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Monday, July 15, 1996
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NEXT STORY Cheap Phone Calls Are Next Wave on
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PDF [Image] [Image] Computers: New software
EDITION offers clear voice quality. Big firms,
consumers stand to gain when it is
POLITICS & widely available.
POLLS
[Image] By JUBE SHIVER, Times Staff Writer
FRONT PAGE
[Image] ΚΚΚΚΚYou may not have any interest in
NATION & Internet discussion forums or online
WORLD magazines or surfing the World Wide
[Image] Web, but the computer industry is on
STATE & the verge of drawing even the most
LOCAL technophobic into cyberspace with a
[Image] universally appreciated commodity: very
SPORTS cheap telephone calls.
[Image] ΚΚΚΚΚ Although software for making
BUSINESS & phone calls over the Internet computer
TECHNOLOGY network is already available, the
[Image] technology is poised for a great leap
LIFE & forward this summer when Microsoft
STYLE Corp. and Netscape Communications Corp.
[Image] incorporate voice communication
CALENDAR capabilities into their mainstream
[Image] Internet software.
COMMENTARY ΚΚΚΚΚ At the recent PC Expo trade show
[Image] here, Microsoft, Netscape and others
WEEKLY dazzled audiences with software
SECTIONS offering remarkably clear voice quality
[Image] over the Internet. Also in the works is
technology that will make it possible
to call not just from one computer to
another but from a computer to a
regular telephone or from one phone to
another over the Internet--a
development that promises to eliminate
the biggest obstacle to widespread use
of the Internet as a telephone network.
ΚΚΚΚΚ
ΚΚΚΚΚ The new generation of Internet
communication will also let users on
opposite sides of the globe play
interactive games in real time and
collaborate on writing letters and
other documents, all for the price of a
local phone call.
ΚΚΚΚΚ The result could be a boom in
Internet traffic, a windfall for savvy
consumers and big corporate
telecommunications users--and a
dangerous loss of revenue for telephone
companies, especially on lucrative
international services.
ΚΚΚΚΚ "Six months ago I would have said
someone is nuts for telling you this
technology had a market," said Len
Kennedy, a Washington communications
lawyer who has studied the issue. "But
many businesses already have the
infrastructure [in their computer
networks] to do telephony, high-speed
data transmission and even video
conferencing. Pretty soon the computer
industry is going to convince most of
them they don't need a phone company
for most of their communications
needs."
ΚΚΚΚΚ Telephone companies are getting
worried. Computer networks already cost
phone carriers hundreds of millions of
dollars in lost long-distance charges
and other fees--money the companies say
they need to subsidize local telephone
service for low-income Americans and
those living in remote or high-cost
areas.
ΚΚΚΚΚ Merrill Lynch, the big New York
investment house, for instance, has cut
its phone bill in half and removed 13
million minutes of calls per month from
the public telephone networks since it
installed a system that lets its
employees dial one another over the
company's computer network, said Bruce
Sieben, managing director of enterprise
integrated systems services.
ΚΚΚΚΚ "In the coming weeks and months,
consumers will have every incentive and
opportunity to begin a large-scale
migration off the fee-based,
public-switched telephone network in
order to use free [Internet] services,"
Worldcom Inc., a Jackson, Miss.,
long-distance carrier said in a
regulatory filing this spring.
ΚΚΚΚΚ *
ΚΚΚΚΚ Even the biggest name in the
telephone business is scrambling to
protect itself from the advance of
Internet telephony: John Petrillo,
president of AT&T Corp.'s business
communication services division,
recently hired Apple Computer's former
research chief as head of research and
development, in part to focus on
developing Internet telephones.
ΚΚΚΚΚ Only a few years ago, talking
over the Internet was an ordeal only a
computer nerd would love. Voice quality
was poor, and both users had to be on
line at the same time, equipped with
identical software and costly computer
gadgetry, including a sound card, modem
and microphone.
ΚΚΚΚΚ But that's all changing with
remarkable speed. Computer memory
marketer Kingston Technology Corp. of
Fountain Valley, Calif., for instance,
has developed a $200 circuit board that
allows a computer user to talk over an
ordinary telephone handset instead of
using a computer microphone and sound
board.
ΚΚΚΚΚ VocalTec Inc. of Northvale, N.J.,
a pioneer in Internet voice telephony,
has said it will unveil a commercial
system of relaying Internet voice calls
to regular telephone users later this
year.
ΚΚΚΚΚ MCI Communications Inc. and Intel
Corp. announced last month that they
would work to perfect standards to
support instantaneous Internet
communication services, including voice
telephony, video conferencing and other
applications.
ΚΚΚΚΚ And while Internet voice calls
still contain a nettlesome delay
reminiscent of those produced by
long-distance calls transmitted by
satellites, the sound itself is clear.
ΚΚΚΚΚ "I witnessed the technology for
the first time about a month ago, and
the voice quality was absolutely
staggering," said Ken Anderson, vice
president of information services for
the giant telephone switch maker,
Northern Telecom Ltd.
ΚΚΚΚΚ Vocaltec's upcoming service could
also eliminate the need for the
receiver of an Internet call to have a
computer. The computer-equipped
initiator of the call would establish
an Internet connection with a computer
in the city where the call is going and
the computer would then "patch" the
call through free via the regular local
telephone exchange.
