|
Slashing your phone bill
|
 |
September 8, 1998: 5:41 p.m. ET
Internet telephony promises huge cost savings on long-distance calls
|
NEW YORK (CNNfn) - The same technology that brought you the World Wide Web and e-mail could soon bring you major savings on your long-distance phone bill. It's called Internet, or IP, telephony.
The "IP" stands for Internet Protocol, and if it's not available in your area now, it will be in the near future.
"The whole industry is going to have to react to this. They're not going to be able to be isolated by themselves," says Shelby Brian, president and CEO of Denver-based ICG Netcom.
Internet telephony doesn't require a computer. You can make a call from your phone to anyone else's. The difference is in how your voice is sent over the network.
Traditional phone communications require a separate circuit for each phone call. But Internet telephony lets millions of people share major lines at the same time.
"So this is more efficient, and that's the reason it's more economical. And that's why we see such a lot of force and momentum gathering behind IP telephony today," says Ahbi Chaki, telecom analyst for Jupiter Communications.
Also adding to the momentum are regulatory issues. Internet phone calls are treated as data, not voice, communications and aren't subject to expensive access fees like standard long-distance calls.
This is especially significant when it comes to international calls, where extra fees can add 50 percent to the cost of phoning home.
IDT, based in New Jersey, is one company taking advantage of this regulatory loophole.
Since last September, the company has offered Internet phone service targeted at immigrant communities. IDT (IDTC) claims it can save you up to 95 percent on international calls.
And companies are targeting the domestic market as well. One is Brian's ICG Netcom, which is in the midst of rolling out a nationwide network that will be up and running by December.
ICG's charge for calls within the network? Less than six cents a minute, regardless of the time of day, and these costs will continue to drop.
"Where it stops, I don't know. But I can tell you this is not the finish," says Brian. (42K WAV) or (42K AIF)
While it's the smaller companies that are jumping in now, the big players are taking notice. Both AT&T (T) and Sprint (FON) are conducting Internet phone trials, but the big companies can't move as quickly as their scrappy rivals.
"Their customer bases are like millstones around their necks. They really have to deploy the service throughout their customer base so they can be as flexible. But on the flip side, if they really want to get into this business, they'll just -- at the right time, they'll just go out and buy one of these companies," says Chaki.
Internet telephony isn't perfect. Sound quality still isn't as good as standard long distance, but it's catching up fast. Eventually, say analysts, all calls will travel over the Internet, with huge cost savings around the world. 
-- by staff writer Mike Rubens
|
|
|
|
|
 |
|
