In 1876, Alexander Graham Bell conducted the first successful experiment with the telephone by saying those famous words, "Mr. Watson, come here. I want you!" Fast-forward 129 years, and voice over Internet protocol (VoIP) is making that type of traditional phone call one for the history books. Now traditional telecom companies, cable companies, and equipment makers are racing to offer VoIP services to customers.
What is VoIP, you ask? With traditional long-distance service, you pick up the phone and dial the number, and the call is charged on a per-minute basis by your long-distance phone company. With VoIP, the same call is routed over the Internet via a VoIP provider -- similar to an ISP -- thus circumventing your long-distance phone company entirely. The major advantage of VoIP and Internet telephony is that it avoids the tolls charged by ordinary telephone service. So long, long-distance bills.
Although this technology has been around for years, the high-speed Internet connections required for VoIP were not widely available. The long-distance carriers didn't see this coming in the early days, but now it has caught their attention. Privately held Vonage -- which has more than 300,000 subscribers -- is the undisputed king of commercial VoIP providers. But it's unclear how long its reign will last. In a move to keep customers, AT&T
Not be left behind, other carriers are vying to jump online (pardon the pun). Verizon
The cable companies are also getting up to speed by advertising "triple play" packages of voice, video, and high-speed data service. They hope to close the considerable subscriber lead Vonage once had. More than 200,000 people now get their phone service from cable provider Time Warner
Not only will the service providers see profits from the switch to Internet-based phone traffic, but also equipment makers such as Sonus Networks
The future for VoIP is bright. Price will be key in who gets the largest slice of the talking pie. With broadband Internet service growing by 38% over the past year, both the telecom and cable companies will be making the call: "Mr. Customer, come here, I want you!" And for investors, paying attention to this growing industry could result in some interesting opportunities down the road.
Fool contributor Kelvin Taylor likes talking on VoIP but does not own shares of any of the companies mentioned.