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Intel develops 'Net phone
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July 22, 1996: 9:15 p.m. ET
New telephony program may put dent in long-distance market
From Correspondent Steve Young
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NEW YORK (CNNfn) - Making a telephone call over a personal computer is about to get quite a bit easier. For the second time over the past week, plans aimed at increasing the use of the Internet to make phone calls were announced.
Although it's possible to make a call using a computer today, only about 30,000 people do so with any regularity. Now, a new program to be introduced Wednesday by Intel Corp. may change that dramatically.
The world's largest chip company has thrown its weight behind a standard that could threaten phone companies around the world.
Intel's plans are exciting because the company's initiative could standardize what is now a chaotic process. Currently, to successfully complete a call on the Internet using one of the available programs, both parties have to be using the same proprietary program.
Up to now, all Internet phone software has required that another PC be at the other end of the call and that it be running when the call is made.
Computer users that try using the Internet to make a phone call today must wind through a complicated maze. There are more than 20 different products that could be used -- none of which speaks the same language.
Intel plans to give away free Internet phone software that will be available for download from the World Wide Web. The software will use the same technical standard presently supported by 120 other companies, including Microsoft Corp.
For anyone using the software, even global calls will cost only as much as it cost the computer user to connect to their Internet provider.
Adam Schoenfeld, senior analyst at Jupiter Communications, is among the Silicon Valley watchers that are paying close attention to Intel's advancements in this area.
"This has broad-reaching implications. You can bet that AT&T is watching this very closely. The Internet is a threat in the long-term to traditional long distance telephony," he said.
In addition to AT&T, MCI, Sprint and other long-distance companies are paying close attention to the new developments.
There's a lot at stake in the phone wars. Presently, the long-distance market amounts to $40 billion annually and it's growing at an annual rate of 10 percent.
A few problems still remain to be worked out in Internet telephony, such as transmission delays and clarity that lags behind traditional long distance calls.
Analysts say they do look for the Internet to play a greater role in replacing traditional telephone-based communications services. Some expect long distance fax transmissions will soon shift to the Internet.
Many like Internet analyst Jeff Pulver are quick to point out that phone companies could prosper if they see the Internet as an opportunity, not as a threat. (99K WAV) or (99K AIFF)
MCI is getting already getting into the act by joining with Intel in an alliance that will start targeting businesses next year.
Intel said it's Internet software giveaway is part of a shifting strategy to make the company not only the world's largest chip maker, but a player in the communications industry.
On July 16, IDT Corp. announced it would offer discount telephone service over the Internet with a new product called Net2Phone. Net2Phone is the first service that lets people use a personal computer to make a telephone call over the Internet to any telephone.
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