Change Ahead For Net Calls

February 9, 2004

By Mark Ward

How a web-based service for making phone calls is changing the way we talk, work - and get billed.

Net chat could soon mean just that - talking instead of typing text into an e-mail or instant message.

This is because the net is rapidly replacing telephone networks as the preferred route for phone calls, thanks to a formidably-named technology known as voice-over IP - internet protocol - or Voip.

Voip converts phone conversations into packets of data to be transmitted down the same wires used to browse the net, send e-mails and swap music.

The system makes phone calls very cheap, as all you pay is the local charge to connect to your net service provider. Thus a call to a friend down the road costs the same as a chat with an aunt on the other side of the world.

Talk Is Cheap

Some may even be using the system without realising. Gamers who take on others players around with world thanks to the online services of Sony's Playstation and Microsoft's Xbox communicate via Voip.

Other services, such as start-up Skype, use it to create virtual offices that provide always-on communications. Thus if you say something, all your co-workers will hear it.
In Japan, Yahoo! has bundled Voip in with its broadband service and now has more than 3 million people phoning via the net. In the process, it's done serious damage to the profits of its rival, the phone giant NTT.

So many people have taken up the service that Japan has assigned Voip its own area code (050) and, initially, has assigned more than eight million numbers to it.

In the United States, a company called Vonage lets customers ditch their phone for a Voip alternative. It now has 40,000 subscribers.

But so far, says Mike Valliant, of the technology firm 3Com, businesses are the biggest users of the technology. Between 20 and 30% of all phones shipped in the business sector are IP telephones - and that figure is expected to hit 50% by 2006 at the latest.

Voip suits the needs of businesses as it allows them to connect all their locations using one infrastructure. The makers of exchanges used to link phones in a building to a national network are starting to put Voip interfaces on their hardware.

Features First

But, says Mr Valliant, even better than saving money with Voip is the added extras that come with a net-based system.
Voip means that phone numbers are no longer tied to an individual handset, ideal for workplaces where employees hot-desk. Each person can be assigned a phone number, which goes to the nearest phone whenever they log into the computer system.

This works on the net too. Area codes simply disappear, and instead numbers are findable anywhere. Many Voip phones use a basic protocol that lets the net know when it is connected, so anyone calling can be connected.

This flexibility is attractive to businesses proving phone services, such as BT.

"In the past we sold people connectivity," said Dr Sinclair Stockman, chief information officer of the BT Group. "The only way we could make money out of that was by charging by how long someone is connected."

Voip makes a nonsense of such old-style bills - the expectation is that customers will eventually pay a flat fee, with other services added on.

Already BT is thinking about services that unite all a customer's phones into one bill and uses a single infrastructure to get calls - and other types of messages - through.

Thus the days of having a different phone for home, office and on the move could be at an end. In the future different bills for different devices will no doubt be considered quaint, as soon all these will come down one pipe.

Certainly it looks as if a change is on the way. At present the phone network dominates the internet. But with the rise of Voip, telephony just becomes another part of the network.