Logical Net, on cusp of booming trend, plans entry in VoIP market
by: Richard A. D'Errico, The Business Review

October 25, 2004 - Albany, NY – Tush Nikollaj says Logical Net Corp. plans to enter the Voice over Internet Protocol market by the middle of next year.

"I think this is the future when it comes to voice communication," said Nikollaj, CEO of the Albany-based Internet service provider.

Nikollaj is right, according to a new report. VoIP will be used in 400,000 U.S. households by the end of the year, and skyrocket to 12.1 million homes--10 percent of U.S. households--by 2009, according to JupiterResearch.

VoIP is the transfer of voice over the Internet or a data network instead of the public telephone network. An analog voice signal is converted into digital packets and sent along high-speed data lines.

Consumers are trying out the technology because calls likely will be cheaper. Companies are turning to VoIP because of the cost savings and because VoIP is a more efficient way to communicate.

And Verizon Communications, SBC Communications Inc., Qwest Communications International Inc., AT&T Corp., MCI, Sprint, Time Warner and Cox Cablevision, among others, have announced plans to tap into the VoIP market within the past year, in part because the service isn't regulated.

Logical Net has a deal with Verizon that will give the ISP access to Verizon's infrastructure to provide DSL service in New York state.

That opens the door to offering VoIP, which requires broadband access.

"We're able to leverage all of Verizon's footprint," Nikollaj said. "When I say all of it, I mean all of it. We basically opened up the entire state of New York from Manhattan to Buffalo."

Nikollaj expects to enter the VoIP market next year.

"We think VoIP will be rolled out in the first or second quarter of next year," Nikollaj said. 'We're taking a watch-and-see attitude toward the whole business so we can learn what some of the VoIP providers are doing. Because we're small, we don't want to make any costly mistakes in how we deliver the product."

Senior analyst Joe Laszlo of JupiterResearch, which is based in Darien, Conn., said other small companies like Logical Net likely will begin offering the service.

"Just like we saw with DSL five years ago, VoIP startups will be extremely important in jump-starting the market and will motivate established carriers to develop their own VoIP services," he said. "However, it is unlikely that start-up VoIP providers will become a significant threat to he incumbent phone companies."

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