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One VoIP provider's patent protection: More patents

A variety of strategies mean that independent VoIP offerings won't go away soon, even if they change form.

Patent litigation has left Vonage's future uncertain, but not all independent VoIP providers have taken cover. Some observers even say that, given ample preparation and a little luck, these providers' network independence could be a key driver as consumers embrace voice as service.

Admittedly, bleak news is abundant when surveying the state of IP telephony. For Vonage, another day brings another lawsuit as AT&T joins Verizon and Sprint in filing patent infringement claims.

Possibly more threatening to VoIP's low-latency needs, Comcast actively shapes Bittorrent, Limewire and possibly even Lotus Notes traffic, according to the Associated Press and other outlets. Without a certain level of "net neutrality," VoIP providers may face increasing interference as telecoms try to defend their turf.

However, at least one provider believes it can dial success with a strategy out of the telecoms' own book: patent development. That is the tactic of 8x8, which feels ready to fend off any patent-litigation assaults with its own arsenal of 69 VoIP-related patents.

"The confidence that we have is not so much based on [the fact] that we don't infringe on some patent, somewhere," said Huw Rees, vice president of marketing and sales at 8x8. To verify that a technology is patent-free would leave no time for actual work, he said. "But what we do feel is that with our patent portfolio, we have strong defensive patents."

These defensive patents could be critical in helping Packet8, 8x8's VoIP offering, steer clear of Vonage's current legal woes.

Jason Schultz, a senior staff attorney with the Electronic Frontier Foundation, said such strategies might be necessary going forward.

"Telecom companies often build huge patent portfolios so that they can overwhelm any new entrant to the market," Schultz said. "So it is often advisable if you are going to enter a patent thicket [to] have your own patent portfolio."

He added that until recently, as its many problems were slowly resolved, VoIP was largely left alone by the telecoms.

"As that [resolution] happened, I think the telecom companies realized that they needed to react, and one way to react is to launch lawsuits," Schultz said.

He added that people are now beginning to worry about broad patents enforcing a new telecom monopoly.

"I think that's a realistic fear," he said, adding that with telecom consolidation, consumers could find themselves without a choice of "net neutral" providers and without an ability to take advantage of services sensitive to latency and speed.

Rees said that provider interference has not so far been a major problem, citing only two resolved instances of undesirable packet shaping. He added that even if providers did close down certain ports or sniff for certain types of traffic, 8x8's ownership of the technology would allow them to rapidly adapt their deployments to work around any restrictions -- overnight, if need be.

This very independence could in fact prove an advantage, Rees said, particularly to those offices with geographically varied locations. Being free from ties to any one provider or location, a Packet8 deployment can, if necessary, remain consistent across the world.

Another crucial aspect of Packet8's strategy, and another differentiator from Vonage, is a focus on small and medium-sized businesses, which are often willing to pay a premium for a consistently higher quality. In contrast, the consumer market has seen price competition so fierce that providers often resort to giving away the service.

This commoditization may, however, provide its own opportunities for growth. Tero Kuittinen, an analyst with Avian Securities LLC, said he saw many of the smaller VoIP players being supplanted by bundled services from sources like Google and eBay that could successfully build an advertising model around connecting users with one another, and even original content.

"I think that bundling is going to make it very difficult for standalone services to succeed," Kuittinen said. "I think that we're going to see a lot of takeovers and acquisitions over the next two years."

Whether in the residential or enterprise market, one thing does remain clear: VoIP's flexibility and cost savings mean it is here to stay. What is not so clear is how it will be delivered.

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