Internet telephony tipped for rapid growth

Despite its shortcomings, Internet telephony is slowly emerging as a way for business users to communicate with colleagues and customers.

Mark Winther, an analyst at New York consultancy IDC/Link, predicts the number of Internet telephone users will jump from 500,000 last year to 16 million by 1999. Those new users will be attracted by cost savings, especially on international calls. For example, with a $40-per-month Internet connection, users can enjoy unlimited conversations.

But to realise those savings over traditional long-distance lines, users will have to accept lower-quality voice, some difficulty in making connections and interruptions caused by crowded Internet circuits.

Several vendors have jumped into the Internet phone fray in recent weeks. Some of their applications require a souped-up, $5000 multimedia PC. Others require a more modest $400 investment in a sound card, an audio headset and an Internet connection.

So far, user interest hasn't translated into sales. "Right now, none of these Internet phone companies is showing a profit, and sales are meagre because no one has been able to sign the big corporate accounts," says Jeff Pulver, chairman of the Voice on the Net Coalition in Great Neck, New York.

Still, the products keep rolling out. IDT a New Jersey company, has launched Net2Phone for making phone calls over the Internet from a PC to any regular telephone.

Douglas Lang, president of Washington-based High Technology Store, a marketer that sells over the World Wide Web, calls Net2Phone "revolutionary".

VocalTec's Internet Phone Telephony Gateway Server connects two locations through a company's private branch exchange. That gateway could allow companies with spare bandwidth on an intranet to set up internal phone-to-phone communications between branches, Pulver says.

"This is much more plausible than a lot of other over-hyped gateway products and it would give companies control over quality and delivery," he says.

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