Companies answer call for Net phones

Published 9:00 pm Thursday, December 11, 2003

NEW YORK — Cable and phone companies are hustling to offer new services that route calls over the Internet, a technology that eventually will make the 125-year-old telephone system seem about as advanced as sending smoke signals.

That day bounded closer this week as three major communications companies — Time Warner Inc.’s cable TV unit, Qwest Communications International Inc. and AT&T Corp. — announced plans to sell Internet phone services to consumers.

The plans promise to lower the cost of phone service and include new features such as the ability to check voice mail or program call-forwarding requests on the Web.

Internet phone technology has already made inroads in big companies and as a means of carrying international calls.

But while Internet phone services for consumers have been available for more than a year from some cable companies and start-ups such as Vonage Holdings Corp., it has remained a niche technology. Fewer than 200,000 Americans use Internet phone service as their primary line, according to TeleGeography Inc.

That figure could soar in 2004. Besides the announcements made this week, the nation’s biggest phone company, Verizon Communications Inc., which serves Snohomish County, plans to deliver a consumer Internet phone offering within six months.

"The giants getting into the business give Voice Over IP credibility," said Guzman &Co. analyst Pat Comack, referring to Voice Over Internet protocol. "People will give it a shot now. All of a sudden, this is not a toy anymore."

But while the Internet phone bandwagon swells, a full-fledged revolution seems several years away. For now, only about 20 percent of U.S. households that have broadband Internet access can use the technology.

Perhaps most importantly, special steps have to be taken to make the Internet phone systems connect to 911 dispatch centers or work in blackouts, like the old-fashioned phone network can.

"I’m not going to pretend that we’re ready to solve those problems," AT&T spokesman Gary Morgenstern said Thursday. "We’re working on that."

Other providers say they have addressed those issues. Internet phone pioneer Net2Phone Corp., which is focusing on helping cable companies deliver the service, boasts that it has overcome the technical hurdle of letting law enforcement officials set wiretaps, which phone companies are required to allow.

Traditional phone conversations are converted into electronic signals that follow an elaborate network of switches in a dedicated circuit. Long-distance calls cost more because regional carriers have to be paid for originating and terminating the calls.

The new technology’s premise is simpler.

When a call is made, the sounds are converted into packets of data that take diverging paths around the Internet or private networks, just like e-mails or Web pages. The packets are reassembled as sound at the other end of the call.

The sound quality sometimes strays from perfection, though it has come far in recent years and is expected to get better.

The process is cheaper because it cuts some or all long-distance access charges out of the equation — though that is a contentious issue under consideration by the Federal Communications Commission.

It also helps big businesses save money because they can use their expensive data networks to make phone calls instead of only shuttle files around.

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