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Internet Phoning Begins To Click: Flurry Of Activity By Big Players Hoping To Lu

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Internet Phoning Begins To Click: Flurry Of Activity By Big Players Hoping To Lure Customers With New Technology

October 22, 2003
By Andy Riga

It's still early days, but the telecommunications industry expects many of us to be using the Internet for our phone calls in coming years.
That explains a flurry of recent activity by such big players as Bell Canada and TELUS Corp., which hope to lure customers with new technology known as voice over Internet Protocol or Internet-Protocol telephony.

So far, few businesses have jumped on the bandwagon, worried about replacing dependable, if dated, telephone systems with as-yet-unproven technology. And consumers may not be all that interested because Canadian home-phone and long-distance prices are already relatively low.

That may change.

Analysts say low prices are one but not the biggest advantage of IP telephony. Business especially may be lured by extra features, such as the ability to zero in on a voice-mail message from among many, via computer, without listening to every one.

"One of the biggest problems I have with voice mail is it's sequential," said Iain Grant, a telecom analyst with SeaBoard Group, a Montreal market researcher. "You pick up your blinking phone and it says, 'You have 49 messages.' And probably the one you want is the 48th."

Internet-based telecom services - which use the Internet rather than the telephone network to route calls and data - can solve that problem, said Grant, who is testing an Internet-based telecom service from Vonage, a U.S. company that might try to reach into Canada.

With Vonage, "you can actually see who called you in sequence on the computer screen and if you want to listen to message 16, message 32, message 33, you simply click on them and listen. That's really clever."

IP telephony also lets users blend voice, data and images in new ways, allowing employees to, for example, easily collaborate on projects even if they're in different cities or working for different companies, Grant added. Such collaboration has been available to big companies for years. Voip could bring it - as well as quick-and-easy video conferencing - to small business.

Some IP-telephony services are already available. Anyone with free instant-messaging software like Microsoft's MSN Messenger, for example, can use it to make free long-distance calls over the Internet. Among the downsides: both parties must have computers - and there's no guarantee it will always work.

Fee-based online services, such as Net2Phone, allow users to make calls to people who don't have computers. For Canadians who "talk to Europe, the Far East, India, the Caribbean, there are some savings to be had," Grant said. But Net2Phone is not targeting countries like Canada because its long-distance rates are already relatively low.

On the consumer side, cable-TV operators have the most to gain from Voip services because they could be used to take local-phone customers away from established players like Bell. Cable wants to match Bell's ability to bundle local-phone service with TV and Internet.

In the U.S., some cable companies already offer local-phone and long-distance services using the same network that provides TV and Internet. But in Canada, cable operators have balked at the required investments.

There's a simple reason for that, Louis Audet, chief executive of Cogeco Inc., said in an interview this week.
"The cost of a basic phone line in Canada is about $22 Canadian - in the U.S. it's about $40 U.S.," Audet said. So there's not as much money to be made in Canada -- and little incentive for consumers to leave Bell.

Audet said the Canadian cable industry will wait for the price of required technology to fall.

"That's not going to happen this year, it might not even happen next year," Audet said.

Today, IP telephony services are more reliable than cellular, but not quite as reliable as old-fashioned wireline service. And there can be a discernable difference - a faint echo, for example - on IP calls, Grant said.

But many corporate information-technology managers see the advantages, Grant said. They have experimented with IP telephony on small projects and are getting ready to buy equipment from companies like Cisco Systems, Nortel Networks, Avaya and Mitel Networks for large-scale installations, he added.

But the switch won't come overnight. Corporate telecom systems are "something you don't want to mess with. You want to make sure your corporate heartbeat continues to beat and not be on life support somewhere."

It will take time to convince companies the new technology can replace the old, Grant added, "but it is clear that it is definitely ready for prime time."

Gearing Up
There has been a flurry of announcements regarding Internet-based telephony services from Bell Canada and TELUS Corp., including:

On Monday, Bell said it plans to allow subscribers to access and manage all communication needs, including voice mail, e-mail, faxes, text messages and voice-controlled Web-browsing, using a telephone, wireless device or personal computer.

Bell said last month it will spend $200 million gearing up to offer IP telephony services to big customers next year.

TELUS, which has invested heavily in the area and now has a handful of corporate customers onboard, said last month it plans to showcase the technology in demonstrations in Montreal in November.

This story also appeared in:
  •, 10/22/03

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