NY Times article. Internet Phone Calls, No Computer Necessary
By SETH SCHIESEL, 4/16/98
nytimes.com.
Making a phone call over the Internet used to be a challenge. For
one thing, there was no phone involved.
In 1995, for instance, Steve R. Frampton was helping to link a school
system in Kingston, Ontario, to the Internet. Sometimes he tried to use
the computer in his laboratory to call his girlfriend on her computer in
Japan.
"How the old way worked was both parties
would have sound cards, and then the
sound cards would be hooked up with a
microphone and a speaker, and you would
choose from a client software package," he recalled. "The
configurations were very easy. The interfaces were really nice, but the
quality was really bad. Basically it was either completely unintelligible or
it sounded like you were talking in a toilet or something."
Last fall, after trying three generations of modems, Frampton gave up
and went back to paying about $1.50 a minute to talk over a
conventional phone line.
Today anyone can make an Internet phone call, with a telephone.
Nora S. Spohr never goes near a computer when she makes
long-distance calls. But her conversations still travel through
cyberspace.
"My phone bills used to be up to $500, $700," said Spohr, a leather
merchant in Englewood, N.J., who often calls Florida, Europe and
South America. But she recently started using prepaid phone cards
from a New Jersey corporation called IDT, which routes many of its
calls over the Internet rather than over traditional communications
networks.
With each call, people like Spohr and the companies that serve them
are shaking up the telecommunications industry. They are beginning to
usher in a time when computers will have to share cyberspace with
other technologies, just as cars share the highway with motorcycles and
trucks.
On Friday, the Federal Communications Commission took the first step
toward regulating Internet calls when it recommended that some
cyberspace phone carriers pay the same fees paid by traditional phone
companies. But for now, people like Spohr are relishing their low rates.
"I used to pay like 89 cents a minute to Argentina because I had this
urge to pick up the phone at any time and the phone companies have
many different rates," she said, adding that IDT let her call Argentina for
about 48 cents a minute at any time.
"With the card, I just get to call whenever I feel like it," she said on a
recent weekday. "I called Buenos Aires today because I forgot my
uncle's birthday, and I don't have to worry. I don't want to be restricted
to have to wait for Sunday or Saturday to get a good rate.
"I find no problem with the quality, and it's not complicated at all," she
added. "And by buying the cards, I'm limiting myself to around $100 or
a little more a month."
The Internet has
allowed people to talk
to one another through
their computers since
the early 1990's, but the
technology was
complex and the sound
quality dismal. Around
1996, companies began
offering phone service
that allowed people to
use their computers to
talk to other people
who used telephones,
but the sound quality
was still poor.
Howard Jonas,
chairman of IDT, which
started one of the first
computer-to-phone
services, said the first customers tended to come from the digitally
adept. "In the beginning," he said, "it was like: 'Hey, Mom, you can't
believe it. I'm calling you from Bangladesh, and it's only a dime a
minute.' And Mom was like, 'Whaddya say?'"
But now companies are offering phone-to-phone long-distance service
that routes calls over the Internet but keeps the sound quality close to
that of a standard call.
Standard calls still have the edge in quality over Internet calls. That is
because a standard telephone call travels like a train down an empty
track: Each conversation has its own set path, which occupies a certain
amount of network space, regardless of whether the callers are actually
speaking or not. An Internet call often travels like a train that has had its
cars split up and sent down all sorts of different paths: the sound is
translated into binary computer code, and bits of code travel different
routes. When those pieces of code are put back together, they can
remain a little jumbled (and the call is not as clear as it could be).
As the oldest consumer electronics device, the phone has all the
glamour of a long-serving handyman -- dutifully reliable, sometimes
cranky, quietly indispensable.
But that is changing. As Internet technology begins to transform the
world of plain old telephone service (or POTS, in telecommunications
jargon), the phone is taking the Internet out of the expensive computer
boxes in which it has traditionally resided and making it useful for
people who do not know a DOS prompt from a disk drive.
In fact, the people who are using ordinary telephones to make calls
though cyberspace -- a process called telephony (pronounced
tel-EF-own-ee) -- may be the first people to use the Internet without
using a computer. But they will not be the last.
"We're going to see a massive amount of Internet use with appliances
which have been Internet-enabled but which we don't think of as PC
units," said Vinton G. Cerf, who co-designed the Internet in the late
1960's and is now a senior executive at MCI, the No.2 long-distance
telephone company. "Telephony is only one example of that.
