Streaming Magazine August 2000
John Silliman Dodge
Mr. Watson, come here, I want you! These are the first words that
Alexander Graham Bell spoke into his new, new thing, the telephone.
Considering the occasion he might have uttered something more inspirational
like, "That's one small sentence for a man, one giant
blab fest for mankind." But the poor guy had just spilled acid
on his pants and probably wasn't thinking in sound bites.
We've come a long way since Alex. Fast forward
to the year 2000 and the state of Internet Telephony, also known as
Voice over IP. Today about 15 million people make calls over the Net
compared with 5 million last year. Roughly 2 dozen companies offer
long distance service, either free, ad-supported or significantly
cheaper than the alternatives. The combined revenue of Net talk providers
is expected to grow at a compound annual rate of 200% a year, from
$208 million in 2000 to $16.5 billion by 2004, according to the International
Data Corp., a research firm in Framingham, Mass. That's decent
performance for a five year-old technology.
Today with a computer, a Net connection, a headset and
some software you can talk to anyone anywhere on the planet for as
long as you like, often for free. Well, technically for free. The
price for this all-you-can-eat buffet is jitters, echoes, distortion,
delay and other sonic strangeness. People can put up with roughly
250 milliseconds of delay before it becomes annoying. Echo is less
tolerable; 50 msec is about all we can handle. And there can be a
tin can tonality to Net phone calls. And sometimes bandwidth limitations
and network congestion can make you sound like a robot on a martini
binge. And you may have to click on or listen to advertising, or fill
out surveys and profiles so marketers can target you more precisely.
And if you're a corporate user and your company has a firewall,
you're out of luck. Ditto for Mac users; it's a PC-centric
world. But I'm not complaining because hey, it's free.
Originally Net telephony was a computer-to-computer
transaction only. Today the majority of products don't require the
recipient to be on a PC. You initiate the call from your box and it
goes out over the Internet to a gateway near the callee. From there,
your call travels over regular phone lines. Sometime in the future
the Net will transport every phone-to-phone call and you won't
even be aware of it. The call goes over the local public switched
telephone network, or PSTN to the nearest gateway server, which digitizes
the analog voice signal, compresses it into IP packets, and moves
it onto the Internet for transport to a gateway at the receiving end.
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Why is all this happening? Price for openers. Digits
are cheaper to transport than atoms and they travel more efficiently.
Plus it's more efficient to operate a single integrated network
for voice, data, audio and video. Among other factors, better compression
rates and the elimination of silence in speech (over half of all voice
transmission is space) make packet telephony at least five times more
bandwidth efficient and less expensive than switched circuit telephony.
We're also in a cycle of deflation. The floor is falling from
under plain old telephone service. Imitating the trend in digital
storage costs, advances in fiber-optic capacity are dropping the wholesale
cost of carrying a call 40% a year. How far away can the bottom be
when the cost of billing for a long distance call exceeds the cost
of providing it? Still, the traditional phone companies charge a premium
because for the time being the market will bear it. At least until
technology catches up. Once quality and convenience issues are successfully
addressed, you can expect the entire global telecommunications network
to flip the switch and go packet-based.
That's the Net phone backstory. If you';re
ready to see what all the fuss is about, here's what you need
to get started: a relatively new computer with a good connection.
The faster the better. A high speed processor. And as usual, more
RAM equals a better experience. You need a sound card plus a microphone
and speakers or a headset. And finally, you need the Net phone software
itself. Check out any one of the following companies, then pick one
and start talking.
Firetalk offers free unlimited calling world-wide, unlimited conference
calling, instant messaging, voicemail, forums, virtual auditoriums
for large scale virtual meetings, voice chat on any website, and web
touring-users can synch their browsers and talk while they surf. This
might be good for talking with your remote Web design team. Like most
of these programs, Firetalk requires all users to run the same software.
Mediaring provides free PC-PC calls, budget PC-phone
calls, and fun services including Voizmail. Users go to Mediaring's
site, record a voice message and enter the recipient's email
address. Like an e-greeting card, the recipient gets an email with
a link to the site which contains the voice message. Why not just
pick up the phone? I don't know, but I applaud any effort to
sonify the Web.
Dialpad has the distinction of not requiring a software download.
This is a good thing. Their Java-based web-to-phone service requires
users to complete a 2-page registration form. You're good to
go from there with free, unlimited calls in the US.
Net2phone is the current industry leader with partners like AOL, Yahoo!,
Compaq, Prodigy, RealNetworks and Netscape. AT&T, after unveiling
its own Web-based voice products, is leading a coalition to invest
$1.4 billion in Net2Phone. While their PC to PC calls are free, PC
to phone calls cost 3.9 cents a minute for calls within the US and
as little as 5 cents a minute for calls to the US from any other country.
Phonefree offers free PC-to-phone calling to and within the United
States, worldwide PC-to-PC voice calling over the Internet, integrated
PC based voice mail, video calling and video mail and file and picture
ITXC is a new class of ITSP, or Internet Telephony Service Provider.
Dubbing themselves the "service provider's service provider,"
ITXC serves traditional telephone companies, new competitive carriers,
portal companies, ISPs, prepaid calling card companies, call back
companies, and newly formed Internet telephony service providers like
the ones listed above.
This is an extremely dynamic space. By the time you
read this there will likely be new companies, new services, and new
rates. And there's an interesting political swirl around Net
telephony, always an indication that traditional business feels threatened.
For now there's a nice spread between the cost of circuit and
IP-based calls. In part that's because the FCC has postponed
dealing with the touchy issues of tariffs and taxation, as Congress
has done with Web commerce. (Mustn't stifle baby during the
formative years.) But it's only a matter of time before the
scent of money proves irresistible to legislators. It's their
nature after all.
Today, one could argue that this whole thing is a solution
in search of a problem. Regular telephones are convenient and their
use is getting cheaper all the time. Alternately, the public Internet
is unmanaged, unreliable, and prone to congestion at rush hour. It's
hard to envision any quality of service unless and until Net telephony
runs on one of the managed IP backbones. Still, it's hard to
ignore the trends: we're seeing projections of 15% of long distance
traffic in 5 years up from 1% today.
The ultimate objective of Internet telephony is dependable,
high-quality voice service, the same kind we expect from the phone
company. Clearly, we're not there yet. But looking farther out, with
its support for computer-to-telephone calls, telephone-to-computer
calls, phone-to-phone calls, PC-to-fax and an array of other communication
services, Net telephony represents a significant step toward the integration
of voice and data networks. The real story, once again, is the Internet
itself. It's proving to be the ultimate transmission mechanism for
anything that can be digitized, including all telecommunications.