS and firewall.
What happened: Linksys and DLink both released VoIP-enabled routers last year, albeit tied to specific service providers.

Prediction: Asterisk hits it big. Committed users of the terrific open source PBX-plus software develop easy-to-follow installation and configuration menus. Asterisk installations by small businesses and SOHO and home users will soar. Asterisk-to-asterisk networks, bypassing the Bells and even VoIP providers, begin to take shape.
What happened: Asterisk is certainly getting a lot more attention, though it is a long way from having “easy-to-follow installation and configuration” menus. Several new “front-ends” that purport to make asterisk easier to set up and use were released, though many of these packages are actually harder to implement than the decidedly user-unfriendly asterisk itself.

Prediction: Proliferation of low-cost feature-packed IP Phones.
What happened: A few new IP phones have been announced (e.g. the Sipura SPA-841 and the Grandstream GXP-2000), but nothing close to “proliferation” we expected . We were probably about 12 months ahead of the times here; 2005 will be different.

Prediction: A temporary solution to the 9-1-1 dilemma (for those who keep a landline around). New VoIP telephone adaptors will include ports that connect to PSTN lines. All 9-1-1 calls are automatically routed through this port, no matter their origination.
What happened: A couple of adapters include a PSTN port (the Sipura SPA-3000 and the Grandstream HT-486), but not many. On the other hand, 9-1-1 over VoIP is improving. We expect a large number of providers to address the 9-1-1 issue this year, though the lack of PSTN-like emergency phone service in VoIP appears to be more red herring than obstacle to adoption.

Prediction: International area codes arrive in the U.S.
What happened: Libretel, Lingo, Broadvox Direct, and Vonage have entered the International DID market in force, and several Asian-, European-, South American-based consumer VoIP providers are making inroads with their offerings in the North American market. Expect much more of this in 2005.

Prediction: Wireless phones and VoIP begin to converge.
What happened: Yes, we were wildly over-optimistic. Other than the release of the Sipura SPA-3000, which allows more adventurous users to gateway their cell phone calls through their VoIP service, there's been little movement here. A couple of pricey and feature-poor wi-fi cell phones hit the market, but consumers stayed understandably ho-hum about them. There is some progress being made in this area. And we expect, with fingers crossed, that truly useful WiFi-enabled wireless phones will arrive soon.

Prediction: VoIP providers get smarter. Watch for the more innovative services to interconnect, bypassing the PSTN altogether.
What happened: If interconnection is happening, it's a big secret. We suspect that some providers are hooking up together behind the scenes at various interconnect points in order to reduce their costs. Distributed Universal Number Discovery, or DUNDI, a peer-to-peer number-querying protocol designed by Mark Spencer, the lead architect behind Asterisk, is encouraging. But adoption of DUNDI since its October release has been limited to only a handful of innovative VoIP services.

Prediction: Broadband service providers up their uplink speeds.
What happened: A number of service providers have increased bandwidth in both directions this year. Look for additional speed increases as the competition between cable and DSL heats up in 2005.

Prediction: FCC steps in on regulation.
What happened: The FCC didn't just step in — the agency dove into VoIP head first when it squashed any state or municipal efforts to regulate internet telephony.

Looking forward

We admit that our mixed record predicting 2004 is pretty good evidence that we shouldn't open up a psychic hotline anytime soon. Still, we've got a keyboard, a server with plenty of hard drive storage space left to fill, and a bit of time on our hands in these slowest of news periods. So we'll try again. Here's what Voxilla predicts for 2005:

1. At least one major Internet telephony service provider will merge with another. We don't expect the so-called major industry shakeout like we predicted for 2004, but rest assured, it's coming (2006?) and this will be the opening salvo in the battle for supremacy in the Internet telephony service provider market.

2. Skype will become a more open network or perish. Skype's technology is quite good, and millions of users have downloaded the software. But it is still a closed, proprietary environment reminiscent of instant messaging networks. For it to survive, Skype must peer with other networks or risk losing their users to other, more open, networks. Jeff Pulver announced that Version 0.94.3 of Pulver Communicator will include Skype instant messaging, so the garden wall is beginning to crumble. Is voice-peering with SIP really all that far off?

