Internet Phones Catch On
As a Global Experiment
By GAUTAM NAIK
Staff Reporter of THE WALL STREET JOURNAL
How do you attack an entrenched phone monopoly when it costs billions to
build a new network to carry the calls? Bertelsmann AG has an answer: Use
a network that's already there -- the Internet.
With cost savings made possible by using the Internet, Bertelsmann, the
German media giant, plans to launch phone service early next year that will
offer discounts of 30% to 60% below Deutsche Telekom AG's
long-distance and international rates. If successful on a small scale,
Bertelsmann plans to expand Internet telephony across Germany -- and then
through the rest of Europe.
Deutsche Telekom, not to be outdone, has launched its own Internet test
offering phone service to 1,000 customers. A small U.S. company, USA
Global Link, already has 8,000 customers using Internet phone service,
mostly in Germany, and it plans to invest $500 million in a purely
Internet-based phone network.
Numerous other carriers, big and small, also are counting on so-called
Internet telephony to help them breach the defenses of deep-pocketed and
entrenched phone monopolies. While Internet telephone service, which
lacks the clarity of calls made with traditional technology, is still in its infancy,
it already is starting to undermine the hegemony of conventional phone
networks.
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