New York Times Article 11/17 points out the importance of Orckit's products in the internet telephony market. Although Orckit is not mentioned by name, it is their modem design which will help alleviate current voice/data problems associated with analog wiring:
nytimes.com
November 17, 1997
More Callers Using Internet to Make Phone Calls
By LAURIE J. FLYNN
Daniel Briere, an Internet consultant and author, sends dozens of hefty
faxes every day from his office in Verona, N.J., some of them to
far-flung locales abroad. Yet his telephone bill for faxes - once nearly
$1,000 a month - is only pennies. In other offices, people routinely
make international calls for the price of calling across town.
These may sound like fancy phone scams, but they are actually just some
of the newest applications of the Internet - and potentially some of its
biggest revenue generators.
Today, Internet telephony, as it is called, is considered the
fastest-growing type of service on the Internet, and $30 million, by one
estimate, is expected to be spent next year. Many experts say the
question is no longer whether, but when, many consumers and businesses
will start using the Internet in big numbers, particularly for faxing,
in which a substantial potential for cost savings is seen.
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When you make a telephone call a circuit is dedicated to the phone call
and words move in sequence along the route.
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But when you make a call using the Internet words move separately along
the fastest possible route and then are reassembled in the correct order
on the receiving end.
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"This is the start of the next-generation telephone industry," said Jeff
Pulver, an Internet analyst and chairman of a nonprofit group called the
Voice on Net Coalition, an organization originally formed to resist
phone industry attempts to regulate the use of the Internet for voice
calls.
While the pace of development has exceeded many people's expectations,
not everyone shares Pulver's view that Internet telephony will amount to
a revolution anytime soon. "We are not big believers that Internet
telephony is going to take over the circuit-switch phone network," said
John Sidgmore, chief executive of UUNet, a large Internet service
provider owned by Worldcom Inc.
If Worldcom completes its proposed merger with MCI Communications Corp.,
the combined company will own a huge chunk of both the traditional, or
circuit-switch, telephone network and the Internet backbone.
Among the problems Sidgmore and others point to is the typically poor
voice quality of Internet phone calls. Because of the way in which data
is sent over the Internet -- in digital "packets" of information,
instead of the steady stream used in analog phone service --
conversations can sound scratchy or can even break off unexpectedly.
Also, it is often still not possible for a user to call someone who uses
a different Internet telephony service.
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Spending on Internet telephony is expected to reach $2 billion by 2004.
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Still, technical improvements have been made. As recently as two years
ago, placing a call over the Internet required both parties to talk
through the sound system of their PCs. But today placing such a call is
almost as easy as making a conventional phone call.
The caller typically picks up a normal phone, waits for a dial tone,
then enters a personal identification code that has been assigned by an
Internet telephony services company. The service then directs the analog
call to a gateway device that converts it into digital code, which is
then broken down into the packets of data. When the digital information
reaches an Internet server in the destination country, it is converted
back to the sound of the voice and, typically, sent over local phone
lines to the intended phone number.
Despite the glitches of Internet telephony compared with the traditional
telephone network, an emerging crop of companies is betting aggressively
that many consumers will decide the trade-off is worth it.
Two of the leaders are Concentric Network Corp. and IDT Corp., which are
working to solve some of the problems. So are Delta Three, an Israeli
company partly owned by RSL Communications, and USA Global Link, which
plans to set up gateways all over the world for Internet traffic.
While the market for Internet telephony is minuscule today, amounting to
only about $10 million in revenues last year, spending on Internet
telephony is expected to reach $2 billion by 2004, according to
Forrester Research of Cambridge, Mass. Forrester estimates that in that
year, consumers will save about $1 billion by not having used the
traditional phone network; with the $2 billion in Internet telephony
revenue, that translates to a loss of roughly $3 billion to the
conventional telephone companies, or 4 percent of their projected annual
revenues.
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Faxes are a natural for the Internet because the problems that affect
voice conversations in Internet calls do not affect the quality of a
faxed document.
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For that reason, telecommunications giants are starting to take notice.
Easily the most aggressive of them is Deutsche Telekom AG of Germany,
which last summer paid $48 million for a 21 percent stake in Vocaltec
Communications Ltd., an Israel-based maker of the gateways that are
critical to Internet traffic.
AT&T is also becoming involved. It has helped finance ITXC Corp., a
start-up that was founded by Tom Evslin, the former head of AT&T's
Worldnet Internet service. ITXC, which stands for Internet Telephony
Exchange Carrier, is developing technology to provide settlement and
billing services for calls routed across gateways from one carrier to
another.
But for the most part, the telephone industry is approaching the market
cautiously, concerned in part that the new technology could eat into its
revenues, analysts say.
"The incumbent telephone companies are not moving very aggressively in
Internet telephony yet, because they don't want to underprice
themselves," said Christopher Mines, a Forrester analyst. "The question
is, where is that point where they have got to be in the market because
customers are going to start using it anyway?"
While that day has not arrived, the indications are that it will.
Initially, corporations are intrigued with the possibility of enormous
savings in sending international faxes, which this year will cost them
upward of $7 billion. Faxes are a natural for the Internet because the
problems that affect voice conversations in Internet calls do not affect
the quality of a faxed document.
As quality improves, companies are expected to attach Internet gateways
to their corporate phone systems. In fact, in a recent Forrester survey
of 52 large corporations, 42 percent of telecommunications managers said
they expected to use the Internet to send faxes or to make calls by the
end of the century.
That also means telecommunications customers will face additional
choices. Sidgmore of UUNet sees two markets developing: One for the
lower-priced and, for now at least, lower-quality Internet telephony
service, and the other for the greater quality and reliability of
conventional phone services.
"The point is, we're going to let the end user choose how much they want
to spend to call London, and what quality they want to pay for," he
said. |
