Message understood - cut-price calls on the net

IT IS three years since the first suggestions emerged of cheap or even free long-distance and international telephone calls using the internet. Most businesses have still not reached that promised land, but it seems as if larger companies may not have to wait much longer before they can slash their 'phone bills.

Early internet 'phone connections were very basic. Using microphones attached to PCs, the quality of conversation was poor and there was a time delay in hearing the other person. Calls could only be made between PCs that were on-line simultaneously, and between callers with phone cards to plug into their PCs. But these calls cost only a fraction of BT's because they took advantage of local connections to internet service providers, which some cable firms provide free of charge.

Technology has moved on and it is now possible to have good quality conversations, with only a short delay, using calls connected via the internet. Part of the improvement has been achieved as several service providers have enabled callers and recipients to use handsets for conversations. Europe's first internet phone-to-phone service was launched in April by Delta Three, charging around half of BT's international call rates.

According to BT and other big telecoms companies, though, there remain quality problems when using the public internet connections for 'phone calls. One problem is that an internet service provider will usually use the cheapest connections to route traffic. Sending an e-mail from Hampshire to Birmingham via California may sound peculiar, but it should not harm the quality of the transmission. But routing a 'phone conversation around the world can lead to a break-up in the quality of the call.

One solution to this, being worked on by several technology companies, is for internet 'phone calls to be routed in a different way to electronic data traffic, only choosing connections that will provide good-quality voice transmission. A Dedicated Automatic Internet Telephone device should be available later this year from Supertron.

An alternative is not to bother with public internet connections, but to make greater use of companies' own intranets - internal communication networks that use internet protocols. Intranets often connect dispersed offices of big corporations, enabling them not only to send information securely between divisions but to cut the cost of calls. Similar networks are being developed by big telecoms providers between inter- national commercial centres. Telstra began a trial in June involving 250 customers based in Sydney who were able to make calls to London using internet protocols. These are phone-to-phone conversations, and Telstra and equipment supplier Siemens believe that quality problems have been overcome.

BT is involved in similar trials in Europe and the US. By using intranets, which are based on ISDN or better cabling, it is possible to guarantee the quality of transmission, claims BT.

Public internet connections will be increasingly used, says BT, for multimedia uses. Working with Digital, which is producing the hardware, and Microsoft, which provides the software, BT is to offer multimedia call centres to enable corporate buyers to view goods virtually before they buy them.

Cable & Wireless has also conducted internet telephony trials, though so far only internally. In the next year it will carry out a wider trial in conjunction with a big customer, again using internet protocol technology but only within a private intranet.

It may appear that using private protocol networks for selected phone traffic is not much of a step forward, especially if the big telecoms corporations continue to control most of the lines. But C&W says that this hides important technological developments. The internet protocols enable data, including voices, to be compressed, shuffled, transmitted and then reassembled much more efficiently, allowing more traffic to flow. The result will be big reductions in costs to the customer, says C&W.

The domination of the internet telephony market by the big telecoms corporations is not guaranteed. In Ireland a joint venture has been established between internet service provider Ireland On-Line and Networks Telephony of California. This venture is offering cheap international calls using private internet protocol networks. But it is a pre-paid service, requiring access via special handsets provided by the operator. Ireland On-Line says it expects its charges to be half that of other international telecoms providers.

q Contacts: Supertron, 0181 998 6372; Delta Three, www.delta three.com; Ireland On-Line, iol.ie