THE ARTICLE:
Net Telephony Poised To Connect With Consumers
(12/08/97; 9:00 a.m. EST)
By John Borland, Net Insider
For years, Internet telephony has been a poor relation of
mainstream Net technologies, languishing as an favorite
topic of eccentric hobbyists and a small group of
evangelists.
But the technology is finally nearing the point where it
can compete with traditional telephone service. And with
a spurt of announcements last week and several more
expected this week at the Fall Internet World convention
in New York, Net telephony companies are hoping to
take advantage of the show's spotlight to give their
technology a new burst of momentum.
"We see a tremendous market for Internet telephony,"
said Stephen Loudermilk, a Lucent Technologies
spokesman. The company has just started shipping a
server designed to handle online voice transmission and
will be demonstrating it at Internet World, he said. The
company has three large clients already using it on a trial
basis, Lourdermilk added, and plans to expand that
number significantly in 1998.
The scale of the market for the technology is finally
emerging. Killen & Associates estimated early this year
that the market for Internet telephony could reach $63
billion by 2002. And as the potential for profit emerges,
as well as the potential threat to their traditional
businesses, the big telephone companies are starting to
get involved.
Until recently, however, the quality of Net telephony has
been its primary flaw. Its advocates have long touted the
enormous savings that users could realize by using
Internet lines for voice conversations, particularly for
pricy international calls. But demonstrations of the
technology, which often sounded like a bad cell phone,
took the air out of the sales pitch.
One of the key problems has been in figuring out how to
make sure that that voice transmissions take priority over
the data streams being pumped over the same Internet
lines. The technical problems with breaking information
into bite-sized packets, transmitting them separately and
recombining them at the endpoint have largely been
conquered for ordinary data. A voice conversation drops
sharply in clarity and quality when broken up the same
way and forced to compete with other data packets,
however.
But several companies now are working on new methods
of prioritizing or routing voice-transmission data,
enabling the quality of the network audio to improve.
One of these companies, which hopes to use Internet
World to forge connections with customers, is Network
Telephony Systems. "We're considerably better than
Internet or cell-based telephony," said president Bill
Perren.
Network Telephony Systems uses its own technology to
send voice transmissions over partner company Infonet's
existing global network. This gives any multimedia
computer user with an ISP using Perren's company's
service the ability to call any another ordinary telephone
in the world though their PC.
Perren's company will be demonstrating its technology at
Internet World and seeking to cement new relationships
with ISPs. The company has about 100 ISPs signed up to
provide voice-connections services to their subscribers,
about 75 percent of these in the United States, he said.
The company originally intended to keep close to
three-quarters of its ISP partners in North America, he
added, but since international phone rates are
considerably higher overseas, the company will likely
focus more heavily on the overseas market than it had
planned.
AT&T, along with VocalTec, one of the leading
telephony technology companies, is backing ITXC, which
said last week it would launch a global cooperative
network by April to let Net users speak to each other
without dealing with separate companies. Deutsche
Telekom recently invested heavily in New Jersey-based
VocalTec, boosting its stock and giving it considerable
credibility in the marketplace.
Lucent -- the company once known as AT&T Bell Labs
-- makes hundreds of millions of dollars producing the
computers that govern the existing phone networks. But
company officials -- who have been experimenting with
network voice technologies since the mid-1980s -- say
they, too, are embracing the world of Internet
conversation.
But more questions will have to be answered before the
technology can come anywhere close to widespread
adoption. The Federal Communications Commission has
yet to decide on a regulatory scheme, which could make
the difference between sky-high profits and failure for
the budding industry.
I also sent him a copy of the Syracuse article
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