Telecom Eireann is facing down the competition from companies offering cheaper calls over the Internet by entering the Internet telephony market itself, Eoin Licken reports.
Telecom's Internet and multimedia research manager, John O'Sullivan, said it "will embrace Internet telephony", since "if someone's going to eat your cake you might as well eat it yourself".
Although he said it was too early to specify a definite product, two possibilities are planned. The first involves linking private exchanges (PABXs) of corporate customers over the Internet, offering cheaper communications between separate branches of large companies. The second involves using the Internet to provide bypass services for long distance telephone calls. The new services would be introduced "sooner, rather than later".
O'Sullivan predicted that while the cost of traditional telephony would decrease over the coming years - with "quite substantial" reductions in long-distance rates due to deregulation and increased competition - the cost of Internet telephony would increase. In order to provide an adequate quality of service the Internet telephony service providers (ITSPs) will have to invest in faster Internet links, increasing the cost of Internet telephone calls. Despite pressure from small and medium-sized telephone companies, the US has resisted calls to regulate the new industry, which many research companies are predicting will be worth several billion dollars within five years. The Clinton administration favours letting "new telecom and information technologies blossom and grow", according to Larry Irving, head of the US telecommunications and information administration. The Federal Communications Commission (FCC) has also come out in support.
The European Commission has decided for the moment that Internet telephony isn't, strictly speaking, real-time voice telephony. In its draft position document published last May (http://europa.eu.int/en/comm/dg04/lawliber/en/97c140.htm) it said: "Voice on the Internet cannot be considered as `voice telephony' in the sense of this Directive [90/338/EEC] and therefore falls within the liberalised area." But it hinted that regulation may yet be introduced, depending on how the industry takes off.
Telephone companies around Europe differ in their views. At one extreme, Deutsche Telekom, Europe's largest telco and the third largest carrier in the world, purchased around £20 million of Internet telephony firm VocalTec's products in August. France and Finland are also said to be in favour. But BT and Spain's Telefonica have responded cautiously to the Commission's position, saying increased demand could require increased regulation.