Cheap long-distance calls, and no special kit. Telkom should be worried, write Kevin Wilson and David Shapshak
It sounds too good to be true. From a normal telephone you can place a long- distance call over the Internet and pay a fraction of the standard rate.
The mechanics of how the Internet carries phone calls may be a little beyond the ken of most people, but this doesn’t affect how the call is made – and even the worst technophobe can do the sums.
And so can the telecoms giants, whose business is threatened by the aggressive young companies – the so-called next- generation telcos (telecommunications companies) – whose services are sprouting up all over the Net. The prospect of Internet telephony has huge implications for the way telcos will be do business in the future.
In South Africa, the five-year exclusivity granted to national utility Telkom makes it illegal for Internet service providers (ISPs) to provide telephony through the Internet protocol (IP) system they use for computers to communicate with each other.
This gives Telkom a legislated breathing space, until 2003 when the exclusivity expires. But voice-over-IP networks are gaining momentum for “in-house” communication, especially in corporate companies who already have sophisticated data networks linking their computers. Industry analysts expect this to be the standard of the future.
And there’s no stopping the average Net surfer from capitalising on these inexpensive calls. It has been possible to place phone calls over the Internet for the past three years. Geeks in bedrooms were the first to discover that two personal computers (PCs) could be wired up with microphones and sound cards to hold conversations over the Net. And it was free – they were paying only for the standard local rate connection to the Internet. But the quality was appalling.
With improvements in the software that converts voice messages into digital signals for transmission across the Net, and the hardware that links the Net to the public phone system, the quality now approaches that of a normal call, and it can all be done from a phone.
As with all Net phone calls, a trans- atlantic chat between London and New York, for instance, will have a timelag of around 200 milliseconds – just noticeable but not enough to disrupt a conversation, and the clarity is indistinguishable from any other long-distance call.
When a connection is made, the voice message is carried across the local phone network until it reaches the nearest Internet “gateway”, a piece of computer hardware that links the public phone system to the Net.
The gateway converts the message into digital form and sends it across the Net to another gateway nearest the destination phone. The message is then converted back into analogue form, and travels across standard local phone lines to the target phone.
Some of the biggest names in the computing industry including IBM, Siemens and Lucent Technologies are now producing these gateways, which run software from Net telephony pioneers such as VocalTec, eFusion and NetSpeak.
Calls are cheaper because Net hardware costs less than standard phone equipment, and the next-generation telcos are exempt from the access charges that are levied on traditional telecom companies delivering long-distance services.
Until now, a user needed a PC equipped with a sound card, speakers and microphone plus software to make a Net phone call. New Jersey-based IDT was one of the first companies to offer PC-to-phone calls with its Net2Phone service. With a PC at one end, only one gateway is needed to make a call, which means the number of countries that can be reached expands to more than 200.
The next-generation telcos are moving into those phone markets that haven’t been opened up to competition from traditional telecoms companies – areas like South America, Asia and Eastern Europe. These companies sell their services both direct to the customer and through traditional Internet service providers, which can offer Net telephony as an option to subscribers.
Although the consumer market is where most of the excitement has been generated, Net calls account for only a tiny fraction of the market – $20-million worldwide revenue compared with a total figure of $70-billion – and much-needed investment in private networks to handle bandwidth-hogging calls is likely to push up prices as more customers come online.
“The network allows voice and data to be intermingled,” says Gavin Parnaby, of analyst Datamonitor. “That’s where the big opportunity will be in the future – value- added services like Web-based conference calling, voicemail and video conferencing, rather than a cheap imitation of telephony services.”
The use of voice-via-data network calls reflects a greying of the distinct lines between voice and data forms of electronic information. Voice is now seen as just another form of data. So by consolidating networking infrastructure, corporations can realise a whole lot of useful benefits, such as integrated call centres, and routing of voicemail messages to e-mail boxes (as an audio-file attachment which can be played back).
A lot of corporate companies are beginning to realise using IP telephony over their wide area networks, a closed network which links various offices of a company nationally or internationally, has all these advantages and can save them a lot of money.
“It doesn’t make sense to maintain two networks,” says Bruce Kasrel, of Boston- based analyst Forrester. “It makes sense to carry everything on a data network like the Internet. If you throw enough bandwidth at it, the sound quality is great.”
Nestl South Africa recently began using a Cisco-based voice-over-IP network at four offices around the country, with plans to extend it. This will save the confectioner R120 000 annually, say the system’s installers Blue Sky Networks.
Innovation will continue at a frantic pace, led by companies such as Cisco, 3Com and Bay Networks who, unlike the telcos, are accustomed to responding quickly to technological developments.
These are the companies that provide the infrastructure that routes messages across the Internet. And all are now investing heavily in hardware to handle Internet telephony.
As with other computer technologies in the past, the keyword is convergence – this time between voice and data networks, the public phone network and the Internet.
The computer industry has been quicker to spot the opportunities, and so far it has outmanoeuvred the telcos. The question now is whether the telcos can respond in time.