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Net phones still on hold

Nearly ten months after phone companies filed for a ban on Net telephones, the Federal Communications Commission still has them on hold.

Nearly ten months after a group of telephone companies petitioned for a government ban on Internet telephones, the Federal Communications Commission still has proponents, as well as critics, of the measure on hold.

But a group that has strongly opposed the effort by America's Carriers Telecommunication Association to ban Net phones next week will ask the FCC to take action on the petition or to drop the matter entirely. The Voice on the Net Coalition, which includes members from Microsoft, VocalTec, and other companies, plans to file its own petition with the FCC seeking action on Internet phones, coalition chairman Jeff Pulver told CNET today.

"The petition will be asking [the FCC] to act on the ACTA petition," Pulver said. "I think legally they have to respond or ACTA can sue them."

ACTA, a trade organization of phone companies, originally made its bid to stop the sale of Internet telephones last May. Net phones such as Microsoft's NetMeeting and VocalTec's Internet Phone allow users to have crackly voice conversations with other Net phone users over the Internet without paying normal long distance fees.

Unlike regular phone calls, use of Internet telephones is not subject to FCC tariffs. ACTA, which includes 130 small- to medium-sized telecommunications companies, bitterly opposed the use of Internet telephones because cheap Net calls could, in theory, eventually steal business from them.

Internet telephony advocates freely admit that they want to offer users an alternative to expensive long distance calls, but they argue that, as a new technology, voice communication over the Internet should not and cannot be regulated.

"The Internet is a different infrastructure [than the telephone network]," Pulver said.

Still, even though the FCC has been slow to take action on the ACTA petition, the agency is unlikely to ban Internet telephones anytime soon. In various speeches, FCC chairman Reed Hundt has echoed the concerns of the VON Coalition and others, suggesting that Net telephones shouldn't be subject to "thoughtless regulation."

For now, the debate over Net telephones may be much ado about nothing. Because of the poor quality of voice conversations over the Net and lack of interoperability among products, the technology doesn't yet approach the popularity of other Internet applications such as Web browsers or email.

Pulver estimates that the marketplace for Internet telephones, which amounted to $10 million in 1996, will grow to between $30 million and $40 million this year--a tiny sliver of the multibillion-dollar telecommunications industry.

But new developments could make Internet telephones easier to use. Today, PictureTel, a leading maker of videoconferencing products, announced that it would support an audio compression-decompression (or "codec") standard called G.723.1. The standard will allow PictureTel's products to engage in phone calls with products from Intel and Microsoft, both of which already support the codec.

Other companies, such as Lucent Technologies, are also planning gateway products that will connect Net telephones to regular telephone lines. The gateways could also enable to users of regular telephones to make a call over the Internet without initiating the call from a PC.