cheap VoIP call termination

This is "baked" in the sense that the hardware to do it has existed for years, but "half-baked" in the sense that it's still basically unavailable in the US as a commercial product.

Basically, service providers would buy blocks of telephone numbers (ideally, in major metro areas, but I suspect some people really wouldn't even CARE if they had to have a New York or Los Angeles phone number despite living in Iowa or Florida). They'd also maintain a password-protected online database correlating phone numbers sold to customers with the hostname and port address of a VoIP router to which incoming calls to that number should be routed. Incoming calls to the phone numbers would be received by the service provider, and forwarded over the internet to the VoiP router at the specified host:port. To callers, it would look just like a normal landline phone tied to a physical street address somewhere (911 calls would show whatever address the customer registered with the service provider as the router's physical address).

Normally, if the called party's router were unreachable or nonresponsive, the calling party would simply get a message that the number was valid, but the call could not be completed at that time. For an extra monthly fee, customers could have fallback voicemail that would either hold the message or periodically poll for their router and attempt delivery when it came back online.

Associating routers with a hostname (as opposed to an IP) and an arbitrary port frees the service provider from most day-to-day administration. People with dynamic IPs could simply make their own arrangements with a dynamic DNS service like tzo.com, and enabling the specification of arbitrary ports would make it NAT-friendly (just assign the VoiP router a private internal IP and forward its port at the DSL/cable router) and permit multiple phone numbers to terminate at the same physical IP address.

Insofar as target markets go, I'd target the one likely to demand the least: people who use their cell phones for almost everything anyway, work in I.T., and have DSL/cable & question monthly why they're still paying BellSouth/PacBell/Verizon/etc $20-30/month for a phone they hardly ever use (answer: Pizza Hut won't deliver if you call from a cell phone, nor will most credit card companies let you activate a card from a cell phone). Such people would probably jump at the chance to pay somebody a base rate of $9.95/month plus some low per-minute rate like 6-10 cents/minute (the FCC and other tax authorities still insist upon having their fun) -- especially if caller ID and the like were included for free (in most cases, it's the customer-owned VoiP router that would provide most of those features anyway).

The per-customer profit would probably be fairly low (FCC and state taxes would eat into most of the $9.95 and 6c/min), but on the other hand, the service provider wouldn't have to provide much in the way of real service anyway. Remember -- these are people who hardly EVER touch their landline phones... they just need them to be there a few times a year. If they had customers pay 3 months' of base monthly fees at a time and took the per-minute fees out of a prepaid and credit card replenishable $25 fund, the system would basically run itself. A "tough love" customer service policy (telling customers to RTFM that came with their VoiP router if it doesn't work) wouldn't hurt, either -- their responsibilty would begin and end with receiving calls and forwarding the data to the customer-owned and maintained VoiP router alleged to be at the host/port specified by the customer.