Vonage, VoicePulse Push Forward With Video

Two major VoIP providers announce their intention to offer video services in 2005. The timing of the dual announcements was in part driven by competition. Yet, that very competition is one stumbling block to the wide acceptance of video VoIP. Will Vonage, VoicePulse and Packet8 — the only significant player in video VoIP today — call a short time out and sign the interconnection agreements needed to allow video voice to work?

Within the space of a few hours, two separate New Jersey-based Voice over Internet Protocol providers announced their intention to move forcefully into relatively uncharted space: the video telephone.

First, Edison, N.J.-based Vonage Holdings Corp announced that the company had struck an agreement with video telephone manufacturer Viseon to provide video services, asking that the news be embargoed until Thursday.

A few hours later, Jamesburg, N.J.-based VoIP provider Voice Pulse issued a press release announcing it would be incorporating video service into its offerings in the second half of 2005.

The twin announcements are not coincidental. According to Ravi Sakaria, CEO of VoicePulse, his company decided to disclose its video service soon after he received a call from a reporter at the Bergen Record, a newspaper in northern New Jersey.

“We built our network for video from Day 1 and we’d been getting ready to announce it for a while,” said Sakaria. “So when I got the call from the reporter, we decided to move ahead with the announcement.”

Vonage chairman and CEO Jeffrey A Citron refused to discuss pricing or features of the new service beyond saying the device itself will be less expensive than Viseon’s current video phone offering, the $599 VisiPhone, and will be more than “just a phone with a camera slapped on it. It will have features never before available to consumers.”

The phone will use the H.263 and H.264 protocols, according to Citron.

The new video phone, expected to be unveiled at the 2005 Consumer Electronics Show in January in Las Vegas, will look different than the VisiPhone, Citron added, but he declined to be more specific. “It will be nothing like that device,” Citron said.

Pricing is another matter that Citron refused to discuss. VoIP provider Packet8 offers a video phone for $499, with no additional charge for video services. Citron called the Packet8 device “a phone with a camera slapped on it.” Citron said that pricing will be discussed when the phone itself is unveiled.

“We’ve been working for a long time to advance the types of [VoIP] devices that people could use,” Citron said. “We started off offering one adapter. Now we offer a full range of adapters. We offer adapters in home routers, access points and modems.”

Vonage has been working on video telephony for a long time, Citron said. But technology issues kept video telephony from being viable until earlier this year. Video telephony has suffered from poor quality and from bandwidth considerations. But the increased presence of broadband, better compression and other advanced technologies have made high quality video telephony a reality.

“This service will allow Vonage small business customers to benefit from corporate quality videoconferencing’” Citron added.

In a prepared statement, John Harris, president and CEO of Viseon, Inc. commented: “This relationship will finally provide consumers with a next generation telephone that can take full advantage of the features available from broadband phone service. The phone we will be offering in partnership with Vonage is different from anything else available today.”

Interestingly, when VoicePulse and Vonage join Packet8 in offering video, a customer of one service will only be able to make a video call to another customer on the same service. That is because there is no interconnect agreement between the companies to terminate calls on each other’s networks.

Even today, simple voice calls between VoIP providers are actually linked together via the PSTN because the new start-ups have been too busy competing with one another to strike up interconnection agreements that many think will reduce telephone costs and further enhance the quality of IP calling.

Sakaria believes that “it’s possible that video is what drives interconnection between the VoIP carriers.”

“The technology is not the obstacle to deployment of video telephony,” said Sakaria. “The real obstacle is delivering it in a user-friendly, acceptable, affordable package.”

“Once that happens, “ Sakaria said, “I think we’ll have to stop fighting each other long enough to reach interconnection agreements just to be able to serve our own customers.”