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On The
Line Online
The Spread Of Broadband Means That The Internet Is Poised To
Revolutionise The Telecommunications Market, Says Victor Keegan
March
26, 2004
By Victor Keegan
British Telecom's price-cutting skirmish
with Carphone Warehouse and other rivals is, in every sense, a phoney war.
It's not just that the cuts are not always what they seem (such as
trading possible lower call charges for a higher rental), but that they are also
obscuring some interesting things that are happening behind the smokescreens.
Not to beat about the bush telegraph, the telecoms industry is about to
be turned inside out by a new technology that has been around for years but has
suddenly reached take-off - voice over internet protocol (VOIP).
This is
a way of routing telephone calls over the internet (instead of over copper
cables or a cellphone) in which the extra transmission costs are next to
nothing.
Until recently, progress had been held back by the poor quality
of calls and the fact that those at either end of each call needed to be at a
computer, connected to the internet, to make it work.
All that is
changing very fast. The number of people switching to broadband (which
facilitates high-quality sound) has hugely increased the amount of potential
customers.
An emerging industry, including the likes of Microsoft and
Cisco, has agreed a common standard (akin to the mobile industry adopting GSM
years ago), although Skype, the London-based start-up that claims 8m downloads
of its free VOIP software, is on a different standard.
One of the
drawbacks of VOIP - including the Skype model - has been that it needs two
people to be sitting in front of their computers to function properly.
This makes it great for internal corporate communications, or for
late-night geeks, but not so good for ordinary punters who are either at the end
of the local loop from their telephone exchange or using a mobile phone.
All that is changing fast as operators, including BT, begin to offer
home phones that look like ordinary phones but are actually VOIP.
So if,
for example, you are ringing Australia, the call will be routed over the
internet for next to nothing until it gets to Australia, where its final lap
will be charged at the cost of a local call.
If you have a cellphone or
personal digital assistant (PDA) that can hook up to a local wi-fi (local
wireless network), you can go all the way on VOIP, squeezing your traditional
telephone company out of the picture almost completely.
Small wonder,
then, that telephone companies are trying to get in on the act as quickly as
they can, because some analysts think that the advent of VOIP could be the
biggest threat to BT's monopoly since privatisation.
This week, a House
of Commons select committee found that BT's 70% monopoly of domestic calls was
"unacceptable".
If this is true then, for once, MPs need do nothing about it
- except sit back and watch internet telephony do the job of cutting BT down to
size without governmental interference.
Internet phoning is already
happening in Japan, where usage has exploded from next to nothing to five
million people over the past year or so. The result has been claimed savings of
up to 80% on telephone bills.
It is also beginning to take off in a big
way in the US, where companies such as Vonage are offering low monthly
subscriptions and almost unlimited free calls.
A company in France is
reported to be offering multi-channel TV, 1MB of broadband and ten hours of free
VOIP calls for €30 per month.
A number of fledgling VOIP companies in
the UK - not including BT - recently joined together to form a trade
association, ITSPA (Internet Telephony Service Providers Association), to push
their cause, and several overseas companies, especially from the US, are
expected to begin a British invasion later this year.
In other words,
internet telephony could emerge as the unexpected "killer application" for
broadband - indeed, it could generate a virtuous spiral. If the cost of
telephone calls is kept low, that could provide a big incentive for poorer
people to think about getting broadband - thereby helping to bridge the
broadband digital divide.
And if internet telephoning sweeps
all before it, think of what we could do with all the redundant telephone
exchanges that will be lying around - like converting them into
dwellings.
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