from the New York times
Technology - Circuits
April 16, 1998
Internet Phone Calls, No Computer Necessary
By SETH SCHIESEL
M aking a phone call over the Internet used to be a challenge. For
one thing, there was no phone involved.
In 1995, for instance, Steve R. Frampton was helping to link a
school system in Kingston, Ontario, to the Internet. Sometimes he
tried to use the computer in his laboratory to call his girlfriend
on her computer in Japan.
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"How the old way worked was both parties would have sound cards,
and then the sound cards would be hooked up with a microphone and a
speaker, and you would choose from a client software package," he
recalled. "The configurations were very easy. The interfaces were
really nice, but the quality was really bad. Basically it was
either completely unintelligible or it sounded like you were
talking in a toilet or something."
Last fall, after trying three generations of modems, Frampton gave
up and went back to paying about $1.50 a minute to talk over a
conventional phone line.
Today anyone can make an Internet phone call, with a telephone.
Nora S. Spohr never goes near a computer when she makes
long-distance calls. But her conversations still travel through
cyberspace.
"My phone bills used to be up to $500, $700," said Spohr, a leather
merchant in Englewood, N.J., who often calls Florida, Europe and
South America. But she recently started using prepaid phone cards
from a New Jersey corporation called IDT, which routes many of its
calls over the Internet rather than over traditional communications
networks.
With each call, people like Spohr and the companies that serve them
are shaking up the telecommunications industry. They are beginning
to usher in a time when computers will have to share cyberspace
with other technologies, just as cars share the highway with
motorcycles and trucks.
On Friday, the Federal Communications Commission took the first
step toward regulating Internet calls when it recommended that some
cyberspace phone carriers pay the same fees paid by traditional
phone companies. But for now, people like Spohr are relishing their
low rates.
"I used to pay like 89 cents a minute to Argentina because I had
this urge to pick up the phone at any time and the phone companies
have many different rates," she said, adding that IDT let her call
Argentina for about 48 cents a minute at any time.
"With the card, I just get to call whenever I feel like it," she
said on a recent weekday. "I called Buenos Aires today because I
forgot my uncle's birthday, and I don't have to worry. I don't want
to be restricted to have to wait for Sunday or Saturday to get a
good rate.
"I find no problem with the quality, and it's not complicated at
all," she added. "And by buying the cards, I'm limiting myself to
around $100 or a little more a month."
_________________________________________________________________
Different Paths to the Same Point
[INLINE] When you make a telephone call a circuit is dedicated to the
phone call and words move in sequence along the route.
[INLINE] But when you make a call using the Internet, words, once
translated into bits and bytes, move separately along the fastest
possible route and then are reassembled in the correct order on the
receiving end.
_________________________________________________________________
The Internet has allowed people to talk to one another through
their computers since the early 1990's, but the technology was
complex and the sound quality dismal. Around 1996, companies began
offering phone service that allowed people to use their computers
to talk to other people who used telephones, but the sound quality
was still poor.
Howard Jonas, chairman of IDT, which started one of the first
computer-to-phone services, said the first customers tended to come
from the digitally adept. "In the beginning," he said, "it was
like: 'Hey, Mom, you can't believe it. I'm calling you from
Bangladesh, and it's only a dime a minute.' And Mom was like,
'Whaddya say?'"
But now companies are offering phone-to-phone long-distance service
that routes calls over the Internet but keeps the sound quality
close to that of a standard call.
Standard calls still have the edge in quality over Internet calls.
That is because a standard telephone call travels like a train down
an empty track: Each conversation has its own set path, which
occupies a certain amount of network space, regardless of whether
the callers are actually speaking or not. An Internet call often
travels like a train that has had its cars split up and sent down
all sorts of different paths: the sound is translated into binary
computer code, and bits of code travel different routes. When those
pieces of code are put back together, they can remain a little
jumbled (and the call is not as clear as it could be).
As the oldest consumer electronics device, the phone has all the
glamour of a long-serving handyman -- dutifully reliable, sometimes
cranky, quietly indispensable.
But that is changing. As Internet technology begins to transform
the world of plain old telephone service (or POTS, in
telecommunications jargon), the phone is taking the Internet out of
the expensive computer boxes in which it has traditionally resided
and making it useful for people who do not know a DOS prompt from a
disk drive.
In fact, the people who are using ordinary telephones to make calls
though cyberspace -- a process called telephony (pronounced
tel-EF-own-ee) -- may be the first people to use the Internet
without using a computer. But they will not be the last.
"We're going to see a massive amount of Internet use with
appliances which have been Internet-enabled but which we don't
think of as PC units," said Vinton G. Cerf, who co-designed the
Internet in the late 1960's and is now a senior executive at MCI,
the No. 2 long-distance telephone company. "Telephony is only one
example of that. Videocassette recorders, televisions, washing
machines, water heaters will all show up on the network for all
kinds of reasons."
