Net voice calls a threat to telcos

By JUHA SAARINEN


For all the ballyhoo about fast internet access, bog-standard telephone calls are still the bread-and-butter business of Telecom and competing telcos.

However, internet voice calls are threatening this cosy revenue stream. Forget about call specials or buying phone cards - just install free software on your computer and natter over the internet, without time charges. That's all there is to it. No wonder Telecom chief Theresa Gattung has identified services such as Skype as a looming threat.

An old concept reborn


Placing calls over the internet is actually nothing new. Dredging through my archives, I found a review I wrote eight years ago of Quarterdeck Webtalk. With only a 28.8Kbps modem the voice quality was acceptable, but it was hard making calls as both parties had to be online at the same time. I had to call the other party to ask her to log on, which made the internet telephone idea seem silly.

Today we have faster internet connections that are always on, so IT editor Peter Griffin and I test drove a bunch of "net phones" to find out where the technology stands.

Talking SIP

First up, a few calls to a "SIP" phone in Canada using normal land lines, mobiles and the X-ten X-lite free software for PCs. Calling from normal phones was as easy as dialling a phone number but setting up the X-lite software was fairly complicated.

SIP stands for "Session Initiation Protocol" and refers to the way the calls are set up over the net; the technology is used by large Voice over IP (VoIP) vendors such as Cisco. The sound quality of the SIP phone calls was as good as normal phones, with no perceptible lag, echo or drops in audio even during lengthy conversations. Both parties could talk at the same time, which is more important than it seems - having to wait for someone else to finish before you can speak is highly unnatural.

We also received clear calls from a SIP-phone wielding contact in Minnesota, who makes free calls in the US and Canada and international calls for very cheap rates other the Vonage VoIP network.

Softphone freebies

Next up was Microsoft's Messenger simply because it is built into the Windows XP operating system. You can also use other instant messaging clients such as AIM and Yahoo IM, both of which let the user "do voice" like Messenger. All that's required is a $15 headset and microphone.

Calling with Messenger was as easy as clicking a button, with reasonably clear and lag-free sound, on par with standard telephone handsets. Messenger also lets you share a whiteboard and Windows applications, a handy feature for remote collaboration, and a webcam can be hooked up as well, for a true multimedia call.

Messenger doesn't allow conference calls, however, and requires you to register with Microsoft's Passport service. As with the SIP phone, Messenger does not encrypt calls going over the internet. This means anyone can listen in (and see) quite easily, a real concern on today's hostile net.

Finally, we tried out the much-hyped Skype. (It was designed by the people who developed the well-known KaZaA peer-to-peer application, and works in a similar fashion to it.

Skype runs on Windows PCs as well as personal digital assistants with the Pocket PC operating system, and is free to use. The PC version of Skype is a 7.6MB download, and it installs painlessly, without any firewall reconfiguration needed.

Unlike Messenger, Skype uses heavy-duty encryption for calls known as 256-bit Rijndael to ensure that no one can listen in on conversations. You can also hold five-party conference calls, and there's a searchable directory of users. Overall, the Skype interface is intuitive and manages the tricky balance of offering features whilst not overwhelming novices.

We were amazed at how good voice quality was with Skype. Neither party used high-end microphones or sound equipment but even so, Skype produced crystal-clear sound without the faintest hint of lag or echo. After trying out Skype, standard telephones sound muddled and distorted.

The system revolves around a global phone book of Skype users who call each other's computers with ringing bell sounds to boot. The more people in your phonebook the better.

We made calls to other Skype users in locations ranging from Napier to Denmark.

Skype also serves as a decent instant messaging client, but doesn't support video currently. Neither does it have an answering machine, but Skype does keep track of who called you.

The existing version cannot call landlines and mobiles, but Skype says it will launch SkypeOut this northern summer, which the company promises "will allow users to call any traditional telephone line". SkypeOut won't be a free service, however, as calls to traditional telco customers will have to be paid for.

If talking to your PC feels funny, Skype sells handsets that work with the program. They are quite pricey though, at US$60 ($96) including delivery.

Getting started

To make calls over the internet, you need a computer with sound capability. You'll get the best results using a headset with the microphone built in, but it's not necessary. Notebooks with built-in microphones work well too, as long as earphones are used to avoid feedback.

Windows 2000 and XP users have the easiest time finding free voice over internet software, but there are a few for Macintosh as well, such as MacInTouch.

Whatever software you decide to use, the Herald recommends some form of encryption to protect your privacy. The internet is a public network unlike the normal telephone one, and anyone can listen in on calls.

The local VoIP scene


Internet telephony could revolutionise the way we talk to each other, but for the time being, we need to be able to communicate with plain old telephones too. For that, providers that can serve as bridges between the two, but despite much interest, a commercial service is yet to be launched in New Zealand.

Callplus is launching SIP phone service in Australia, but spokeswoman Annette Presley says that "the environment and quality of [the] network in New Zealand" means that the quality level isn't acceptable yet.

Wired Country and internet provider partners such as ihug are also trialling voice over internet in conjunction with its wireless roll-out, but have yet to produce a commercial service. Until a cheap, reliable service gets off the ground Skype and Messenger are good options to test the water.