Talk Is Cheaper

Going The Distance

The main attraction of voice transmissions over the Internet, known as Internet telephony, is the promise of lower rates on long-distance calls. To get up and talking, you need a multimedia PC with a microphone, sound card and speakers (or headset), and the proper Internet telephony software installed on your computer, or a telephone connected to an Internet Protocol (IP) telephony switch.

A popular program, available in Macintosh and Windows versions, is VocalTec Communications' Internet Phone ($49.95). Internet Phone's PC-to-PC capabilities allow you to make an unlimited number of long-distance calls to other PCs that have Internet Phone for the cost of your monthly Internet access fee. Internet Phone also boasts the ability to send and receive video over the Internet (a parallel port camera or video camera with a standard Windows-compatible video capture device is required) in addition to its various document-sharing and audio-conferencing capabilities.

Perhaps the best feature of Internet Phone is its new PC-to-phone capability for making calls over the Internet from your computer to standard phones. To do this, you must first sign up with an Internet Telephony Service Provider (ITSP) that offers service to the regions you'll be calling most frequently; some ITSPs charge an initial sign-up fee. Choose from the software's list of ITSPs, then click on the link to the ITSP's Web site and subscribe. (A user name and password will be provided.) You'll then have access to the VocalTec Telephony Gateway, which bridges the gap between the Public Switched Telephone Network (PSTN) and the Internet so your Internet call can be sent over the PSTN to a regular phone. Unlike PC-to-PC calls, PC-to-phone calls do have a charge--but it's a reduced rate.

Keep in mind that Internet telephony has been plagued by poor voice transmissions over IP networks. On the Internet, data is broken down into "packets" that are sent separately and reassembled at the receiver's end. Unfortunately, this means voice conversations on the Net are often subject to delays because of high traffic volumes, and sentences can get clipped or jumbled when put together on the other end. "The quality of voice conversations is still a big concern today and remains one of the major downfalls [of Internet telephony]," Muller says.

That's why some companies are creating their own high-bandwidth networks that carry voice, data and other traffic, and promise to deliver better sound quality. You'll have to pay for these services, but they're offered at discounted prices. Qwest ( offers a new service called for phone-to-phone IP telephony service carried over its advanced fiber-optic network. To place a long-distance call, a customer must first make a local call to access the Qwest IP network, enter a password and then dial the destination number; calls run 7.5 cents per minute--a rate considerably lower than those generally offered by standard long-distance carriers. is only available in nine cities so far: Salt Lake City; Denver; Kansas City, Missouri; and Anaheim, Los Angeles, Oakland, Sacramento, San Francisco and San Jose, California. Qwest plans to expand its service to 25 cities by mid-1998.

Similarly, Delta Three ( offers savings of up to 50 percent off international calls placed on its Global Internet Protocol Network. Phone-to-phone conversations run approximately 29 cents per minute. Service is offered to five international destinations: Bogotá and Cali, Colombia (45 cents); Hong Kong (28 cents); Israel (33 cents); and São Paulo, Brazil (48 cents). Customers must dial a toll-free number and enter an access code before dialing the destination phone number.

Delta Three offers discounted PC-to-phone services for voice calls over the Internet as well. You can download its free software, Internet Phone Lite, from the Web. Delta Three's Global IP Network serves more than 200 international destinations. A call from a PC in Moscow to a phone in New York costs 12.5 cents per minute using Delta Three, compared to the more than $2 per minute traditional carriers charge.

Although these new services are limited, experts believe they're a sign that Internet telephony is finally gearing up for the masses. For now, they're probably most useful for growing companies that want savings on frequent calls to specific areas.

Another sign that Internet telephony is preparing for prime time is the development of new standards, Muller says. While many Internet telephony products still require that both parties use the same software, this is changing, thanks to standards that allow compliant software to communicate. Products adhering to the G.723.1 international standard for Internet telephony applications will be able to interoperate, making them easier to use on a larger scale.

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This article was originally published in the June 1998 print edition of Entrepreneur with the headline: Talk Is Cheaper.

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