Phone Calls Over the Internet Ready for Mainstream

By Mike Langberg, San Jose Mercury News, Calif.

May 22–All telephone calls, everywhere in the world, are about to become local.

Long-distance charges will vanish as calls move increasingly to the Internet, where conversations are just packets of data — packets that are as cheap to move across the globe as they are to move down the street.

Free computer-to-computer voice calls are already widely available, and a string of announcements in the past two months show how fast the transformation is moving beyond computers to regular telephones.

Before I get to the details, a personal perspective:

I just returned from a three-week vacation in France, mostly in small Languedoc and Provence villages surrounded by miles and miles of grapevines.

Of course, I took my laptop. Both of the rustic houses where my family stayed, as well as a hotel in Paris where we stopped for two nights, had wireless Internet connections.

Before leaving, I bought a block of PC-to-phone minutes from Skype, the Internet phone service owned by San Jose-based eBay. From France, I could now call friends and family back in the United States for a scant 2 cents a minute after plugging a headset into the laptop.

Between the usual tourist excursions and gourmet meals, I made 2 hours and 15 minutes of calls. Total cost: slightly less than $4.

I’m telling this story for two reasons.

First, my behavior changed in a big way. On previous trips to Europe, I didn’t call the United States; it was too expensive. This time, I talked whenever I wanted — including one marathon 43-minute conversation with my in-laws in Florida.

Second, the French telecommunications network didn’t get a centime from me. Skype pays a small fee to transfer calls from the Internet to phone networks near their destination, the United States in this case. But the once-lucrative business of selling overpriced international phone calls is evaporating.

My experience is one small example of a seismic shift in telecommunications.

Most phone calls today move through the Public Switched Telephone Network, or PSTN, the copper phone lines and relay centers maintained by big companies such as AT&T and Verizon.

Within a few years, most phone calls will instead become Voice over Internet Protocol, or VoIP, a form of digital data used for Internet calls. Even mobile phone calls will go to VoIP.

Once the transition is complete, there won’t be any need for regular phone lines. We’ll have broadband Internet access in our homes and offices, offering a range of services that happen to include voice and video calls.

You’ll still pay a monthly fee for Internet access, but you probably won’t pay much, if anything more, to talk through the Internet — regardless of how far your call is going.

This isn’t science fiction, as you can see from recent headlines:

— May 16: America Online unveils AIM Phoneline, an inexpensive service for making and receiving regular phone calls through its AOL Instant Messenger.

— May 15: Skype says its SkypeOut service, which I used in France, will be free for the rest of this year for calls anywhere within the United States and Canada.

— May 3: Verizon cuts the monthly fee for VoiceWing, its Internet calling service that offers unlimited calling in the United States and Canada, to $24.95 a month — $5 to $10 below previous rates.

— May 2: Vonage, the largest independent Internet calling service, expands unlimited calling for its $24.99 monthly plan from the United States and Canada only to include five European countries: France, Ireland, Italy, Spain and the United Kingdom.

— April 28: Comcast begins offering Digital Voice, an Internet calling service at $39.95 a month, to its broadband subscribers in San Jose, Campbell, Cupertino, Los Altos, Mountain View and Santa Clara.

— March 28: Jajah, a start-up company in Menlo Park, launches a service allowing users to connect two regular phones via Internet calling simply by entering the phone numbers on a Web page. The service even works on some cell phones with built-in Web browsers.

— March 22: Yahoo launches Phone Out and Phone In, a low-cost Internet calling service for its Yahoo Messenger software.

Such a flood of competition is sure to keep rates heading down.

AT&T, Verizon and the other PSTN operators, meanwhile, are fully aware their core business is dying. They are working feverishly to build ultra-fast broadband networks for delivering television and other services, and are actively marketing their own Internet call offerings.

There are still rough edges in Internet calling. It’s difficult to use some services, and audio quality can be erratic — although my calls from France all sounded fine.

But Internet calling is now ready to move beyond early adopters into the mass market, and the phone business may never be the same.

Contact Mike Langberg at mike@langberg.com or (408) 920-5084. Past columns may be read at www.langberg.com.

—–

Copyright (c) 2006, San Jose Mercury News, Calif.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

Unknown:SKYPE, NASDAQ-NMS:EBAY, NYSE:T, NYSE:VZ, NYSE:TWX, NASDAQ-NMS:CMCSA, NASDAQ-NMS:YHOO,