Many speakers at the VON conference in Boston last week talked about what one called VoIP 2.0. If VoIP 1.0 was all about inexpensive calls, 2.0 is about integration and new applications, said Brad Garlinghouse, vice president of communications products at Yahoo.

"VoIP by itself isn't it," he said. "It's all about new functionality." By way of example, he cited a capability Yahoo supports in the U.K. through a deal with BT. When customers are in the office they can have calls to their home sound an alert at work, and they can either answer, block or route the calls.

Consumers are ready for 2.0, he said, noting how advances have actually complicated their lives. "People have voice mail at home, in the office, on their cell phones and then multiple types of e-mail. We need to break down barriers and integrate these environments," he said. (For more on Yahoo, see story)

Skype CEO and co-founder Niklas Zennström agrees that the future is about new options. He said the first two years for his firm were "all about people communicating with each other. Now it is about people communicating with services."

He can imagine, for example, Skype making it possible for a businessman in China to contact a colleague in Germany and, on the fly, arranging for a translator to join the conversation for a fee. As part of eBay now, Skype has access to eBay's PayPal business unit that will make it easier for this type of thing happen.

Zennström points out that there are 400 products built to the Skype API today and some 1,000 developers building to Skype.

Blair Levin, managing director of Legg Mason, said players such as Skype, Yahoo and Google are innovating faster than legacy telco players. The latter, he said, have a lot more to lose than to gain.

But BellSouth CTO Bill Smith told the VON crowd that VoIP is one of four key BellSouth initiatives, the others being building out broadband, integrating wireline/wireless and deploying IPTV.

Why VoIP? Smith echoes the others: new features. "The old world was defined by 12 buttons and a switch hook," he said. "The sky's the limit in the new world. I should be able to use my cell phone to call up my personal video recorder and program it to record something. That's possible today but clunky. It should be simple."