FYI;
Phone Rate Cuts Threaten Net Telephony, Report Says
(12/29/97; 4:28 p.m. EST)
By Andrew Craig, TechWeb <Picture>LONDON -- Proposals to reduce the cost of international phone calls could slow the spread of Internet telephony and other alternative telephony networks, according to a paper published this month by researcher The Yankee Group Europe.
In August, the U.S. Federal Communications Commission issued plans to cut the cost of international calls by reducing the amount paid between carriers for sending and receiving each other's traffic.
The International Telecommunication Union, a worldwide organization that sets communications standards, has also announced recently plans to address the issue of reducing the high cost of international phone calls.
But a Yankee Group paper published in mid-December said the FCC proposals could "adversely impact" the development of Internet telephony and of other alternative voice networks, which are used as lower-cost alternatives to telephone networks for international voice traffic.
Analysts said they are predicting rapid market growth for Internet telephony during the next few years. The market will grow to 16 million users by 2000, from 2 million users at the end of 1996, according to figures from International Data Corp., in Framingham, Mass.
According to Frost and Sullivan, another researcher, the market is expected to be worth $1.89 billion by the end of 2001, representing a compound annual growth rate of 149 percent.
The lowering of international call tariffs is worrisome for business models that seek to compete with conventional telephony networks, said Harvey Kaufman, executive vice president of NetSpeak, an Internet telephony software developer based in Boca Raton, Fla. "The changes will impact companies that install a couple of gateways and try to compete with the conventional networks," Kaufman said.
But despite being hit by the decline in conventional telephone call rates, Internet voice telephony could be used as an alternative transport route for voice traffic where rival telephone traffic carriers fail to agree on the new benchmarks, according to the Yankee Group white paper.
"One could envision a scenario where calls would need to be completed by alternative means, such as the Internet," the white paper said. "Realistically, though, we do not see this happening," it added.
However, the primary value of voice over Internet is not cheap long distance phone calls, Kaufman said. Providing the ability to offer value-added services, such as video and multimedia, are the real benefits, he said.
The European Commission is the latest body to put its weight behind the campaign to reduce international phone charges. It has launched an investigation into settlement rates between European carriers and between carriers in Europe and Japan and the United States.
The commission said it plans to make benchmarks for settlement rates -- the cost of an international call split between the carrier where the call originates and the recipient's carrier. Creating benchmarks could lower the cost of international calls for consumers in the U.S. by more than $17 billion during the next six years, according to the commission's own predictions. |
