Net Telephony Threat Grows (Reuters)
12:45pm 16.Jun.98.PDT
LONDON -- Making telephone calls over the
Internet is getting cheaper and easier, and will
soon provide profit-threatening competition to
established big operators.
That's the conclusion of a report released today by Analysys, a Cambridge-based telecommunications strategy consultant, which
estimates that Internet telephony traffic will
overtake fixed network traffic by 2000. Three years later, it is expected to account for 36 percent of all international calls.
Big operators like AT&T, Deutsche Telekom AG,
British Telecommunications Plc., and France
Telecom SA are not standing idly by as their
traditional markets are attacked.
The first reaction of big operators in the United
States to upstart Internet telephone providers was to seek to ban them. The US Federal
Communications Commission wouldn't go along
with that, so they are gearing up the technology to fire back when the time is right, said Philip
Lakelin, a co-author of the report.
Already, AT&T has launched a program designed
to expand the reach of its own IP telephony
services by luring new providers into the business. The goal of the new service is to
broaden AT&T's penetration into a market that is beginning to nibble at the edges of its traditional telephone empire. AT&T's program is similar to that of anupstart company
called ITXC, founded by former
AT&T WorldNet executive Tom Evslin.
Internet telephony has moved quickly from the
limited and arcane process to an efficient and
cheap competitor to traditional fixed phones.
Now, Internet telephone providers can offer service to people who don't even own personal computers.
RSL Communications Ltd. said in April that its
Delta Three subsidiary would expand into Europe,
where high prices make cheaper telephone calls
even more attractive.
Delta Three offers subscribers a pre-paid card. The user dials Delta and enters a code.
The call is dialed from a regular telephone which connects to a local Internet service provider using software provided by VocalTec, an Internet telephony pioneer.
The service provider converts the voice into digital data packets which are sent worldwide to the Internet service provider nearest the destination city. The digital data is then converted back to
analog voice and is delivered by the local phone network.
Delta says this can mean significant cost savings.
The standard call from the United States to
Germany costs US$1.36, but this is slashed to
between 10 cents to 45 cents using the Internet
phone.
Ericsson uses a similar IP telephony scheme to
give phone companies and corporate network
administrators easier entry into shuttling their
voice traffic over data networks.
Analysys' Lakelin admits that quality of Internet
telephony is not as high as for fixed lines.
"The success depends on how much operators
can convince users that the quality loss is
acceptable compared with the price cuts offered,"
he said. "At least for the next two years there will a quality gap. But with mobile phones, people were willing to accept higher prices for mobility. There's no reason why they won't
accept this compromise." |
