Internet Phone Calls Still Face Challenges Service "Not There Yet' Despite endorsements from venture capitalists, reliability issues persist.(INTERNET & TECHNOLOGY)

Byline: MIKE ANGELL

Venture capitalists may have put their stamp of approval on Internet calling. But some customers feel the service still has bugs to work out.

Vonage last week announced a $105 million infusion of cash from venture investors -- a move seen as another endorsement of voice over Internet protocol technology.

Vonage uses VoIP data networks, instead of regular voice networks, to deliver phone calls. That makes calling less expensive and more flexible.

With an estimated 600,000 people in the U.S. using VoIP service, it looks ready for prime time. But VoIP providers say they have yet to match the high reliability of regular phone networks. Problems range from network outages to user error. And since VoIP relies on Internet technologies, there could be future issues with VoIP-savvy hackers and spammers.

The bottom line: VoIP still needs work. "I would say we're close but not there yet," said Marian Croak, vice president for AT&T's CallVantage VoIP service.

VoIP is becoming more mainstream each week. Vonage annonced Wednesday Office Depot will resell its service. And CallVantage says Best Buy and cable provider Adelphia Communications will market its service.