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TelephoneMy friend and colleague Joichi Ito and I had been chatting sporadically over a several week period via instant messaging. One day we decided we should talk via voice and I gave him a call that evening around 9 PM. The monthly invoice from SNET/SBC just arrived. The call to Joi was 27 minutes and the cost was $34.02. That computes to $1.26 per minute. I didn’t think to use Net2Phone. A few days later I called a colleague in Singapore, but this time I used my Net2Phone account. It was a short call but, even so, the cost was only fourteen cents This encouraged me to check on what the rates to Japan would be. Using Net2Phone to call Japan costs $.059 per minute if calling a land line or $.29 to call a cell phone. The SNET/SBC charge was 23 to 43 times higher. We are not talking about 23 to 43% higher, we are talking about 23 to 43 times higher. It costs no more to visit a web site in Japan than one in New York. Why should it cost 20+ times more to make a phone call to Japan than to New York? It shouldn’t — and that is why the telecommunications industry still has some challenging days ahead.
In the case of the web page we are talking about a request from the browser going to the server and the server sending a page back to the browser. Zeroes and ones in both directions. In the case of an Internet phone call (VoIP) such as with Net2Phone, a person’s voice is converted to zeroes and ones, sent over the Internet, and then converted to a voice. Zeroes and ones in both directions. It takes less than 10,000 bits per second to represent a voice in a way that is crystal clear. That means that VoIP requires less than 10% of the capacity of the average digital cable or DSL Internet service. Most of us would never notice. These basics are why companies such as Vonage are likely to do quite well.
For $39.99 per month, Vonage offers unlimited local and long distance calling within the US & Canada. As part of the package you also get…

  • Call Waiting
  • Voicemail
  • Call Forwarding
  • Repeat Dialing
  • Call Transfer
  • Caller ID
  • Caller ID Block
  • Virtual Phone Numbers
  • Area Code selection
  • Keep your current phone number
  • A whole bunch of other features
  • Money-Back guarantee

In a story this week in the Wall Street Journal titled, “AT&T Official Expects Rates For Bandwidth to Fall Further”, it was reported that an AT&T executive in Asia said that there was a huge capacity of fiber optic cable installed during the boom years and they were finding it attractive to lease whatever they needed to satisfy their customers. There is also plenty for use by competing long distance carriers. Even the five cents per minute or thirty-nine cents plus three cents per minute guys (five cents per minute is cheaper for any call less than 20 minutes) are priced well above Net2Phone. The bottom line is that there is plenty of bandwidth available in the backbone of the Internet in most parts of the world and the bits can be a voice as easily as they can be a web page or an email. The hand writing is on the wall.