3. Asterisk will have some competition. While Asterisk is considered the premier open-source PBX application, there are other contenders for the throne. SIPfoundry has released a promising open-source Linux-based PBX , donated by the folks at Pingtel . Others, including some written specifically for Microsoft Windows, are sure to follow. Asterisk will still be the head of its class in 2005, though others will certainly make inroads.

4. NAT Traversal for SIP will be solved elegantly. There are a number of companies offering gateways allowing SIP clients to function behind NAT. There is also Simple Traversal of User Datagram Protocol (UDP) Through Network Address Translators (NATs), or STUN, which many providers use to solve this problem. Traversal Using Relay NAT (or TURN) is another standard in progress. None are particularly elegant solutions. Some clever soul will work out a more foolproof way to get SIP traffic through NAT, a welcome development for those of us who consider ease-of-installation a must for truly widespread VoIP adoption.

5. A standalone, non-provider locked VoIP adapter will be released and retail for under $50 USD. The closest thing we had to this in 2004 was the PAP2 from Linksys, which is based on an early version of the SPA-2000, (Sipura Technology's two-port analog telephone adaptor which did displace Cisco's ATA-186 as the de facto industry standard in 2004). The vast majority of the PAP2s out there now are locked to a provider, though a few thousand unlocked units managed to leak out for around $60. This year, we most definitely expect device manufacturers to release unlocked telephone adaptors similar to, and perhaps surpassing, the SPA-2000 for under $50 USD.

6. The four US RBOCs will offer VoIP to their residential DSL customers. The four US-based Regional Bell Operating Companies are Qwest, SBC, Bell South, and Verizon. We predict each of these local exchange carriers will begin offering VoIP services – at a competitive price – to their residential DSL customers in an effort to reduce customer losses. Verizon already offers VoIP services under the VoiceWing brand. Qwest is also offering their OneFlex Hosted VoIP for small business customers. A residential offering should not be too difficult for Qwest, nor for SBC or Bell South.

7. Major Internet telephony service providers will announce peering agreements. These agreements will allow providers to more cheaply terminate calls on each others networks without the call ever touching the PSTN, thus reducing their costs and siginificantly improving voice quality. The agreements may either be between the providers directly or via a neutral peering point such as those that exist for internet traffic. Yes, competiton between VoIP providers is good for the consumer, but everyone benefits when the pitched battle for new customers is set aside while the IP telephony heavywieghts work together to improve their service. It's time.

8. Cordless IP phones will be introduced in 2005. Many of the IP phones currently on the market today are “fixed” phones, meaning they sit on a desk and have a cord. There are a couple of WiFi phones available, but they are pricy, clumsy and brain-dead when it comes to features. Look for companies like Uniden, VTech – and even Sipura – to come out with conventional cordless phones that have an Ethernet connection and speak SIP.

9. The press realizes that VoIP is International. The media will realize that the VoIP world is larger than the likes of Vonage and AT&T. We will begin to see real coverage of non-US-based Internet telephony service providers such as Telio, the innovative Norwegian company whose market penetration in Scandanavia surpasses all US-based providers combined, and Gossiptel, the UK-based company that has aggressively moved into other markets, including North America.

10. The VoIP revolution will be televised. Or at least it moves into video a bit more briskly. Companies like Packet8 already offer videophone service, and Vonage and VoicePulse boast they will be adding video service this year. But the real issue will be getting it cheap enough and “good enough” that people are interested. Standalone videophones not tied to service providers are in the price range of personal computers, meaning too expensive for most people to consider. Until videophone hardware gets cheaper, the only reasonable alternative is a softphone with a webcam, and that's where Xten's eyeBeam SDK comes in. It allows you to develop your own custom VoIP softphone client that includes instant messaging and video capabilities. Since a number of providers already use Xten as their softphone of choice, it makes sense they might consider using the eyeBeam SDK to make a softphone videophone. We predict at least one Internet telephony service provider will come up with a software-based videophone option in 2005.