Excite To Offer IDT’s Net Telephony Internationally

Net Telephony Heating Up The Competition

Excite To Offer IDT’s Net Telephony Internationally

The Net2Phone division of IDT [NASDAQ:IDTC] has struck a deal to have Excite, Inc. [NASDAQ:XCIT] offer its Internet telephony service to net users through localized versions of the Excite World Wide Web portal site in the United Kingdom, Germany, France, Australia, the Netherlands, Sweden, and Japan.

The deal, which is for two years, does not cover the United States, IDT spokeswoman Sarah Hofstetter said, since Excite already has an alliance with AT&T domestically. At any rate, she said, "the big market for Internet telephony is on the international front," so IDT considers this international deal better than one for the US market.

The Net2Phone icon will appear on the Excite site, integrated into many of its channels, so that customers can just click on the icon and download the necessary software to use the service.

The service will let callers place calls anywhere in the world using Internet Protocol (IP) telephony. The calls are carried over the Internet, but can be directed to ordinary telephones, so the recipient of a call need not be online. Rates for the calls do not depend on the distance covered, and costs are lower than for traditional telephone calls, IDT officials said.

In time, the companies said, Excite will integrate Net2Phone with its personalized directory, so that an Excite user can look up a number in his or her personal directory online and then call the person by clicking on the phone number.

Hofstetter said the service will operate in the local language in all the countries where Excite offers it.

IDT’s Net2Phone unit is at http://www.net2phone.com on the World Wide Web, while Excite is at http://www.excite.com.

(Contact: Sarah Hofstetter, IDT, 201-928-2882)

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US ISP Announces Flat Fee Voice Telephony Network Plans

The worst nightmare of the telecommunications industry just happened. No, a major network didn’t collapse, but a West Coast company has announced plans to build a national US Internet telephony network with a flat rate access fee.

That’s right — "all you can talk" for a flat rate a month. Coupled with the free local calls available in many areas, the end is now nigh for variable voice communications bills. Well, for some users anyway.

According to USA Talks.com Inc., the PhoneClub network will be the first to use the Internet to carry voice calls to normal phone lines at the other end, with unlimited service at a flat rate per month.

Allen Portnoy, the firm’s CEO, said that the Internet service provider (ISP) is on schedule to offer its long distance phone service throughout the state of California by the end of next month.

"We expect to proceed across the country and `light up’ at least 34 major metropolitan areas, including approximately 60 area codes by the end of October 1998, giving us access to 75 percent of the US population," he stated.

According to Portnoy, the firm is able to offer long distance service by installing POPs (points of presence) across the US. "After the entire nation is covered, we will then move to international markets in 1999," he said.

To use the service, callers will not need a PC. Instead, users will simply dial a local number and vocally state the number they wish to call. USA Talks.com’s voice dialer technology will then identify the phone number and ID of the caller, and route the call to its destination across the Internet.

The use of voice recognition prevents several users making use of the same account. The firm says that high ratio speech compression will be used to assure the quality of the call.

The big question facing the telecommunications industry and, indeed, the existing Net telephony firms such as RSL Com’s Delta Three service (http://www.deltathree.com) is how they can adapt to meet the massive threat that PhoneClub poses to them.

For the telecommunications carriers, in the longer term, the solution seems to lie in concentrating on local loop calls, leaving long distance and even international traffic to the Internet and fax store-and-forward firms. In the medium term, however, competition will almost certainly come in the firm of value-added services which the carriers will charge for on a timed basis.

For companies such as Delta Three, however, which charges by the minute to many international destinations, a flat rate international PhoneClub service would blow them out of the water, except for smaller users. Research to date suggests that low usage subscribers on Net telephony services do not make much profit for the Internet telephony firms.

Telecommunications carrier statistics have shown that the typical domestic phone line is in use for around 10 percent of the time in the US, with that figure doubling for business users. Given that in a sizeable portion of time people are asleep or not prepared to talk on the phone, anaylsts estimate that — in theory at least — a service like PhoneClub could triple or even quadruple the volume of calls handled by the local loop, posing a very severe capacity problem for the local loop providers.

Such is the potential scale of the problem that the Federal Communications Commission (FCC) would be almost certain to step in to regulate the market if a significant number of phone users started using flat rate phone services like PhoneClub.

USA Talks.Com’s Web site is at http://www.usatalks.com.

(Contact: Lesley R. Wilber, USA Talks.Com 619-546-0550)

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