Web Telephony Spurs Telephone Revolution

LOS ANGELES -- The city of Silute, Lithuania, with a population of 22,000 and a location three hours from the national capital, is an unlikely place from which to foment a revolution.

That's particularly true of the one Stepas Kairys carries on simply by staying on the telephone for hours.

For the equivalent of $10 a month, Kairys, a 49-year-old basketball coach, gets to make unlimited calls to the United States. His calls to European countries often cost a tenth of standard rates.

The only sacrifice - a minor one, he says - is that he has to make his calls from a headphone-and-mike arrangement connected to his personal computer, which enables the calls to move not over conventional telephone lines, but the Internet.

Kairys is a pioneer, but the rest of the world is not far behind him. Telephone service is moving off the traditional telephone system, on which voice communications dominate, and onto the Internet, which it will share with web pages, video and music transmissions, and a near-infinite variety of other data.

Many international calls already travel, at last partially, over the Internet, and dozens of small companies have sprung up to offer free or cut-rate dialing for long-distance customers by bypassing the conventional telephone system.

The big telephone companies whose franchise has depended on traditional telephone technology are taking notice. "This is coming at us whether we want it to or not,'' says Cathy-Ann Martine, president of the international carrier services unit of Concert, a joint venture of AT&T and British Telecommunications that will operate high-speed Internet telephone services in 60 countries, including China and Japan, by mid-2001. "It's a freight train.''

In simple terms, Internet telephones work by breaking up the sounds of callers' voices into a stream of digital "packets'' and piping them onto digital networks at high speed. Because they share these networks with packets carrying web-page data, music and video, they travel at much lower cost than a traditional voice call, which monopolizes a single circuit linking the callers.

Routing calls over the Internet will give service providers new opportunities to offer customers cheap conference calling, video calling and integrated voice and e-mail. Others see a day when anyone can be reached by the same telephone number no matter where he or she is in the world, just as one can read one's e-mail from almost any computer.

"There are probably more applications than anyone has even thought about,'' says Greg Braden, the head of telephony services at MediaOne, the large cable system operator that provides consumer telephone service over its network.

"Everything happening on the Web today will [soon] have voice attached,'' says David Greenblatt, chief operating officer of Net2Phone, which provides long-distance service at cut rates over its data network. "In e-commerce it's no secret that 70 percent of [shoppers] enter the site and leave [without buying anything]. What you have is a Nordstrom's without employees. But what if you had someone there telling you how something fit, or how it'll wash and wear? Every place is better with a human interface.''