How about never? The technologists were technically right: voice over the Internet (VOIP, for Voice Over Internet Protocol) will end up being so small a part of the data stream that it alone will not be worth metering. But VOIP is probably, right now, just about as free as it’s ever going to get. If you already pay for Internet access, making telephone calls costs nothing, once you’ve invested in a bit of extra hardware–but with some big caveats.
The basic idea is simple: turn voice into a stream of bits, just like email, and send it on the Internet rather than the telephone company’s lines. The prime example right now is Skyper, the software company launched by the same two Scandinavian entrepreneurs who gave the world the file-sharing software KaZaA, which shook the music industry to its core. In a recent interview on the Red Herring site, the founders promise to do the same to the telephone industry: “The future of telephony,” says Janus Friis, “is free worldwide telephone calling.” And on the surface that would appear to be the case. Folks with Skype software on their computer, plus a headset, microphone and high-speed Internet connection, can dial one another anywhere in the world at no cost.
For the less technically inclined, a growing number of firms now sell Internet telephone handsets-devices that look like telephone handsets but plug into your broadband-connected computer and let you dial, for free, anyone else who owns a similar handset. Large corporations are already adopting these VOIP systems,and some consumers are as well. One early market in the United States, for example, is immigrant communities–with a small upfront investment on both ends, expats can now chat with their homelands as long as they want.
But there are some hitches in Internet telephony. The first, and least troublesome, is sound quality–in years past, Internet telephony was often pretty awful. But that’s already improving dramatically, and someday, with a few tweaks, Internet telephony could actually sound better than the best quality available on current analog telephones.
More troublesome is how you connect to people who don’t have your brand of VOIP software. The answer is, at present, you don’t. If you want to call someone’s regular telephone number, you’re going to have to use a for-pay Internet telephone service, like Net2Phone or Vonage. They’re cheaper than traditional telephone connections, but they’re never going to be free because they need to pay fees to the local phone companies in order to make the final connections.
Futurists sometimes see Internet telephony as the death knell for traditional phone companies. But that’s not going to happen: those companies also own the last few miles of the old-fashioned copper and switches that cause phones to ring in every home and business. They’re not going to give up this business without a fight, and that’s why Verizon, AT&T, Qwest and SBC have all announced that they will begin to sell Internet telephone services next year. You can expect these services to be priced below the phone companies’ regular packages, with slightly lower sound quality–something like an airline starting a low-cost carrier that doesn’t serve meals.
Adding VOIP to the already intense competition from wireless carriers could mean that 2004 will launch a brutal price war between telephony providers, with only the strongest surviving. For the most part, those survivors will be the companies that already own their own networks. The failure of the AOL-Time Warner merger offered a very instructive lesson, when it became clear early on that the Time Warner cable systems had no intention of sharing their Internet access business with their new kin at AOL. Even within the same company, the people who own the networks don’t need to play nice. And they don’t need to make telephone service free.
While free is not in our future, the way we’re billed for telephone calls will change dramatically in the next decade. For starters, we may well see portals like MSN, Yahoo and AOL offering telephone service as part of an integrated communications package that also includes voicemail, email, fax, instant messaging and video-conferencing. The network and cable system operators could do this themselves, of course–Time Warner is already experimenting with cable telephone service–but my guess is that in the long run they’ll partner with companies who are already good at building and running this kind of consumer software.
In that new world, clever Web interfaces will let you convert your voicemail messages to email, or your emails to voice; you’ll be able to call-forward in a myriad of ways, or switch to video or hi-fi voice if you want, or even agree to hear some number of commercials every day to lower your bill. In the end, the futurists will be right in one sense: you won’t be paying a measurable amount for the bits of voice you actually send. Instead, you’ll be paying a monthly fee for all the services wrapped around those bits. Your phone bill will morph into a connectivity bill–and that will be anything but free.
