The VoIP Industry has virtually eliminated bad debt from the equation of running their VoIP service businesses. The VoIP (residential VoIP and small business VoIP) service providers like Vonage, Packet8, Lingo, Broadvox, VoIP.net, and etc.

The VoIP (Voice over Internet Protocol) Industry has virtually eliminated bad debt from the equation of running their VoIP service businesses.  The VoIP (residential VoIP and small business VoIP) service providers like Vonage, Packet8, Lingo, Broadvox, VoIP.net, and etc. have entered the market place with a strict pre-pay only payment structure.  This means that the customers must pre-pay with a credit card for the month of VoIP service at the beginning of the month in order to receive the VoIP service.  If the credit card gets denied, so does the customers service.

This pre-pay model gives the VoIP service providers a leg up on the ILECs (Incumbent Local Exchange Carriers or Traditional telephone companies like SBC, Qwest, or Verizon).  The ILECs run their businesses via a post-paid billing model, meaning that the customers pay for their services at the end of the month via many different payment options. If the bill is too large for the customer and the customer doesn't have the money to pay the bill, generally the bill will go unpaid.  Unpaid telephone bills reach into the millions of dollars each month for the traditional telephone companies.  This is just a known fact for the telephone companies and it is taken into consideration when the telephone service pricing is established.  The phone companies charge everyone a little more to cover the bad debt of those who fail to pay their telephone bills.

Bad debt is one cost that the Voice over IP service providers have eliminated from their VoIP pricing structure.  This along with reduced taxes, unlimited local and long distance calling, included enhanced telephone features, and outstanding customer service allow VoIP service providers to save consumers a significant amount of money. These are the things that are attracting millions of customers to VoIP service and will continue to do so in the future.