The demise of ATT?
Date: Wed, 1 Mar 95 21:56:45 PST
From: Peter Langston <psl>
Subject: The demise of ATT?
Forwarded-by: Claude Ginsburg <email@example.com>
I-PHONE BEATS BABY BELLS
(c) Farhan Memon
Ever thought of making a long distance call and being
charged only the local rate? You will, and there's not a thing AT&T can
do about it.
Last week VocalTec, a software company based in Israel,
unveiled Internet Phone, a revolutionary new product that
allows users of the Internet to speak to each other in realtime over
the world wide computer network.
Since most people access Internet through dial-up accounts
the only charge incurred is that of a local telephone call.
In less than a week, users have downloaded 25,000 copies
of the Internet Phone software from VocalTec.
Until now the most popular way for Internet users to
communicate with each other was by e-mail or through text chat
gateways. The voice capabilities offered by Internet Phone add
a new component to the 'Net surfers' tool box and promises to
make the Internet more attractive to a wider variety of users
--Telecommuters who can check on daily work activities with a
simple data call.
--Small and medium sized companies with remote offices who want
--Home users, or students away at college who want to maintain
contact with far-away friends and family.
The appearance of Internet Phone has the big long distance
carriers running for cover. From 1990 to 1993 they saw the U.S.
Postal Service lose $1.8 billion to inexpensive electronic
alternatives such as e-mail, and during that same period the
volume of business-to-business mail declined by one third.
Privately spokespersons for the telcos fear the same will
happen in their industry because of the Internet Phone.
They have good cause to be concerned. Depending on the
speed of your modem sound quality of
Internet Phone is comparable to that of a regular long distance
call, conversations aren't stilted and can be carried on at a
normal pace, and because the Internet is designed to route
messages around trouble spots there's never a chance of the
circuits being busy.
"Sprint's fond of saying that you can hear the sound of a
pin drop using their service," said John Hampton, a software
developer from Carson City, Nevada who was interviewed using Internet
"I say using the I-Phone you can hear the pin actually falling.
This is so good."
The Internet Phone relies on technology VocalTec developed
for its corporate users who wanted to conduct inter-office
communications over their own computer networks.
To accomplish this the company invented a technique that
compresses sound In addition, a secret mathematical formula
allows the software to overcome
one of Internet's inherent weaknesses -- sometimes data packets
do not arrive at their destination in the same order they were
sent making the message unintelligible.
At a minimum the Internet Phone requires a 486/33Mhz IBM-
compatible PC running Windows 3.1, a sound card, a SLIP or PPP
connection to the Internet, and a 14.4K modem. Users download
the Internet Phone program from VocalTec's homepage on the Internet
(http://www.vocaltec.com) and then have 30 days to try it out
for free. During the trial period there is a 60 second on-air time
limit before the program has to be re-loaded.
Until April users can register Internet Phone by e-mail
for $49, after which it will be available in stores for $99.
With its voice activation mechanism and a quick tour
tutorial for beginners, the Internet Phone is extremely user friendly. A
live Internet Phone directory provides a list of all Internet
Phone clients that are on-line at any given moment. A click on
a user name in the directory results in a ringing tone on the
receiving end which when answered allows the call to begin. An
on-screen indicator informs the receiver who's calling in a manner
similar to the "Caller ID" feature available with standard
telephone service. If the person being called is on-line with
another call, the caller will get a busy signal.
"It's better than speaking on a regular telephone," said
Peter Lucas of Duneden, New Zealand. "Over the past week I've
spent nearly 20 hours on my computer chatting with people in
France, Australia, Great Britain and the Bahamas. For me the
phone company doesn't exist anymore. I'm going to make my overseas
friends get this otherwise I'm not calling them."
While consumers prepare to by-pass them the long distance
phone companies are putting on a brave face and deny that there
is anything to fear.
"Were looking at this, but we aren't overly concerned,"
said Gini Gold, a spokeswoman for AT&T. "Not everybody has Internet
first of all so its a matter of convenience. With the phone you
can pick it up and call. Then you have to consider the level of
quality and service we provide. When your call doesn't go
though you can always call us, but who are you going to call when you
have problems with Internet Phone who are you going to call and
what type of support are they going to give you."
Gold said companies considering using Internet Phone for
business should be aware that the Internet network has many
Despite AT&T's ambivalent attitude towards Internet Phone,
telecommunications analyst Reid Halloway believes the new
technology will affect the long distance carriers do business.
"The ultimate impact of this is that long-distance rates
will continue to come down. That's just the way competition works.
These guys at VocalTec have transformed a data crunching
machine into a true telecommunications device, they've found a new way
to skin the cat. It's the age old story of commodities over time
--prices come down."
© 1995 Peter Langston