Adding another string to its already multi-stringed voice over IP (VoIP) bow, software behemoth Microsoft has done a deal with MCI to provide a service that allows customers to place calls from a PC to ‘virtually any phone’. The snappily titled 'MCI Web Calling for Windows Live Call' service will be available through 'Windows Live Messenger', the soon-to-be successor to 'MSN Messenger'. The latter is the instant messaging and free PC-to-PC phone service that has more than 185mn active accounts around the world and apparently attracts more than 440mn unique users worldwide per month.

MCI and Microsoft say they are testing the service as part of a 'Windows Live Messenger' limited beta, with subscriptions initially available in the USA , and that they expect to jointly deliver the PC-to-phone calling capabilities to France , Germany , Spain and the UK in the coming weeks. Once subscribed to the service, customers can place calls to and from more than 220 countries with rates starting atUS$.023 per minute to the USA , Canada , the UK and Western Europe during the beta testing period. Upon sign-up, MCI Web Calling customers will receive up to one hour of free calls. Final pricing will be determined when the product officially launches in 2006, although it has to be said that the cents-per-minute ‘draw’ of VoIP services is becoming somewhat ineffectual as more and more service providers continue to push prices further and further southwards.

Going south VoIP price-wise, for example, is Yahoo! This month the online company jazzed up its VoIP services with the addition of (like Microsoft/MCI) PC-to-phone calling, and with inbound calling, and better integration with the rest of the features in the Yahoo! Messenger client. Prices for these calls range from US$0.01 per minute to US destinations and US$0.02 per minute to 30 other countries. Split those hairs if you can.

According to the UK-headquartered Ovum consultancy, the Yahoo! move is aimed at grabbing some of the VoIP limelight from Skype. "Yahoo! has traditionally seen its major competitors in the instant messaging space as AOL and MSN, but this announcement shows that Yahoo! clearly has Skype, rather than those traditional competitors, in its sights in launching the new functionality" suggests Ovum principal analyst Jan Dawson. "It has made a point of ensuring that not only the headline prices but also each calling rate in the new plan undercut those of Skype. In positioning the launch to us in a pre-briefing, MSN and AOL were barely mentioned while Skype was mentioned dozens of times".

VoIP pioneer Vonage is also expanding its repertoire. This week, in partnership with US/Chinese equipment vendor UTStarcom, the company unveiled a portable Wi-Fi handset configured with Vonage’s VoIP phone service. The product, which will offer mobility across IEEE 802.11b networks, is being pitched as a device that will enable users to make unlimited local and long distance calls from any open access Wi-Fi hotspot.

"We believe the affordable price point and extensive features of the UTStarcom F1000 offered through Vonage will be a disruptive force in the telecommunications service marketplace", ventures Bill Huang, chief technology officer and senior vice president of engineering at UTStarcom.

And in two other VoIP developments of the last few days BellSouth and 8x8 did a deal to offer new services and Softroute announced free PC-to-PC phone calls and PC-to-phone calls claimed to ‘more competitive’ than those of other VoIP providers “…including Skype”.

So, where will it all end? Surprisingly this may not be too tough to call. Given the rate of new VoIP service launches and alternatives (you can probably find far more for the month of December than those outlined above), and the continuing downward pressure on prices, this looks like a market increasingly ripe for consolidation. What was once geeksville is becoming commodityville. As such the great VoIP adventure will certainly end in tears for many enterprises whose unique selling proposition was just price, or was just not unique enough. And it may end in laughter all the way to the bank for a fortunate few others if they wind up in eBay/Skype type endgames.

We sometimes wonder, in fact, how many VoIP are actually for sale from day one.
John Williamson