Posted at 05:46 p.m. PST; Sunday, March 14, 1999 seattletimes.com
Internet calling: These
savings aren't phony
by Peter Lewis
Seattle Times technology reporter
Whether he's at home or on the road, Bellevue
businessman Victor Pinedo has taken to the
Internet to make phone calls. Pinedo pays as little
as 5 cents a minute to place domestic calls, and
10 cents a minute when he's calling the U.S. from
overseas.
Spokane native Doug Sublett, now attending
college in Klamath Falls, Ore., pays even less
when he wants to talk with his sister in
McMinnville. It's a "free" call, no matter how long
they chat.
The key to these bargains is an emerging
technology: Internet telephony - a cheaper, more
efficient way of transporting communications than
"regular" calls routed over the conventional
telephone network.
Traditionally, voice calls have traveled across
what's known as the public-switched telephone
network, or PSTN. Think of it as a vast freeway
whose lanes are separated by solid lines, with
each call getting a lane all to itself, even for the
silent moments in conversation.
By contrast, a growing number of voice calls are
getting routed over the public Internet and private
networks that use Internet protocol or IP. In these
instances, voice is treated just like data. On one
side it gets digitized, highly compressed, and
turned into packets that may or may not move in a
continuous stream. But it all ends up in the same
place, reassembled on the other side. This
freeway has broken white lines, allowing the
traffic to burst from lane to lane whenever there's
an opening.
Besides being more efficient, IP-based calls are
cheaper because the data network that facilitates
the calls is largely unregulated, allowing providers
to avoid the "access" and "settlement" fees
ordinarily paid to telephone companies that own
the circuit-switched networks. This, in turn, lets
IP-based telephony companies pass savings
along to consumers.
Two forces - technological advances that are
making IP networks stronger and deregulation
stemming from the federal Telecommunications
Act of 1996 - are combining to make IP telephony
a real comer. The the good news for consumers,
analysts say, is that this dynamic duo is helping
drive down the price of phone calls in general.
A new report on IP Telephony by Piper Jaffray
Equity Research found that the volume of IP
long-distance minutes is "doubling approximately
every two to three months. This growth should
continue for the next several years but should
remain a small portion of the total telephony
minutes."
Piper Jaffray projects that long-distance minutes
on IP-based telephony will grow to more than 6
percent of total long-distance traffic by 2003, with
revenues at $8.6 billion. Two years ago, IP
telephony was virtually nonexistent.
An even more dramatic prediction comes from
Jossein Eslambolchi, vice president of network
operations for AT&T Global Network. He expects
the majority of voice calls to become IP-based
within seven years.
Part of what's holding things back for now, he
said, is development of standards to ensure the
same kind of features and functionality, including
quality of service, that customers have come to
expect using the regular, circuit-switched network.
Significantly, AT&T has announced it will quit
laying new switches to extend its circuit-switched
network - the long-distance network it has been
building for more than a century. Instead, it will
concentrate on developing IP technology.
Coming at it from the consumer point of view,
Bruce Kasrel, an analyst with Cambridge,
Mass.-based, Forrester Research, says:
"The way we see it, Internet telephony is getting
more and more invisible to the user. . . . People
who use calling cards today they buy at 7-Eleven
are using Internet telephony and don't even know
it."
Well, they're not quite using it yet - at least not all
the time.
Depending on the network over which the call is
routed, and perhaps even the time of day (i.e.,
whether everybody and his brother is on America
Online), it may be a far cry from "you can hear a
pin drop" quality.
My personal experience, though limited, has been
happy. Using a test account set up by Delta
Three ( deltathree.com ), an
Israeli-based Internet telephony company, I
recently phoned a friend in Hong Kong.
Except for a certain "flatness" to my friend's voice,
which may have had more to do with the 16-hour
time-zone difference (it was late night there, and
early morning in Seattle), I found the connection
perfectly acceptable. Curiously, even though I
thought he came through loud and clear, my
friend said he detected a little bit of a delay from
my end.
Delta Three's rate for the call to Hong Kong was
17 cents a minute. Had I placed the call using my
long-distance carrier, the rate would have been
66 cents a minute.
New York-based Delta Three spokeswoman Fara
Hain said the company rolled out the service two
years ago.
What pushed the technology, she recounted, was
the influx of Russian immigrants into Israel, and
their desire to call their relatives back home.
"To do that over regular phone lines was
incredibly expensive," said Fain. "Emigres were
paying $2 a minute, and there was no alternative
at that time. . . . So the founders (of Delta Three)
saw PC-to-PC communication happening over the
Net." They figured: 'Let's tinker with this.' Pinedo,
the Bellevue businessman who travels abroad
frequently, first learned about IP telephony while
reading an airline magazine. He signed up with
IDT ( idt.net ) and says he's been a
satisfied customer for about a year.
