Will Internet Phone Usage Revolutionize the Industry?

Article excerpt

Daniel Briere, an Internet consultant and author, sends dozens of hefty faxes every day from his office in Verona, N.J., some of them to far-flung locales abroad. Yet his telephone bill for faxes -- once nearly $1,000 a month -- is only pennies. In other offices, people routinely make international calls for the price of calling across town.

These may sound like fancy phone scams, but they are actually just some of the newest applications of the Internet -- and potentially some of its biggest revenue generators.

Today, Internet telephony, as it is called, is considered the fastest-growing type of service on the Internet, and $30 million, by one estimate, is expected to be spent next year. Many experts say the question is no longer whether, but when, many consumers and businesses will start using the Internet in big numbers, particularly for faxing, in which a substantial potential for cost savings is seen. "This is the start of the next-generation telephone industry," said Jeff Pulver, an Internet analyst and chairman of a nonprofit group called the Voice on Net Coalition, an organization originally formed to resist phone industry attempts to regulate the use of the Internet for voice calls. While the pace of development has exceeded many people's expectations, not everyone shares Pulver's view that Internet telephony will amount to a revolution anytime soon. "We are not big believers that Internet telephony is going to take over the circuit- switch phone network," said John Sidgmore, chief executive of UUNet, a large Internet service provider owned by WorldCom. If WorldCom completes its proposed merger with MCI Communications, the combined company will own a huge chunk of both the traditional, or circuit-switch, telephone network and the Internet backbone. Among the problems Sidgmore and others point to is the typically poor voice quality of Internet phone calls. Because of the way in which data is sent over the Internet -- in digital "packets" of information, instead of the steady stream used in analog phone service -- conversations can sound scratchy or can even break off unexpectedly. Also, it is often still not possible for a user to call someone who uses a different Internet telephony service. Still, technical improvements have been made. As recently as two years ago, placing a call over the Internet required both parties to talk through the sound system of their PCs. But today placing such a call is almost as easy as making a conventional phone call. The caller typically picks up a normal phone, waits for a dial tone, then enters a personal identification code that has been assigned by an Internet telephony services company. The service then directs the analog call to a gateway device that converts it into digital code, which is then broken down into the packets of data. When the digital information reaches an Internet server in the destination country, it is converted back to the sound of the voice and, typically, sent over local phone lines to the intended phone number. Despite the glitches of Internet telephony compared with the traditional telephone network, an emerging crop of companies is betting aggressively that many consumers will decide the trade-off is worth it. …