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To: djane who wrote (36483)	2/26/1998 5:04:00 AM
From: djane	Read Replies (1) \| Respond to of 61433

Internet Growth Could Hurt Service Providers (02/25/98; 5:26 p.m. EST) By Andrew Craig, TechWeb techweb.com Internet service providers and telecom carriers are concerned their profit margins will be squeezed by having to cope with a demand for Internet bandwidth which is increasing at a much greater rate than revenue. Bandwidth demand is growing by about 1,000 percent per year, while revenues of Internet service providers (ISPs) are growing at a much slower pace, according to senior officials of leading ISPs speaking at the Internet Service Provision '98 conference in Amsterdam Wednesday. The competitive nature of the ISP market forces low prices onto suppliers and makes it difficult for them to pass the cost of new equipment and more leased bandwidth onto their customers, said speakers. No technology in history has grown as fast as the Internet, said John Sidgmore, chief executive officer at UUnet, one of the world's biggest commercial ISPs. "Internet bandwidth demand is expanding by 10 times each year. This is presenting a scaling challenge that we've never found before," said Sidgmore. But revenue from Internet services provision is not growing at the same rate, said Steven von Rump, vice president of business markets at telecom provider MCI. "There is a widening gap between traffic and revenue, and it is becoming more and more of a challenge for ISPs to fill that gap," said von Rump. Rather than just boosting bandwidth to meet increasing demand, service providers and telcos are looking at alternative ways to reduce bandwidth congestion, said conference speakers. One way is to use data storage devices to cache copies of large, frequently accessed files within the ISP's network. This way, large files do not have to travel across the Internet from the source every time they are downloaded, but just from the ISP to the subscriber. Storing files locally using caching servers will help to reduce Internet congestion, said Paolo D'Andrea, marketing director at Italian telecom carrier and ISP Telecom Italia. "We're thinking about using caching, because bandwidth demand is increasing but revenue is not increasing," said D'Andrea. "Every time we add 2 megabytes to our customers' leased lines to the Internet, it is immediately saturated by more traffic. So we're thinking about making leased-line customers pay on a usage basis," he said. Another way of reducing Internet congestion and easing the demand for bandwidth is by installing private connections between ISP servers, a process known as "peering." Peering lets traffic from one ISP pass directly to customers of another provider with a peering arrangement and bypasses the main Internet gateways, where most congestion occurs. Peering has been criticized for shutting off sections of the Internet and going against the "Internet vision," said von Rump. But, he said, such criticism is ill-founded. "From a user point of view, individual or corporate, the connection is still the same. There is no change in the vision of the Internet, but it provides a means to reduce cost and improve the quality of transmission across the Internet," he said. Search Archives Related Stories: Fatter Pipes Needed To Keep Internet Smoking Rivalry In ISP Market Heats Up = Link to our tech encyclopedia for more info.

To: djane who wrote (36483)	2/26/1998 12:11:00 PM
From: djane	Respond to of 61433

[SF Chronicle article. 5 cents-a-Minute Internet Calls Coming Soon] sfgate.com 5 cents-a-Minute Internet Calls Coming Soon Jonathan Marshall, Chronicle Staff Writer Thursday, February 26, 1998 Even if you don't have a computer, the Internet may save you money on long-distance phone calls. On Monday, New Jersey-based IDT Corp. will begin offering nickel-a-minute rates for calls anywhere in the United States, using the Internet to carry conversations to customers. The rate applies 24 hours a day, all week. Most industry analysts believe that a large fraction of telephone calls will migrate to the Internet during the next decade. AT&T already offers Internet-based telephone service in Japan. MCI uses Internet telephony to help call centers manage electronic commerce. And one of Europe's largest carriers, Deutsche Telekom, is a major investor in one of the pioneers of Internet telephone technology, VocalTec, based in Israel. IDT began offering long-distance phone service over the Internet to Bay Area customers in November, for 8 cents a minute. Through improvements of its technology and expanded call volume, IDT was able to lower its prices domestically and to several foreign cities. Its new rates make it the cheapest service around. Internet-based telephony, although in its infancy, already is becoming extremely price competitive. Earlier this month, Denver-based Qwest Communications International Inc. announced long-distance service to residents of San Francisco and San Jose for 7.5 cents a minute. It also uses Internet technology to carry conversations. This is how IDT's service works. A user calls a local number to reach a ''gateway,'' essentially a computer that converts voices to digital signals. The gateway then sends those signals over IDT's Internet backbone to another gateway, which converts them back into voice and completes the call over the local telephone system. Before talking, callers have to enter a 12-digit account number and then the 10- digit number they wish to call. That's a lot of hassle, but customers who run up large bills will find it worthwhile. Raymond Fisher of Tiburon uses IDT to call his son in Australia and friends in England and New Zealand. IDT's new rates are as low as 9 cents a minute to London and 10 cents to Sydney. ''We're cutting our phone bills in half,'' Fisher said. Fisher said ''99 percent of the time, voice quality is excellent,'' noting that occasionally a bad echo or noise on the line will force him to redial. ''When you compare the price, you put up with that,'' he said. Free calls made over the Internet by owners of multimedia computers have given Internet telephony a mixed reputation. Because the Internet often is congested with data traffic, such calls often sound like bad cellular phone connections. IDT, though, offers relatively high call quality by routing calls directly onto the Internet backbone through its managed data networks. IDT got its start in 1991 as an international call-back service. Later, it branched into Internet services. Today, its Internet- based telephone service has attracted 20,000 U.S. customers. People wishing more information about the service can call (800) CALL-IDT. Get a printer-friendly version of this article ON THE GATE Wire up, plug in, and log on: Technology on The Gate. c1998 San Francisco Chronicle Page C1 Feedback Bay Area Stocks \| Personal Portfolio \| Herb Greenberg