U.S. competition appears to be heating up in the Small Business (SMB) Internet Phone Service market, but vendors are still wet behind the ears.

Although it may seem like there is no shortage of choices for Business Internet Phone Services most of the service providers are still not delivering IP business phone lines in any way that the consumer can understand.

There is also a misconception that Internet Phone Service and Business Phone Service delivered over the Internet are the same thing, they are not. In fact, they are quite different.

Many of the companies out there are marketing these service as if they are the same thing and many SMBs are being fooled into thinking that this is the case. This could easily spell certain disaster for Small Businesses and does the entire small business community a disservice.

Best efforts Internet phone services have zero Quality of Service (QOS). This includes Vonage, Packet8, Lingo and there are many more. These services should NOT be used as a replacement for your primary business lines.

QOS is an important piece of any Phone Service that many Internet Phone Service providers prefer not talk about, it’s their Achilles’ heel.

Without a guaranteed Quality of Service your provider can not say if your call experience will be mostly good or mostly bad. I don’t care who they are or what they say, there is nothing that any service provider can do today to deliver a reliable best efforts Internet Phone Service unless they own the Internet service as well.

About the only company out there that seems to have done this reasonably well is Cbeyond. Their website says..

Designed with small businesses in mind, Cbeyond offers flexible services and fully-loaded packages that meet your needs. Explore our packages that integrate high-speed T-1 internet access, local and long distance voice service, toll-free numbers, mobile and more— delivering all your communication needs on a single bill.

Sadly, their service area is limited:

* Atlanta
* Chicago
* Dallas-Fort Worth
* Denver
* Detroit
* Greater San Francisco Bay Area
* Houston
* Los Angeles
* Miami
* Minneapolis/St. Paul
* San Diego

No, I do not own stock in Cbeyond, but maybe I should buy some considering the lack of competition out there. Especially since their stock price is a mere 30% percent of it’s 52 week high.

Canada is even worse off than the US. Not only is their no Cbeyond but there is no real T-1 infrastructure that’s affordable. Shaw is probably the most competitive in the West for T-1s, but at $400/month it’s nothing a Small Business in Canada would get excited about.

So the question is, who will deliver Business VoIP service for the rest of us? I think there is a huge opportunity here and it doesn’t seem to be something that the incumbents are likely to be all that motivated to pursue anytime soon.