Nov 18

Reach Out and IP Someone
Sun Review November 18, 2000

How many times have you received a phone call from a telephone company extolling the virtues of their long-distance calling plans? If you're like most people, weighing the merits of a 9-cent-a-minute everytime plan versus a $20 monthly plan is probably low on your list of priorities. Instead, why not think free? Making cheap, or even free phone calls over the Internet is more than a fad - it could be the next big thing.

The technology that makes these calls possible is called voice over Internet Protocol (VoIP). It is becoming easier to use, although the quality of calls still lags behind that of traditional phone lines. VoIP calls can be described as being "cellular-quality" at best. A conversation over your PC can sound like it's happening over a cheap speakerphone with the occasional bit of static and noise. Despite the generally poor quality, many people are willing to put up with VoIP for one reason - the price. All you need is an Internet connection, a microphone and a pair of speakers (or a headset) connected to your computer.

So how does it work? VoIP software transforms your analog voice into digital packets that can be sent over the Internet. When the packets arrive at their destination, they are reassembled and converted into an analog signal that the other person can understand. Because these voice packets are routed over the Net in packets that do not tie up a dedicated phone line, most PC-to-PC calls are free. However, making a call from your computer to a regular phone still costs money. Within the US, Net2Phone (www.net2phone.com) allows free PC-to-phone calls, while such calls originating from Canada cost approximately 15 cents (Cdn) a minute. You can also purchase a Net2Phone card for $12.95US, which gives you 100min of calling anywhere.

This savings potential will be the driving force for VoIP to become widely adopted. According to Parks Associates, voice traffic on packet-switched systems accounted for just 2.5 billion minutes of calls last year, but it is predicted that by 2004, VoIP will carry more than 114 billion minutes of long-distance voice traffic. Net2Phone was started in 1996 and now handles an average of 200,000 calls a day. Dialpad.com, a relative newcomer, signed up more than 500,000 users in its first month and now claims more than 8 million registered users.

Most phone companies are not entirely amused by VoIP upstarts trying to break into their markets. But instead of trying to beat them, some traditional phone and telecommunications companies are also hopping on the bandwagon. AT&T owns more than 30% of Net2Phone, Sprint offers Net2Phone service for some overseas calls, and in Europe, Germany's Deutsche Telekom has introduced its own Web-based VoIP service. America Online's new Netscape 6 browser has Net2Phone built right in, and the hugely popular Internet portal Yahoo has integrated Net2Phone in its People Search section. You can look up phone numbers online, then click and call directly from your PC to that phone. Microsoft is also forming partnerships with Net2Phone to offer VoIP software as part of MSN.

What’s on the horizon? VoIP companies are working hard to improve the quality of their services. You can expect to see more VoIP-related services that connect you transparently, integrating features such as a follow-me number that can be set to ring up to nine other numbers sequentially until the calling party reaches you, conference calls, and the consolidation of all messages such as voice, fax and e-mail into one online account. Soon, VoIP will become available on portable and handheld devices. You can also anticipate more talking websites. Clever e-commerce marketers can now use Cahoots (www.cahoots.com) free VoIP software for talking to real people in real time as you browse, search or shop on the Web.