The Israeli Connection In Internet
Telephony
Delta Three, a tiny Israeli telecom innovator, believes there's great
promise in Internet telephony. Indeed, the company has been operating
a Net phone service from the U.S. to a dozen countries since April.
Delta Three's phone-to-phone service is based on a local toll-free
access number. The local call goes through a server that puts the
phone conversation into digital form and routes it over the Internet
between two servers. The savings on international calls is 40% to 90%,
estimates Jacob Davidson, chairman of Jerusalem-based Delta Three.
Experts say Internet telephony still faces technical problems. Most
noticeable: a time lag in delivering the signal. The delay experienced in
a Net call was 400 to 600 milliseconds at the beginning of the year.
Davidson says this is now down to around 200 to 300 milliseconds --
but that's still double the delay in standard international calls.
Delta Three's customers include many international telecoms that have
capacity problems to various destinations. The Israeli company is
already sending commercial traffic to 10 countries from the U.S.,
including Israel, Russia, Colombia, Paraguay, Hong Kong, and
Australia. And it's negotiating to enter Japan and China soon. Davidson
predicts that this type of rapid growth will continue in the future.
The company got a big break in July when Bermuda-based RSL
Communications Ltd. bought a 51% stake in Delta Three for $10 million.
RSL --whose principle shareholder is Ronald S. Lauder -- focuses on
providing telecom services in countries that are deregulating their
telecommunications industries. Earlier this month, RSL went public with
a valuation of $1 billion. It's expected to report sales of $300 million for
1997.
Internet telephony may well have the most promise in developing
countires. "If a developing country wants to upgrade its international
gateway, it can buy a large switch from any of the large equipment
companies like Ericsson, Lucent, or Nortel at a cost of millions of
dollars," Davidson says. But, he adds, "the cost of an Internet telephony
server is about a tenth of [a switch's] price, and you can handle the
same amount of traffic."
Davidson sees big opportunities along high-cost, high-traffic routes.
Among them: the U.S. to Russia and China, Greece to Turkey, and
Australia to China. Another promising Delta Three market: linking the
Palestinian territories with Jordan. Under an agreement between Israel
and the Palestinian Authority, the Palestinian territories aren't allowed a
separate international code. But Delta Three notes that by using its
telephony network, the Palestinians would be able to get around the
restriction. Paltel, the new Palestinian telephone company, is already
negotiating an international-service deal with Delta Three.
In the case of China and Russia, Davidson says both have
underdeveloped telephone systems, as well as limited bandwidth
allocated for voice. "We can take advantage of data bandwidth and use it
for voice," Davidson says. He hopes to enter the Chinese market within
six to eight weeks.
Along with proprietary technology it developed for network billing and
management to run its service, Delta Three uses technology developed
by Israel's VocalTec and U.S.-based Dialogic.
By Ronald Grover in Los Angeles |
