Internet Telephony: A Solution or a New Problem?
by Derek J. Rundell
Is there an alternative to expensive long-distance telephone calls? Companies such as Microsoft, VocalTec, Quarterdeck, and JabraNet seem to think so. Their solution is called Internet Telephony (IT).
The Internet is a network of computers. Internet users can access information stored in computers all around the world through a local phone call to an access provider. By utilizing this same technology, IT lets people in different parts of the world to talk to each other over the Internet. With the right hardware (which includes a microphone and speaker set connected to the computer), software (which provides the necessary connections to the Internet), and Internet connection, there are no long distance fees. Although the cost of IT includes a local phone call, Local Exchange Carrier fees, and the hardware and software setup, IT is very inexpensive because it does not require the user to utilize a long distance access provider. The cost of accessing the Internet through an access provider, like America Online or FlashNet, ranges from $10 - $20 dollars per month for unlimited access. And, with IT packages (software and hardware) costing $100-150 dollars, the same price as many standard phones, IT is a serious alternative to conventional long distance service.
IT could pose a serious threat to the conventional long distance infrastructure. Randy LeFevre, spokesman for BellSouth said, "We are aware of the changes in the industry and we’re tracking development in this area, but it is really too early to gauge an effect right now." Reactions to IT are mild because the existing quality of IT is poor.
There are several major drawbacks to the IT technology that is available today. People using IT must be using the same IT communication software package in order to communicate with each other. In addition, much like a walkie-talkie, a person must wait until the other party has finished speaking before responding. And, as many America Online customers have realized, the Internet is getting busy. As Cliff Addy, president of an Internet access provider stated, "The Internet is already overloaded as it is. If another five million people are added, it would be so slow that no one would want to use it -- there are a lot of technology barriers that need to be fixed." However, one must remember that IT technology is very young.
Not all phone companies are taking a "wait and see" approach. In March of 1996, America’s Carriers Telecommunication Association (ACTA), which represents 130 small long-distance companies, petitioned the Federal Communications Commission to put a ban on the sale of IT software. ACTA has also asked the FCC to regulate the Internet and ban IT because it is a "misuse of the Internet." The FCC is currently conducting research and is expected to reply to ACTA within 12 months after the petition was filed.
In response to the petition, IT supporters, Internet users, and technology companies have come together and formed the "Voice on the Net" (VON) Coalition. The VON Coalition is "taking action to preserve the worldwide network as a place for emerging technologies and business." As Jeff Pulver, the VON Coalition Chairman stated, "ACTA is, in effect, attempting to eliminate outside competition by banning emerging technologies. The immediate mission of the VON Coalition is to persuade the FCC to deny the ACTA petition." Whether or not the FCC rules in favor of ACTA’s petition, it is hard not to notice the support the VON Coalition is gaining. Microsoft Corporation, DSP Group, Jabra, and IDT Corp., have all joined the VON Coalition in its battle against ACTA.
The FCC has a challenging task. On one hand ACTA, a group of 130 companies, is calling for a ban on IT. On the other hand, the VON coalition, with its support from industry leaders like Microsoft, are rallying against regulation. With powerful interests on both sides of the debate, the FCC might rely on input from the communications giants Sprint, AT&T, or MCI. Surprisingly, the companies that make billions of dollars through long distance fees are in support of IT. Sprint is a member of the VON Coalition and a supporter of IT. AT&T has hired a former Apple research chief to keep them ahead in the IT market. MCI is developing IT technology.
With Microsoft and the Big Three communications companies supporting IT, the technology is bound to improve dramatically and gain increased popularity. The FCC must consider the support of the Big Three for a product that could cost them their main-stay of billions and billions of dollars in long distance services. If an industry supports a new technology that has the potential to undercut its current technology, there must be merit to the new technology. Fred Voit, an analyst with the Yankee Group, estimated that in 1996, 9.7 million people had the ability to use IT, and in 2000, the number will be 24 million. The potential for widespread IT use is real. The number of users will increase as the technology advances. The FCC must be prepared to keep its regulations on new technologies such as IT as advanced as the technologies themselves.