PC-to-phone redefining long-distance calls

In this story: 'It's too iffy' Obstacles remain RELATED STORIES, SITES

By Richard Stenger
CNN.com Writer

(CNN) -- For pennies a minute or even for free, people are increasingly chatting it up on Internet telephone services. Despite nagging technical nuisances, computer-assisted phone calling is redefining long-distance and winning over millions of users.

According to industry analysts, more than 15 million people in the United States use it to place long-distance calls both at home and abroad. Just this month, Go2call.com Inc. began offering free PC-to-phone calling in the United States, Canada and Europe.

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"We are providing something for free that people used to pay for. We think that's pretty revolutionary," said company spokesperson Marisa Villalobos.

Currently the Internet accounts for less than 1 percent of the international telecommunications market. But industry experts expect traffic will rise eventually to as much as to 30 percent.

"I think it's going to keep getting bigger. I don't now how the phone companies are going to react. It doesn't make any sense for consumers to pay for something they can get for free," said Columbia School of Journalism's John Pavlik, a specialist in new media and avid Internet phone user.

Yet quality concerns remain a sticking point. Computer telephoning is plagued by frustrating glitches like voice echoes and transmission delays.

"Based on the consumer perspective, these companies are allowing them to save a few cents here and there, but to give up quality. That's not very compelling," said Dylan Brooks, an analyst with Jupiter Communications.

Richard Maggini, a California businessman who gave the service a try, agreed.

"It's too iffy. Sometimes it worked well. Most of the time it didn't. You couldn't depend on it to be a good, clear conversation," he said.

Nevertheless, with numerous companies offering national or international calling at no cost, some customers find the hassles easy to handle.

"If it's free then there's some attraction, despite the lesser quality," echoed Brooks.

And industry representatives say the quality is steadily improving.

"IP telephony (Internet-based calling) is a technology that's constantly being refined. I think the quality is much better than people realize," said John Ragals, vice-president of marketing for Net2phone Inc.

Telecommunications stalwarts have taken notice of the competition. AT&T has taken an approach akin to: "If you can't beat them, buy them." In March the company purchased 39 percent of Net2phone, which offers extremely low-cost charges for domestic and international calls over the Internet.

Internet phoning has already overcome several technological hurdles. Ten years ago Internet users could only talk to other people online on their PCs.

"It was a hobbyist pursuit that served a much narrower niche," said Brooks.

Since then the industry has evolved to PC-to-phone calling. It first required downloaded software, but some services, like Dialpad.com Inc., now work without it, using only Web-based applications.

Users still need certain hardware: a computer, of course, a sound card, speakers and microphones. And industry representatives agree that some computer components are not ideal for instant voice communication.

Computer speakers and microphones, for example, were designed for one-way communication. Their use in Internet telephony often results in voice echoes and transmission delays.

But more advances have brought better sound.

"The quality is great if you have a headset, especially if both parties have a broadband connection," Pavlik said.

Some companies, like Net2phone, have begun offering customized handsets, computer phones essentially, that improve reception even more. But it has a long way to go.

"It's getting competitive with some of the quality you get on cell phones. It isn't likely to rival what you have on the standard telephone today," said Brooks.

More improvements are in the works. For example, some companies have begun offering specialized phones loaded with software that skip the PC step and tap directly into the Internet via the phone line to call another phone.

And voice and other multimedia capabilities becoming available through Internet instant messaging could provide a whole range of convenient and free communication features.

Pavlik said he has used the new version of one popular IM program to call many online friends that use the same software.

"If my Internet provider has a flat fee, I can talk to people anywhere in the world, 24 hours a day, and it costs me nothing."

Reuters contributed to this report.

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April 14, 2000
Net2Phone upgrades PC-to-phone service
December 7, 1999
Cheap and it shows
July 29, 1999
InfoGear upgrades phone of the future
June 10, 1999
Internet call waiting turns one phone line into two
August 13, 1999
Chatting cheaper with Internet phone
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Go2call.com
Net2Phone
VocalTec Communications
AT&T

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