Right Now, Internet Telephony’s Big Application Is in Business

The latest wrinkle in the Internet-is-everything movement is phone service.

More and more companies have sprung up offering customers the chance to send their calls over Internet-like connections rather than over networks belonging to the traditional telephone oligopoly of local and long-distance carriers.

Qwest recently made news with a limited phone-to-phone service routing calls over the Internet for 7.5 cents a minute. Last week, IDT followed suit, touting an Internet telephony service charging 5 cents per minute for calls within the United States and 9 cents a minute on calls to London.

Although there’s little doubt Internet-based phone calls will ultimately be big business, few think it will become widespread among home users soon. That’s because sending voice calls via the Internet is just not yet as good as plain old telephone service.

The sound quality is passable, but the process still suffers from transmission delays--caused mainly by heavy traffic--that can leave users talking over one another.

For that reason, the really hot news in the emerging Internet telephony industry--also called “voice-over IP” (for Internet protocol)--is what the technology can do for businesses.

“This is a way for businesses to get control of their networks,” said Patrick J. Fetterman, an IP telephony manager at Natural MicroSystems in Massachusetts. “They are so dependent on the [phone] carriers today.”

Big companies are showing plenty of interest. Forrester Research estimates that by 2004, more than 4% of this country’s telephone traffic--or $3 billion worth--will have moved off the phone system to IP computer networks.

The business focus was evident at last week’s Computer Telephony 1998 Conference and Exposition held at the Los Angeles Convention Center.

Many of the 28,000 trade show attendees were eyeing new products for the more traditional computer-telephony applications, like automated phone routing (“press 1 for billing, press 2 for customer service . . . “) used by call centers.

But the real buzz was about services such as phone calls over data lines or unified messaging (combining voicemail, e-mail and faxes into one desktop mailbox).

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These technologies do not actually mean shunting phone calls over the Internet. Instead, they are for firms that already have their own data networks. With some new equipment, they could make conversations flow smoothly throughout their internal systems without the reliability glitches and traffic hang-ups that can hit the Net.

Big businesses with multiple locations can shift telephone traffic--as well as fax transmissions--to their data lines, saving big money in long-distance calls between offices.

For example, a company running an 800-number calling center might learn that 90% of its customer calls come from three cities. By establishing data lines to those cities, the company could route those calls through local numbers and over data lines, eliminating 800-number charges.

Combining the phone and data networks would also eliminate the need for separate information pipelines and separate staffs to manage and maintain them.

“The key thing for me is that since pipes between locations are expensive, I don’t want one pipe for voice half-filled and the pipe for data filled two-thirds,” said trade show attendee Walt Weber, an information technology manager at a major stereo equipment company. “I’d rather have one pipe.”

Weber will soon start tests on a new system he says could save him $7,000 a month in long-distance charges.

Harry Newton, founder of the Computer Telephony Expo, predicts the technology will replace the current phone system within 10 years. “This is a revolution that’s much more important than the computer revolution, because everybody’s got a phone,” he said.

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Times staff writer Elizabeth Douglass covers aerospace and telecommunications.