Race for Internet telephony begins in earnest

Voyager and Telecom New Zealand are poised to deliver breakthrough Internet telephony products that are seen as having the potential to undermine current charging regimes for standard telephone services. The new services function from phone to phone, over the Internet, but without need of a computer.

Voyager and Telecom New Zealand are poised to deliver breakthrough Internet telephony products that are seen as having the potential to undermine current charging regimes for standard telephone services.

The new services function from phone to phone, over the Internet, but without need of a computer.

Voyager's product, to be called Voyager Phone in this country, has been developed by Voyager's 80% parent OzEmail, in conjunction with two St Kilda-based electronics companies, and is starting its roll-out to customers this month.

Telecom, meanwhile, is carrying out a 400-customer trial of its competing technology.

OzEmail has begun setting up points of presence in locations in Australia, New Zealand, the US and UK. As was the case with the Global Fax Router launched by Voyager late last year, distance charges will be set at half Telecom's standard rate - with the clear implication that they could go lower.

Telecom is still working out its own pricing, but the service could start considerably below Voyager's charges - at 25% of standard prices, according to one researcher.

Telecom services manager Chris Tyler acknowledges that the new services target Telecom's existing customer base. The company, like other telcos around the world, faces a classic "if you can't beat them, join them" situation. Tyler describes Internet telephony as a replacement technology.

"Quite simply, if we do not take this opportunity someone else will. We believe it will have a positive impact on telecommunications overall, because of the added value capabilities the Internet offers in voice and video. It's also going to give people more reasons to use the Internet, and it will become an increasingly important part of Telecom's core business."

"Obviously it's a cheaper, less expensive service than Telecom's current long distance offering," says Tyler. "But it's also a sacrifice in quality and convenience. To gain usage we're going to have to set prices relative to factors such as convenience and quality. So it will be discounted, but we think it will be good value."

The cost of getting a call from point A to point B - be it over the Internet or over POTS (plain old telephone service) - is only a small part of the overall burden. One researcher has put the figure as low as 25%, with the remainder of the necessary outlay going into marketing, support and sales.

Tyler believes 25% is too law, "but it's within the ballpark. And I think that a lot of Internet telephony providers don't address a lot of those additional cost issues. That's where we'll be very competitive."

The length of Telecom's trial is as yet undetermined but, says Tyler, the company hopes to be able to launch the service nationally around the middle of the year.

"We want this to be a ubiquitous, universal service," he says. "It will be available to the consumer market, to business and to the government sector. The target market is basically the phone user."

OzEmail is undertaking to provide a shrinkwrap business solution in exchange for a percentage of affiliate revenue. The package will include hardware, customer service documentation, training, node hosting and management, plus a settlement exchange service for costs incurred in terminating other affiliates' calls.

On registration with the Voyager phone service, each customer is issued with a PIN. To make a call the customer dials into a local Voice Interface Node (VIN) access device via the public switched telephone network. The call is received and transmitted across the Internet to another VIN, which hands it on to the telephone network in another city or country. Each VIN can handle upo to 20 simultaneous calls.

These processes are managed globally by the Control Node (CN), a managed facility on Sun Microsystem hardware in Palo Alto, California. It is the CN which interprets the destination phone number and tells the originating VIN which remote VIN to contact. It also maintains an audit trail of all calls in the system and checks billing. OzEmail claims it will have built full PABX functionality into the network by the end of the year.

Voyager will initially make the service available to its own Internet subscribers, but will open it up to all consumers later, as more resources are added.

Telecom's head of strategy for Internet services, Peter Hatterli, says one flow on-effect from the new technology will be ISPs working closer together.

"With telephony and other real time interactive services the amount of bandwidth available has to be guaranteed - it's far more important for service quality. I think that as service providers adopt this we'll see them engage in a lot more intimate relationship with the other ISPs, so they can maintain service quality."

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