Facebook Twitter



Imagine you could make an international telephone call for the cost of a local call. That's the promise of a new generation of phones which will use the Internet rather than the telephone network.

Supporters of Internet telephones, also known as Net phones and Web phones, believe they'll transform global communications."Internet telephony will revolutionize telecommunications. By 2000, using the Internet to make long-distance telephone calls will be commonplace," says Danny Wettreich, chairman of Meteor Technology, an Internet phone developer.

Internet users - estimated at 50 million worldwide - access the network by making a local phone call from their PC modem to an Internet service provider. Although an Internet user may be accessing data from a computer the other side of the world, he or she pays only local call rates. This is what lies behind the economics of Internet-based telephony.

The Internet could be used for many other telephony services, including faxing, paging, video-conferencing, collaborative computing, business-to-business applications and electronic commerce.

Today's Internet phones use a PC, special software, microphone, speakers and a plug-in computer card that converts speech to data and vice versa.

Companies marketing Internet phone software include Quarterdeck, Televox, DigiPhone Europe, Netspeak and VocalTec. Prices range from free to $60.

To make an Internet telephone call, two people need to have phone software stored on their PCs and to arrange to make a call at a pre-set time. The caller clicks an on-screen icon and the recipient sees a message on the PC screen or hears a sound through the computer speakers.

Internet phones can offer advanced features such as call screening, but they don't have the same sound quality as a fixed-line phone. Speech is compressed and suffers from a time delay - the effect is of having a conversation over a satellite link. In many cases, only one person can talk at a time.

"People accept that mobile phones do not give the same quality as an ordinary phone," says Tony Duerinck, marketing development manager of Dialogic, a computer telephony company. "But they are prepared to trade off quality against convenience. The cost benefits offered by Internet phones will have the same effect. And Internet phone quality will improve."

The International Data Corp. estimates there were 500,000 Internet phone users at the end of 1995, with the market worth about $3.5 million. The corporation says the number of users could reach 16 million by the end of 1999, with a market value of $560 million. Only five percent of Internet phones were used by business in 1995, it says, but the company believes this figure could reach almost 63 percent by the end of 1999.

Forecasts like this have prompted leading computer companies to join the Internet phone market.

Microsoft and Netscape have put Internet phone software into the latest versions of their Web browsers, used for exploring the Internet. IBM is developing Internet telephony software for business and corporate users. Intel, the world's largest semiconductor manufacturer, also has developed an Internet phone.

Existing Internet phones use proprietary software, which means users can't mix and match systems, but more than 120 companies, including Microsoft and Intel, have agreed on an Internet communications standard set by the International Telecommunications Union.

Until recently, traditional phone companies have showed little concern over Internet telephony. But this has changed now that companies are beginning to offer equipment and services that enable ordinary phones and fax machines to make calls via the Internet.

VocalTec and Dialogic have developed a computer server that acts as a link or gateway between ordinary telephones and the Internet. Telephone users call up their local gateway server and hear an automatic greeting asking them to key in the phone number. The call is routed via the Internet to a second gateway server at the other end of the line. Users pay for the Internet connection charge and the local calls to and from the gateways.

VocalTec says multinational companies could buy gateway servers - prices start from $4,000 - to create a private international phone network.

IDT, the callback and Internet company, has announced an Internet phone service that will allow overseas callers to phone anywhere in the U.S. for just 10 cents per minute.

NetXchange from Israel has developed FaXchange, an Internet faxing system which, it's claimed, saves companies up to 70 percent on international fax charges.

Iowa-based Logiphone has announced an Internet fax service which, for a monthly flat rate of $35, will allow companies to send up to 40 fax pages per business day. Users don't need to have an Internet connection, but make calls on a device next to their fax machine.

The British company London Pager offers Page-mail, a system that allows users to receive Internet E-mail on a paging device. Energis and ITR Worldwide, the British telecoms groups, are developing public payphones with Internet access.

"The traditional telephony business model is based on time and separation," says Ohad Finkelstein, VocalTec's vice-president of international sales. "The longer you talk and the greater the distance, the more you pay. Internet telephony is based on subscription."

Not everyone is happy with this brave new world. In March, the America's Carriers Telecommunications Association, representing more than 120 small and local U.S. phone companies, petitioned the Federal Communications Commission to ban the sale of Internet phone hardware and software and put Internet phone services under the same regulatory conditions as ordinary phone companies.

Not all telecoms companies see Internet telephony as a threat.

"We opposed the ACTA petition. We think the market should determine what happens," says Tom Evslin, vice-president of AT&T WorldNet, an Internet service operated by the US telecoms giant. Evslin adds that WorldNet may offer Internet telephony in the future.

British Telecommunications says the company sees Internet telephony as a parallel market: "It will be mainly used for sending voice and data."

Scott Coleman, a general manager at Syntellect, an interactive voice response company, agrees: "Internet telephony will open up the way for online shopping and banking, credit card verification and collaborative computing. People will be able to talk and work together on the same computer screen via the Net."

It sounds promising, but some fear that widespread use of Internet telephony could bring the whole network grinding to a halt. One solution could be for companies to use private high-speed Internet connections. The British company On Demand Information has launched a service offering this facility.

(Distributed by Scripps Howard News Service.)