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Vonage UK President: Take Your VoIP Adapter To France And Spain

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March 10, 2005

By Staff

They say there's no such thing as a free lunch, that you never get something for nothing. So how come millions of people are making long-distance telephone calls without paying?

A range of new talk services has sprung up on the web, many of them offering free calls. In the past, delays and dropouts often led to frustrating experiences with 'net calls, but in these days of fast broadband Internet connections new companies promise crisp, cheap calls. Advances in headsets, which now offer less distortion, have helped, as well handsets which connect to your computer.

So why is making a call on the Internet so much cheaper? When we make a traditional phone call a dedicated two-way channel or circuit is left open between the two phones. That's a waste of resources, given that usually only one person is talking at a time.

Voice Over Internet Protocol - or Voip - splits up our speech into tiny data packets. They travel much more efficiently over the 'net before being reassembled at the other end into an audio signal. The call is free because the telecoms operator has been removed from the process.

Skype, which launched only eighteen months ago, is now the most popular Internet call provider. Eighty million people have downloaded the free software, although only around half of them use the service regularly. It's simple and takes around five minutes to set up. One downside is that both the dialler and receiver need a PC with the same software to make a free call, otherwise it's a bit like playing Frisby on your own.

The man behind Skype also masterminded the controversial filesharing site, KaZaA. At a phone conference in Cannes, he told me he's ready to start making some new waves:

Niklas Zennstrom, CEO, Skype: "Just like a web browser or an email client, you don't pay for making a phone call. You don't pay to send an email or load a page in your web browser, and the same thing applies to telephony over the Internet. It's completely free.

One of the reasons why Skype is so succesfull, why we are actually the fastest growing product on the Internet ever, is because it's so easy to use. You download the software and you start using it, just like you use a web browser."

The technology is most cost effective when making international calls. Although not free, you can call normal landlines and mobile phones as well. Because the Internet carries your voice for most of its journey you only pay the equivalent of a local call or mobile charge.

With some companies in the market you don't even need a PC, just a special router and a broadband connection. With one such system you can take your fixed line number with you.

Kerry Ritz, Vonage: "If you sign up to Vonage in the UK, and take your telephone adapter to France or to Spain, where approximately one million Brits have second homes, you can plug the Vonage service into a broadband connection and make and receive telephone calls as if you were in the UK.

So in that case you're not making any long-distance calls back to the UK, and your family and friends in the UK aren't making long-distance calls to you in Spain or France. You're eliminating that cost from the equation."

You can also buy an area code which lets you make calls as if you were in that city or country. That's only available in the UK and North America at the moment and you have to pay a monthly subscription. It's cheap, but not free.

We used to be reliant on national telecoms operators to place our calls. Deregulation in many markets then gave us more choice. But now we can effectively place our own calls over the 'net ourselves.

The pioneers of Internet telephony call it a 'disruptive technology', one that undermines the need to charge for calls, certainly anything beyond that of a local call. And while some national carriers have diversified away from voice, others could be toppled.

The Dutch national carrier, KPN, is planning to shed nearly half its workforce. It says Internet telephony will cut its revenues in half. The tune is changing in Poland too. After years of living with high call costs under a virtual telecom monopoly more people have now used Skype than in any other country, bar America.

In Japan it's estimated 3 in 10 calls are now made using broadband. And in Africa, the relaxation of regulations around Internet telephony in Kenya, Nigeria and South Africa have cut businesses bills by up to 70%. Although in South Africa it's the national carrier that is leading the way.

But do we really want to be tied to our PCs to make a cheap call? Having got used to the convenience of mobile phones, are we really willing to carry our laptops to a wireless hotspot just to get in touch? The cell phone industry doesn't think so.

Hamid Akhavan, T-Mobile: "I don't believe Voip is going to make a big difference in the mobile business because of the convenience of voice dialling."

Dan Simmons: "Is it in the mobile operators' interests to make it convenient to use VOIP?"

Hamid Akhavan: "I would say that is not something we are focusing one. We don't see it as a revenue builder. We don't see it as a value-adder for our business and therefore we're not promoting it."

Dan Simmons: "You mean there's not much in it for you."

Hamid Akhavan: "Precisely."

But mobile operators shouldn't get complacent. We might not all be rushing down to our local Wi-Fi café to make long-distance calls, but international mobile charges make using a laptop a lot less expensive than using a mobile. The handset manufacturers know it, too. Motorola and Siemens are developing cell phones which can also make Internet calls.

Again the calls aren't free, most wireless Internet providers levy a charge, although there are 350 new hotspots in the UK which don't bill Internet callers.

On the move there's still a lot of fuss needed just to make an IP call, and the quality isn't always as good as a fixed or mobile line.

The Internet is making talk cheaper. As our voices are reduced to tiny data packets it's likely calls will be bundled in with our other data needs, possibly as part of a monthly bill and not necessarily provided by a telecoms company. In future, we might not be charged by the minute, but it's unlikely to be a free lunch.

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