Videocassette recorders, televisions, washing machines, water heaters
will all show up on the network for all kinds of reasons."
In Cerf's vision, VCR's could sprout Internet connections so they could
be programmed from home, or a water heater could step out into
cyberspace so a local power company could turn it on when electricity
was cheapest.
The main reason that telephones are showing up on the network is cost.
For people who live in major metropolitan areas of the United States,
most calls can be made less expensively with a carrier that uses Internet
technology.
For instance, a host of
companies are now offering
a flat rate of around 5 cents
a minute for calls anywhere
in the United States at any
time of day; the traditional
phone companies' standard
flat rate is 10 cents..
The savings on international
calls can be even more
greater. U.S.A. Global Link,
a private company that uses
Internet technology to
deliver international calls
primarily outside the United
States, says that its rates typically undercut those of traditional carriers
by around 30 percent. The company is planning to begin selling service
soon to United States consumers.
Internet calls are cheaper than those over standard networks for two
basic reasons. By splitting up the train cars (the pieces of information)
that constitute a conversation, a carrier can often use its network more
efficiently. On a standard telephone network, two people enjoying a
moment of silence generally use as much of the system as a screaming
match does.
But during that moment of silence, a network using Internet technology
would be sending parts of another conversation involving two other
people. If the technology was working properly, the quiet of the first
call would not be interrupted.
More important, however, companies that transmit phone calls over the
Internet are able to undercut the established carriers because Internet
carriers often do not have to pay the fees mandated by national and
international regulation.
When AT&T, for instance, carries a call from Albany to Chicago, the
company has to pay a total of about 4 cents a minute to Bell Atlantic,
the local phone company in New York, and Ameritech, the local phone
company in Illinois, for connecting the call. After paying those fees,
AT&T still has to recoup its internal costs, raising the price of the call.
In the Telecommunications Act of 1996, Congress exempted Internet
companies from having to pay those fees to local phone companies in
most cases because it was concerned that the Internet might not
become a hit.
Now that the Internet seems firmly established, the FCC has taken the
first step to level the playing field when entrepreneurs use cyberspace to
duplicate the traditional network's main function: connecting calls. That
could make Internet calls more expensive.
But the Internet's regulatory advantage remains strong for international
calls because Internet companies are often able to avoid or reduce the
huge fees, known as settlement rates, that some countries levy against
calls to or from other nations. Some countries allow Internet traffic to
cross their borders without special charges because they are seeking to
increase access to cyberspace.
"Internet telephony is bypassing the settlement process altogether," said
C.Holland Taylor, chief executive of U.S.A. Global Link. "It allows
you to treat voice, which has traditionally been very regulated, as a
series of data packets transiting the globe as a nonregulated media."
But the regulatory forces that allow Internet phone companies to
undercut their larger, older competitors may not last for more than a
few more years. Even before last week's FCC recommendation, the
domestic access fees that traditional long-distance carriers must pay to
local phone companies were decreasing, allowing the long-distance
giants to lower their prices.
In the international arena, agreements reached under the auspices of the
World Trade Organization are intended to reduce the settlement fees
that increase the price of standard cross-border calls. That would put
more pressure on the Internet carriers.
Even the proprietors of Internet telephony see their window closing.
"My basic thought is, eventually it's going to die," said Jonas, chairman
of IDT.
If the market for basic phone calls over the Internet disappears in the
next few years, the next step for the technologists and marketers may
be to convince people like Ariella Levy that there is more to a phone
call than talking.
Levy, who recently graduated from the University of Pennsylvania,
heard about IDT's Internet phone cards on the radio. She bought one,
which she uses to make inexpensive long-distance calls to her friends.
"It's just the same as a phone," she said. "You can't tell the difference.
The only thing they can do to make a phone call better than it is is bring
the person into the room."
Jonas is looking to sell Internet phone calls in ways that traditional
phone companies cannot match. He says video links may eventually
prove popular, but he admits that he is stumped after that.
Referring to a futuristic machine in Woody Allen's 1973 film "Sleeper"
that enveloped its user and delivered sexual pleasure, Jonas said:
"Frankly, I don't know what more people want from the phone. You
can talk to people. You can see people. The next step is either 'Kirk,
beam me up' or it's jump in the orgasmatron."
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