IBM Back in the Phone Business
IBM Teams Up With Internet Phone
Service
By SETH SCHIESEL
Throwing its weight behind the nascent business of
Internet telephone calls, IBM has agreed to
promote the
cyberspace phone service of IDT Corp., according to
executives close to the negotiations.
The companies plan to announce the marketing agreement
this week, the executives said.
The IDT service will be offered on IBM's growing
Internet access network.
The support of IBM represents a big vote of confidence
for new technologies that transmit phone conversations
over the Internet rather than over traditional
telecommunications networks.
Although calls over the
Internet sometimes have a
poorer sound quality than
conventional phone calls,
differences in technology
and regulation mean that
Internet phone providers can
typically offer lower prices
than can traditional
long-distance companies.
IDT, a small Internet access
provider in its own right,
with 80,000 subscribers,
already offers the voice
service, called Net2Phone,
to its own Internet
customers -- and to anyone
else who cares to use it
with any other Internet
provider.
IDT, which is based in
Hackensack, N.J., also
markets its voice service
through Singnet, an Internet
service provider in
Singapore. But the deal with
IBM would be the first
Internet phone pact with a
major international service
provider.
Under the terms of the
agreement, the Net2Phone
software will be included with IBM's standard Internet
access kit. IDT's program allows users to place
long-distance calls to normal telephones from computers
equipped with a microphone. IBM will also place a
button on its Web site at www.ibm.net enabling users to
download IDT's software.
IBM's Internet service has about 750,000 customers.
Calls they make using IDT's service will travel over
IBM's extensive international network.
Neither company will pay the other an upfront sum as
part of the deal, executives close to the companies
said. Instead, the two companies will share revenue
generated by IBM customers who begin to use IDT's
service.
America Online Inc. charged Tel-Save Holdings Inc. $100
million last year for the right to sell long-distance
service to America Online's customers. But that was
basically a joint-marketing deal for conventional phone
service -- not Internet calls.
Though small and few in number, companies that use
Internet technology to carry long-distance calls have
been shaking up the telecommunications industry with
prices as low as 4.9 cents a minute for calls to
anywhere in the United States at any time.
Government rules that are meant to promote the
development of cyberspace allow Internet phone
companies to price their offerings below those of
traditional carriers, primarily by waiving the fees
that most long-distance carriers must pay for
connecting to local phone networks.
The Federal Communications Commission has taken the
first steps toward closing that loophole. Even so,
transmitting calls with Internet technology is more
efficient than traditional telephone networks, which
means lower costs. In fact, some experts predict that
Internet-style phone calls may one day replace most
conventional telephone calls.
Perhaps the best sign that Internet phone companies are
emerging as a new force in the industry is that
established long-distance companies are beginning to
try the technology for themselves.
Last week, AT&T Corp., the No. 1 long-distance carrier,
began offering Internet calls on a trial basis in
Boston.
|
