Net phone service dials up big savings

Who says making phone calls over the Internet isn't viable? A company based in Cyprus does all its international phone calling over the Net, chopping 90% from its phone bill. Most called parties don't even realise their conversation is traversing the Internet.

Marwan Itayim runs a satellite network marketing operation from Cyprus and makes nearly all his international telephone calls over the Internet.

His savings: about 90% over conventional international rates.

Analysts say that is the kind of cost-cutting that should persuade network managers in large companies to at least test an Internet calling service. Savings could be just as good for companies that call internationally, although domestic rates are too low to make Internet calling cost-effective in the US, analysts say.

Instead of paying between US$1.50 and $2 per minute to his local telecommunications provider, Itayim pays only 10 to 15 cents per minute for calls to the US from Cyprus.

“It means I save tens of thousands of dollars on phone calls over a year,” Itayim says.

Itayim uses Net2Phone for his Internet calls, a service of IDT in Hackensack, New Jersey. As an independent distributor of Primestar satellite services for The People’s Network in Carrollton, Texas, he started using the IDT service nearly a year ago. He downloaded free software to his PC and prepays regularly for Internet telephone service by credit card.

The service lets him call any phone, including cellular phones, from his PC over a 28.8Kbit/s modem. Soon, he will upgrade to an integrated services digital network connection. He talks over a headset with earphones and a microphone connected to his PC. When connections get garbled or delayed, he can switch between two Cyprus-based Internet service providers to improve calling quality.

The Internet service costs him about a half-cent per minute per call on top of IDT’s rate.

“The quality is good the majority of the time,” Itayim says. “Most people don’t realise I’m using PC-to-phone, and when I do mention that, they are quite surprised.”

On a typical day of five hours of international calls over the Internet, he saysonly 5% to 10% of the calls have problems, including garbled words or delays when one speaker interrupts the other.

That reliability means “a large business wouldn’t want to cold call [for a sale] on the Internet, but it depends on what you’re selling,” says Hilary Mine, an analyst at Probe Research Inc. in Cedar Knolls, New Jersey.

Such quality concerns have kept large enterprises from buying Internet phone services on a large scale, analysts said. But dozens of companies provide either Internet phone services or hardware, including Internet gateway devices, and some of them have large customers with trials under way.

Lucent Technologies, in Basking Ridge, New Jersey, has had trials with business customers under way for a year but has had no large-scale takers.

IDT says that, after two years in the business, it has more than 100,000 customers — most of whom are residential users or small home-office users.

However, Rosemary Cochran, an analyst at Vertical Systems Group in Dedham, Massachusetts, says companies might choose a trial service for workers within a company to call one another abroad.

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