Telephone service over the Internet has been a dirt-cheap proposition for a while, but when it comes to the sound quality, consumers have found out that you get what you pay for. A new wave of players in the market, however, could make the technology a legitimate threat to traditional long distance phone companies.
The Internet, which breaks data into discreet packets, sends them separately, and reassembles them at the receiver's end, wasn't designed to carry voice. Some companies, such as Qwest and IXC Communications, are building their own high-bandwidth networks that carry not only voice but also data, video, and other services. Under such services, telephony will be one of many communications media carried over the same pipe.
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VocalTec introduced IP telephony in 1995 with software that allowed a PC user with a microphone and speaker to make phone calls. But that paradigm has shifted as the technology gains legitimacy in the eyes of the traditional telecommunications business.
"PC-to-PC [conversation] is not what Internet telephony is anymore," said Elon Ganor, chairman and chief executive of VocalTec. "It's really a telecom business. Most carriers will offer IP services over their own backbone."
Another example of the traditional phone companies moving toward IP networks is long distance giant AT&T, which is teaming with VocalTec to back start-up ITXC and its telephony service brokerage. In April, ITXC will debut the WWeXchange service that connects telephony providers that want to rent space on other companies' networks. Other Baby Bells and long distance carriers also are looking at ways to carry their voice traffic over IP networks.
Both ITXC and Qwest are headed by former AT&T executives, who want to take advantage of the nascent IP phone market, which analysts say could cut significantly into the long distance market by the next decade. Such promise has helped double Qwest's stock price since last July.
The company has grown rapidly in recent months to compete with traditional long distance carriers in both the telephony and Internet services space, but it remains to be seen if its move into Internet telephony will thaw the cold shoulder that consumers have so far turned on the technology.
To draw consumers, Net telephones must be "full duplex," another way to describe the free flow of conversation users take for granted over a regular telephone. If the service isn't full duplex, one person is forced to finish a sentence before the other person can begin as if they were using walkie-talkies.
The Qwest service is full duplex and sounds "just like a regular phone call," a spokeswoman said.
Up to 125 cities will be connected to the service as Qwest adds up to 16,000 miles of fiber-optic network within the United States by the second quarter of 1999, according to the company.