ΚΚΚΚΚ This could also be accomplished
without personal computers on either
end: A caller would simply dial a local
server directly, enter an access code
and the phone number to dial. The
server alerts the caller to hold while
the call is transferred to a computer
near the intended recipient.
ΚΚΚΚΚ Robert Heymann, vice president of
business development for VocalTec's
partner in the venture, Dialogic Corp.
of Parsippany, N.J., said his company
has received numerous inquiries from
Internet service providers, businesses
with overseas offices and international
call-back services that exploit the
lower cost of overseas calls that
originate in the United States.
ΚΚΚΚΚ "I just got off the phone to
Israel, for example, and it didn't cost
me anything," Heymann added.
ΚΚΚΚΚ The new technology has
spotlighted long-standing telephone
rate inequities at a time when federal
regulators are seeking to establish new
ground rules for telephone rate
competition.
ΚΚΚΚΚ Currently, U.S. long-distance
companies pay local telephone companies
an access fee amounting to about 7
cents a minute to deliver a toll call.
Long-distance companies pass along the
charge as well as the cost of operating
their networks, requiring their
customers to pay more the longer they
talk and the farther they call.
ΚΚΚΚΚ Internationally, long-distance
companies pay a heftier "accounting
charge" amounting to 50 cents or more
per minute to foreign carriers to
handle long-distance calls.
ΚΚΚΚΚ By contrast, although
communication over the Internet travels
along many of the same telephone wires
as voice calls, subscribers typically
pay a monthly flat rate of $15 to $25 a
month; dialing up the Internet is
usually a local call and does not carry
access charges. Once on the Internet,
users can send communications virtually
anywhere in the world and for any
amount of time, at no extra charge.
ΚΚΚΚΚ A group of small and medium-size
long-distance companies, America's
Carriers' Telecommunications Assn.
(ACTA), has petitioned the Federal
Communications Commission to regulate
Internet telephone technology.
ΚΚΚΚΚ But earlier this month, FCC
Chairman Reed E. Hundt threw cold water
on that idea in a speech delivered in
Montreal by his chief of staff, Blair
Levin.
ΚΚΚΚΚ *
ΚΚΚΚΚ Levin told the audience that
Hundt is "strongly inclined to believe
that the right answer at this time is
not to place restrictions on software
providers or to subject Internet
telephony to the same rules that apply
to conventional circuit-switched voice
carriers." Hundt added that "the last
thing we want to do is stop . . .
improvement by thoughtless regulation."
ΚΚΚΚΚ The FCC--under a mandate from
Congress to promote telephone
competition--may nevertheless revisit
the access fee issue in the next year
or so.
ΚΚΚΚΚ "We are pleased they are going to
look at this issue in the context of
access charges; that is a start," said
ACTA lawyer Robert M. McDowell, trying
to put the best face possible on the
group's petition to the FCC.
ΚΚΚΚΚ But even if access fees are
overhauled, the higher costs of
international dialing will remain. As a
result, many experts think strong
incentives will remain for
consumers--especially business
consumers--to make long-distance calls
over the Internet.
ΚΚΚΚΚ David Goodtree, an analyst for
Forrester Research, estimates that
corporate spending on two high-speed
networks systems suitable for
simultaneous voice and data
transmission--known as frame relay and
asynchronous transfer mode--will grow
from $1.2 billion this year to more
than $6 billion by the year 2000.
Business spending on direct Internet
access will similarly explode to $8
billion, from $410 million this year,
he predicted.
ΚΚΚΚΚ Some experts believe that heavy
use of capacity-hogging voice and video
on the Internet will end up damaging
the performance of the network
itself--but there is little consensus
on that point.
ΚΚΚΚΚ "There are doomsday believers who
think everything will crash, and there
are other people who say there is
nothing to worry about," said Virginia
Brooks, manager of network access
technologies at Aberdeen Group Inc., a
Boston-based computer technology
consulting firm. "The truth is probably
somewhere in between. There certainly
is congestion and we are starting to
see vendors come up with products to
try to reduce bottlenecks."
ΚΚΚΚΚ Such congestion was in evidence
at PC Expo, as a cacophony of squawking
modems and telephone-dependent product
demonstrations was so great that it
brought some Internet communication to
a virtual standstill.
ΚΚΚΚΚ *
ΚΚΚΚΚ Even if they don't immediately
spur huge numbers of people to abandon
their telephones, the forthcoming
Internet software products from
Microsoft and Netscape--called
NetMeeting and CoolTalk--are almost
certain to entice more people to spend
long hours on the Internet. The two
companies dominate the Internet
software market, and their new products
are expected to quickly create a nearly
uniform platform for voice and other
communication services over the
Internet.
ΚΚΚΚΚ "In 18 months and three days
we've distributed 38 million copies of
our software," said Jim Barksdale,
president of Netscape. "This growth is
unprecedented in the computer industry.
. . . I absolutely see the computer
replacing the telephone and the TV; it
is inexorable."
ΚΚΚΚΚ
Copyright Los Angeles Times
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