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November 1, 1995

INTERNATIONAL DISCOUNT TELECOMMUNICATIONS USES INTERNET TO MAKE THE INTERNATIONAL ELEMENT OF CALLS FREE OF CHARGE

By CBR Staff Writer

Yet another telephony-over-the-Internet service has emerged, but one that has a potentially enormous advantage over its rivals. Rather than limiting callers to other people with an Internet account, users dial up over the Internet using their personal computer, but can connect to any phone user worldwide. The company behind the system is Hackensack, New Jersey-based International Discount Telecommunications Inc, which also pioneered the callback concept for taking advantage of low international phone rates from the US back in 1992. With that system, users dial into the company’s switch in the US, hang up before the call is answered, and are then called back with a US dial tone, paying the lower rate charged by the company for the international leg of the call. With the Internet product, subscribers use their personal computer and the Internet to log into one of the company’s switches (two are initially planned, one in the US and one in the UK), and that switch then transfers the call over the ordinary public switched telephone network to its destination. Since the international leg of the call is essentially free, the company is able to cut call charges drastically: calls to the US and the UK from around the world will cost from just 10 cents a minute, said the company, with calls to anywhere else in the world charged at a significantly reduced rate. Although the system – for which it has filed for a patent – gives it the potential to corner the market on voice-over-the-Internet, the company is taking a laid-back approach to its system: it will be offered only to its callback customers and its Internet access customers who are located in 44 US states, as well as France, Italy and South Korea, and it is planning to offer service in Turkey, Italy and Japan soon. Rollout of the voice over the Internet service will take place over the next three to six months, said the company. On the potential regulatory implications of its new service (CI No 2,761), it is taking an aggressive stance, as it did with its initial callback service, when it saw off a complaint to the Federal Communications Commission from AT&T Corp. Callback was proven as a valid and legal service and this is in the same vein. Let’s not be afraid of these monopolies, said the company. British Telecommunications Plc is said to be a mite uneasy about the implications of this one.

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