Crash, FYI
July 28, 1997, Issue: 641
Section: Top Of The Week
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AT&T Backing Boosts Internet Telephony -- Startup to serve as wholesaler for ISPs
By Gregory Dalton
AT&T gave a boost to the emerging market for Internet telephony last week by lending support to a startup company that plans to provide services to Internet service providers that want to handle calls for their corporate customers.
Tom Evslin, VP of AT&T's WorldNet service, is resigning to become chairman of Princeton, N.J., startup ITXC Corp. AT&T has agreed to help fund ITXC's initial trials and has an option to buy an equity stake in the company. "This is a validation of Internet telephony," says Jeffrey Kagan of Kagan Telecom Associates, an Atlanta advisory firm.
Also joining the market last week was Motorola, which said it will license and distribute VocalTec Communications Inc.'s voice-over-IP software to large companies. Motorola already uses VocalTec gateways to carry calls between five sites on its intranet in the United States and Asia.
AT&T rivals Sprint, MCI, and GTE have also announced plans to market voice-over-IP directly to companies, as have ISPs. ITXC's approach differs in that it plans to be a wholesaler of sorts, providing a private network linking its ISP customers and handling the settlement of call charges.
ITXC will use gateways from VocalTec, which pioneered voice-over-IP in 1995 with its consumer-oriented Internet Phone software. VocalTec, in Herzliya, Israel, has acquired an undisclosed stake in ITXC. Other equipment vendors such as Lucent Technologies in Murray Hill, N.J., and AlphaNet Telecom Inc. in Toronto are developing rival voice-over-IP products.
ITXC expects to be carrying calls on its network early next year, says Evslin, who declines to say from whom ITXC will lease the network. Even without using the public Internet to carry calls, ITXC will bypass regular phone companies, letting customers avoid steep tariffs imposed on international calls under multinational accords. There's much less room for such savings in 10-cents-a-minute domestic calls.
Not everyone is sold on voice-over-IP. Quality constraints will confine it to niches such as residential users and voice mail, says Alan Taffel, VP of marketing at UUNet Technologies Inc., a large ISP in Fairfax, Va. He says UUNet is focusing on technologies such as Internet faxing before pursuing voice.
Copyright r 1997 CMP Media Inc.
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