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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony -- Ignore unavailable to you. Want to Upgrade?

To: elk who wrote (540)	5/14/1998 7:23:00 PM
From: Frank A. Coluccio	Respond to of 3178

AT&T VoIP 8 cents a minute any time. Entry level experimentation in the States by all the announced players seems to be between 5.x and 8 cpm for the casual user. Is anyone offering the ISP charge (19.99) plus a premium of, say, $10 (29.99) or $20 (39.99) for all you can eat LD? Heard a lot of noise about this approach last year, but don't seem to find anyone doing it at this time. Does this flat-rate strategy make much sense? I even recall pundits predicting that voice would be free, and used to entice additional subscribers to existing ISP services. Replies/Comments welcome. The following is the AT&T story as it was printed in yesterday's Boston Globe. Frank C. ===== Dialing up growth on the Net New phone service gets test in Hub By Bruce Mohl, Globe Staff, 05/13/98 AT&T plans to begin testing today in Greater Boston a service that will allow customers to make long-distance telephone calls over the Internet without a computer and at a cost of 8 cents a minute any time. The move by the nation's largest long-distance provider to start routing calls over the Internet rather than its traditional phone system is expected to give a major boost to a business that has been little more than a curiosity to date. Analysts estimate that anywhere from 15 to 25 percent of the nation's long-distance callers could be using the Internet rather than standard phone lines by 2003. AT&T vice president Howard McNally is forecasting a market worth $4 billion to $5 billion and wants AT&T's Connect'N Save service to snare 30 to 40 percent of it. ''I think there are a set of customers out there who are very price-oriented and willing to dial more numbers to save money,'' McNally said. ''I see this as a growth opportunity.'' Although prices vary from carrier to carrier, most standard long-distance domestic phone service costs 10 cents a minute, often with monthly fees and restrictions on calling times. From a user standpoint, Internet phone calling sounds a lot more high-tech than it really is. It's actually a lot like using a prepaid calling card, since customers don't have to leave their current long-distance carrier to use it. Customers buy calling time in increments of $25, $50 or $100 using a credit card. Each time they make a call, they are told how much time is left. To make most long-distance Internet calls, however, customers have to dial 31 numbers - a local seven-digit access number, a 10-digit identification number (usually your home phone number with area code), a four-digit personal identification number and then the area code and number you are calling. In addition to the long-distance charge, Internet phone callers are also charged by their local phone company for the call to gain access to the Internet. AT&T's test in Greater Boston will cover 40 communities, from Hingham in the south to Wellesley in the west to Melrose to the north. The access call will be a local call in each case. AT&T is limiting the number of trial participants in Boston. To sign up, call 800-345-0995 between 9 a.m. and 8 p.m. Bob DeYoung of Melrose jumped at Internet calling earlier this year when IDT Corp. of Hackensack, N.J., offered a price of 5 cents a minute. He said it was sort of a hassle dialing so many numbers, but he liked the rate and the generally clear sound quality. ''If you make it worth my while, I'll take the inconvenience,'' DeYoung said. DeYoung dropped IDT recently when it hiked its price back to 8 cents a minute for customers who don't use IDT as their standard long-distance company. DeYoung said it cost him 1.5 cents a minute to make the local access call to IDT, bringing his total charge to 9.5 cents a minute. AT&T is moving fast into so-called Internet telephony, a market it first decided to enter in December. It also plans to conduct tests in San Francisco and Atlanta, trying slightly lower and higher rates than in Boston. Amanda McCarthy, an analyst with the Yankee Group in Boston, said she thinks AT&T wants to cater to cost-conscious consumers and also nudge many of its customers who are infrequent callers on to this service. That way AT&T could save its customers money and also cut its costs, since billing and customer service will cost AT&T far less with Connect'N Save. In addition to IDT and now AT&T, other companies testing Internet telephony include Qwest of Denver and ICG Communications of Englewood, Colo., both of which are experimenting with rates in the 5.9 cents to 7 cents range. Internet telephony is cheaper for two major reasons. Internet telephony firms don't have to pay access charges to local phone companies that can run as much as 3 to 5 cents a minute. The Federal Communications Commission has said it may force some of the companies to pay those fees, but it has delayed that move for now. Internet telephony can also be more efficient. Regular phone calls carry information point to point on an open switch. Internet telephony also uses phone lines and computers, but information is transmitted differently. It is broken down into packets of information that are dumped on the Internet and then routed to their destination. The routing process allows information to be transmitted more efficiently, but sometimes leads to momentary delays, especially when callers on either end talk at the same time. AT&T's network test yesterday was problem-free. This story ran on page B01 of the Boston Globe on 05/13/98. c Copyright 1998 Globe Newspaper Company.