2005-09-29

Leaving Land Lines

Twenty years ago telecommunications in Britain were governed by a state-owned monopoly and the main choice for homeowners was whether to have the standard-issue phones in red, blue or beige. Line charges were 'take it or leave it' and long-distance calls to relatives abroad were a once-a-month luxury. Now, though, the home phone bill faces extinction, as Internet technology sends the cost of calls plummeting... Devices which convert phone conversations into packets of data and transmit them over the Internet mean traditional bills -- which charge according to distance, length of call and location -- are completely irrelevant. Over the Internet, the cost of transmitting and receiving data is the same whether the customer is in Hamilton, Lanarkshire or Hamilton, New Zealand. So far, Voice over Internet Protocol ('VoIP') has been limited to technology whizzkids because it requires a computer, a broadband connection, headphones and a microphone to work. Now it has made the leap towards becoming an essential household device, possibly leading to the abandonment of domestic landlines altogether. High-street giant 'Dixons' is now selling an adaptor that, unlike 'VoIP' services offered by 'Google' or 'Skype', allows you to make phone calls through a broadband connection using a normal handset without having to switch on a computer. Buying the 80_GBP adaptor, customers get unlimited free calls to all UK landlines for a year. After this, the same service will cost 7_GBP/month. Users get a new phone number -- in an area code of their choice. The adaptor is aligned to that number even if it is plugged in at another property -- in the UK or abroad. This means users can take their home phone number with them without incurring a roaming charge. But the bright new dawn isn't yet dazzling traditional consumers. Anyone wishing to use 'Dixons's' service must have a computer to set up the facility and receive and pay bills -- and for a new generation of young professionals who use their mobile phone for virtually all communications, the savings over the basic cost of landline rental are negligible. A growing number of young homeowners don't even have a landline. It will be at least three years before 'VoIP' is likely to be the most common form of call. But, as with the growth of modems and mobile phones in the 1990s, the change-over means big bucks for some companies. 'Evalueserve', a business and technology consultancy, believes half of all broadband users in Europe will have given up their ordinary landline by 2008, while revenue from long-distance calls by traditional phone companies will have plunged by 40 per cent over the next three years. Big players are already getting in on the act. On-line auction site 'eBay' has agreed to buy 'VoIP' pioneer 'Skype' in a 1_400_million_GBP deal to create 'an unparalleled e-commerce and communications engine'. 'Skype' already boats 54 million users worldwide. 'Communications is at the heart of e-commerce and community,' says 'eBay' Chief Executive Ms.Meg Whitman. 'Skype's' software lets PC users talk to each other for free and make cut-price calls to mobiles and landlines. Other big players in the 'VoIP' market include 'Vonage' and computer giants such as 'Google' (which recently launched its 'Talk' service), 'Microsoft' (which bought leading player 'Teleo' for an undisclosed sum), 'Yahoo!' and 'AOL'. 'Google' has moved to take advantage of the move towards one-stop domestic communications by pledging to broadcast TV programmes over the Internet. The company has already signed up an American channel to provide programmes for 'Google TV' and is in talks with 'The BBC' to broadcast its shows as well. It hopes to build a massive on-line database of programmes that can be searched and watched from any computer, with users able to search for episodes of any show from broadcasters who sign up to the service. It will also let British viewers legally watch hit television shows from America months before they are broadcast in this country. 'Dixons's' parent firm, 'DSG International', which also owns 'Currys', 'The Link' and 'PC World', claims the new adaptor marks the beginning of the end for traditional landline phones. Mr.Simon Turner, divisional managing director of DSG International, thinks it is a 'wake-up call' for traditional phone companies.
'This is the most significant development in the telephone market since the launch of the mobile phone and will transform the way we use phones. 'The days of old-style fixed-line phone calls are numbered,' he says.