In Cerf's vision, VCR's could sprout Internet connections so they
could be programmed from home, or a water heater could step out
into cyberspace so a local power company could turn it on when
electricity was cheapest.
The main reason that telephones are showing up on the network is
cost. For people who live in major metropolitan areas of the United
States, most calls can be made less expensively with a carrier that
uses Internet technology.
_________________________________________________________________
Less for More
The cost of a 10-minute phone call from New York to Brisbane,
Australia, on a weekday morning, using traditional and Internet phone
services:
Traditional Internet services
AT&T MCI IDT DELTA 3
Standard plan $10.90 $10.89 $1.80 $3.60
Reduced-rate plans $4.70 $4.50
+$3 fee each month
Source: The companies
_________________________________________________________________
For instance, a host of companies are now offering a flat rate of
around 5 cents a minute for calls anywhere in the United States at
any time of day; the traditional phone companies' standard flat
rate is 10 cents..
The savings on international calls can be even more greater. U.S.A.
Global Link, a private company that uses Internet technology to
deliver international calls primarily outside the United States,
says that its rates typically undercut those of traditional
carriers by around 30 percent. The company is planning to begin
selling service soon to United States consumers.
Internet calls are cheaper than those over standard networks for
two basic reasons. By splitting up the train cars (the pieces of
information) that constitute a conversation, a carrier can often
use its network more efficiently. On a standard telephone network,
two people enjoying a moment of silence generally use as much of
the system as a screaming match does.
But during that moment of silence, a network using Internet
technology would be sending parts of another conversation involving
two other people. If the technology was working properly, the quiet
of the first call would not be interrupted.
More important, however, companies that transmit phone calls over
the Internet are able to undercut the established carriers because
Internet carriers often do not have to pay the fees mandated by
national and international regulation.
When AT&T, for instance, carries a call from Albany to Chicago, the
company has to pay a total of about 4 cents a minute to Bell
Atlantic, the local phone company in New York, and Ameritech, the
local phone company in Illinois, for connecting the call. After
paying those fees, AT&T still has to recoup its internal costs,
raising the price of the call.
In the Telecommunications Act of 1996, Congress exempted Internet
companies from having to pay those fees to local phone companies in
most cases because it was concerned that the Internet might not
become a hit.
Now that the Internet seems firmly established, the FCC has taken
the first step to level the playing field when entrepreneurs use
cyberspace to duplicate the traditional network's main function:
connecting calls. That could make Internet calls more expensive.
But the Internet's regulatory advantage remains strong for
international calls because Internet companies are often able to
avoid or reduce the huge fees, known as settlement rates, that some
countries levy against calls to or from other nations. Some
countries allow Internet traffic to cross their borders without
special charges because they are seeking to increase access to
cyberspace.
"Internet telephony is bypassing the settlement process
altogether," said C. Holland Taylor, chief executive of U.S.A.
Global Link. "It allows you to treat voice, which has traditionally
been very regulated, as a series of data packets transiting the
globe as a nonregulated media."
But the regulatory forces that allow Internet phone companies to
undercut their larger, older competitors may not last for more than
a few more years. Even before last week's FCC recommendation, the
domestic access fees that traditional long-distance carriers must
pay to local phone companies were decreasing, allowing the
long-distance giants to lower their prices.
In the international arena, agreements reached under the auspices
of the World Trade Organization are intended to reduce the
settlement fees that increase the price of standard cross-border
calls. That would put more pressure on the Internet carriers.
Even the proprietors of Internet telephony see their window
closing. "My basic thought is, eventually it's going to die," said
Jonas, chairman of IDT.
If the market for basic phone calls over the Internet disappears in
the next few years, the next step for the technologists and
marketers may be to convince people like Ariella Levy that there is
more to a phone call than talking.
Levy, who recently graduated from the University of Pennsylvania,
heard about IDT's Internet phone cards on the radio. She bought
one, which she uses to make inexpensive long-distance calls to her
friends.
"It's just the same as a phone," she said. "You can't tell the
difference. The only thing they can do to make a phone call better
than it is is bring the person into the room."
Jonas is looking to sell Internet phone calls in ways that
traditional phone companies cannot match. He says video links may
eventually prove popular, but he admits that he is stumped after
that.
Referring to a futuristic machine in Woody Allen's 1973 film
"Sleeper" that enveloped its user and delivered sexual pleasure,
Jonas said: "Frankly, I don't know what more people want from the
phone. You can talk to people. You can see people. The next step is
either 'Kirk, beam me up' or it's jump in the orgasmatron."
Copyright 1998 The New York Times Company
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