When he's in the U.S. and wants to place a
domestic or international call, Pinedo has his
choice of using IDT's "Net2Phone" (PC to phone
using special software) or phone-to-phone
service; when he's outside the U.S., his only
option is to use Net2Phone, because for now
IDT's network is not as established internationally
as it is domestically.
Pinedo says he has not experienced echoes or
delays using the phone-to-phone service, and
only occasionally when using the Net2Phone
service. "From Europe it (Net2Phone) is almost
crystal clear. . . . If I'm in some countries like
Brazil, I sometimes do get echoes."
All told, Pinedo reckons he's saved a significant
sum, primarily in international calls. Before he
started using IDT's service, "I would say that
phone bills were into the hundreds of dollars per
month. Now they seldom will go over $100,"
Pinedo said.
IDT requires prepayment, and Pinedo says he
has authorized IDT to charge his credit card
whenever his balance of remaining phone time
falls below $10 worth of time, and restore his
account to $25 worth of calls. At the start of each
long-distance call, a robotic voice informs him
how many minutes he has left.
The biggest downside, he said, is the number of
numbers he has to dial to gain access to the
network. Pinedo figures he has to enter about 20
numbers before his call goes through. "That's the
only annoying thing when I'm on the road, but it's
worth it, considering the savings," he said.
Meantime, traditional telephone companies see
the same future as IDT, Delta Three and other IP
telephony companies, and are establishing their
own footholds.
For about a year, for example, AT&T has been
offering "Connect 'N Save" service (
connectnsave.att.com ), which routes
calls over the Internet. In cities where AT&T has
established local access numbers (Seattle is not
currently among them) the rate is 7.5 cents a
minute for domestic calls. AT&T Connect 'N Save
customers must prepay as well.
Residential Connect 'N Save customers must dial
11 digits before they place a call. When on the
road, they must enter 25 digits before they can
dial the number they want to reach.
AT&T spokesman Mark Siegel expresses the
trade-off succinctly: It will appeal to "bargain
hunters willing to spend time to save money."
But this won't be true forever. Internet telephony
experts say the need to enter so many digits will
disappear as the technology evolves.
And meantime, Sublette, the college student who
uses the system to call his sister, is going after
another kind of bargain. For about two years now,
Sublette and his sister, Melinda Sublette, who
attends Linfield College in McMinnville, have
been talking to each other using Aplio phones (
aplio.com ).
"I found it pretty simple to program," said Sublette,
a 19-year-old freshman at the Oregon Institute of
Technology in Klamath Falls. Aplios - about the
size of a three-inch-tall compact-disc case and
weighing about one pound - cost about $200
each.
No computer is required, but you need Aplios on
both ends of the conversation, as well as an
active dial-up Internet account, and an analog
phone line. When users make a call, the Aplio
phone re-routes it across the Internet instead of
the regular switched-circuit, long-distance
network.
More than 55,000 units were sold as of last
spring, according to Olivier Zitoun, Aplio's
president and CEO. The typical Aplio owner uses
the device to make international calls 60 percent
of the time, he said.
There are two modes for making Aplio calls. In the
first, you contact the other party and incur
first-minute long-distance charges. In economy
mode - which works only when both lines are free
and each party is expecting the other to call at a
prearranged time - users can avoid even the
first-minute charge by dialing a unit-identification
number specific to each Aplio device.
"We did this to save money," said Doug Sublette,
although he acknowledged that he and his sister
are still about $100 short of earning back their
investment. One result of buying the Aplios, he
added, is that he and his sister have talked more
than they would have otherwise.
The quality of the connection depends on how
busy the ISP is and network traffic. "Normally
there's about a half-second delay, so it's not too
bad at all," he said. "There's no static or
anything."
Sublette said there's a slight slowdown when he
and his sister talk simultaneously.
David Isenberg, a former AT&T executive who left
the company after writing a paper called "Rise of
the Stupid Network," believes "smart" devices like
the Aplio are the wave of the future.
"There's not a whole lot to boot up. . . . It's
designed and programmed to do one thing well,
rather than a million things so-so," said Isenberg,
now self-employed as a self-described
"prosultant" and telecom industry observer.
He notes that although several established
telephone companies are embracing IP
telephony, "no one is moving too fast to kill their
own cash cow" - a reference to the long-distance
companies' penchant for billing by the minute.
As a result, he says, the established telephone
companies are moving to a "very telco-flavored
version (of IP telephony) where the devices on
the end (of the networks) are still dumb phones,
not really smart devices."
The most exciting technology, he predicted, will
occur as intelligence "migrates out of the middle
of the network and out to the edges," where
Internet protocols and applications can truly be
exploited. Isenberg is referring, among other
things, to advances in home networking - wired
and wireless - that would link a variety of
appliances. Such advances could lend mucho
practical value, such as the ability to remotely
access a VCR, thermostat, or home-lighting
system. |