'BT' has responded to the threat from these new firms by slashing costs of calls using its Internet service. It claims to see 'VoIP' as an opportunity rather than a threat, and is investing 10_000_million_GBP building new networks. Mr.Gavin Patterson, 'BT' group managing director, says:
'We were the first telecoms company to offer voice over Internet two years ago and we intend to keep ahead of the game. 'There's been a lot of hype about "Skype", but these international calls are half their price.'
The biggest challenge is likely to be felt by mobile phone firms such as 'Vodafone'. Voice calls account for the bulk of their business, whereas the new hybrid of domestic computer and telephone technology allows the likes of 'Google' to offer massive discounts on call costs while making a profit by selling the new premium services such as Internet television. Voice calls will become increasingly cheap -- eventually free -- as firms use free 'VoIP' to keep them loyal while charging for extra elements such as downloadable films or on-line games. 'Vodafone' says it is moving towards Internet-based networks in order to reduce costs for its customers. It will have to act fast. After a slow start, broadband is now available in most parts of Scotland. In 2003, only 57 per cent of people had access to the service, far behind England. 'The Scottish Executive' and 'Scottish Enterprise' set up a campaign -- 'Broadband for Scotland' -- to ensure Scotland wasn't left behind in the tech race. 'BT' says broadband is now available to almost 99 per cent of Scotland, while 'The Scottish Executive' says broadband take-up in Scotland now stands at 48 per cent of businesses and 25 per cent of households. A 'Scottish Executive' spokesman said:
'"The Executive" is committed to providing every community access to affordable broadband services by the end of 2005. 'Broadband is one of the most important technological developments of our time. 'While 95 per cent of households and businesses already have access to it, we need to ensure that homes and businesses in rural areas benefit as well.'
Internet calling costs Consumers who want to take advantage of cheaper phone calls over the Internet must already have a broadband-enabled landline. Here is a sample from consumer website www.uswitch.com of some of the main deals offered by telecom firms giving the sign-up cost, the monthly cost and the typical cost per minute of a peak-time call. • 'BT Communicator', 5_GBP, free, 3p • 'Freetalk', 80_GBP, 7_GBP after first year, free • 'Skype', free, free, 1.2p • 'GossipTel', free, free, 2.5p • 'Vonage', 10_GBP, £16.99, free • 'Wazatel', free, free, 2.2p • 'The Internet Phone Company', 6, free, 1.69p • 'Telappliant', 3_GBP, free, 1p How to make Internet calls Broadband users can make an Internet phone call by downloading the relevant software from 'Google', 'BT' or 'Skype', plugging a headset into the computer and clicking on the name of a contact who has similar software. The calls are made as normal, but they are routed more efficiently to save money. The technology routes the calls over the Internet, instead of using the traditional public telephone network. Calls can be made anywhere in the world and for any length of time for free. 'The Freetalk' 'VoIP' phone service offered by 'Dixons' takes a stage further by allowing phone users to make unlimited calls to anyone, regardless of whether they have the software. The adaptor converts voice calls into the same 'VoIP' data system. Incoming calls ring as normal, and users hear a dial tone and dial as normal. But 'VoIP' technology is still in its infancy, and not all consumers will find their phone bills lowered. In particular, it still requires users to have a fixed broadband landline -- which means homeowners who don't have phone services through a cable provider such as 'Telewest' will still have to pay the likes of 'BT' more than 100_GBP/ year plus broadband fees of up to 20_GBP/month for the privilege of being able to even consider 'VoIP'.
'Until recently only computer nerds have used it because it has only been possible to use it while the computer is switched on,' said Mr.Jon Miller at uswitch.com . 'That's changing, although even with the new adaptor from "Dixons" the system is still quite cumbersome and many consumers might be better to wait until the hardware becomes simpler and more reliable.'
The 'Dixons' 'Freetalk' starter pack is priced at 80_GBP and gives users a new home phone number. The adaptor is plugged into the existing landline socket and connected to the existing phone handset. The adaptor can be taken anywhere in the world and the calls remain free for a year, regardless of duration and distance. 'Could this signal the end of telephone bills?', Alastair Jamieson, The Scotsman, 2005-09-29, Th

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