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May 9, 1997updated 05 Sep 2016 12:44pm

INTERNET TELEPHONY, NOT YET THREAT TO LONG DISTANCE CARRIERS

By CBR Staff Writer

The use of the Internet to make telephone calls, send faxes and messages anywhere in the world at the cost of a local phone call does not yet represent a threat to the international calling revenues of long-distance carriers like AT&T Corp as one might have expected. According to a study by Phillips Tarifica, a London telecommunications consulting group, the international calling revenues of AT&T could be eroded to the tune of $350m in 2001 (CI No 3,156). $350m is the realistic figure in the short term because the internet isn’t a big threat in the immediate future, Jahangir Raina, who produced the report, said. This is because the internet’s transmission and voice quality still leave a lot to be desired. At the same time, considering that AT&T’s international calling revenue stands at around $8bn per year, an erosion of $350m is not much of a calamity. However Mr Raina stressed that in five to ten years time things will change significantly as a migration will take place from traditional telephony to the Internet medium. This migration could occur more hastily in the US as subscribers already tend to spend more time on-line than their European counterparts. Traditional carriers could deal with this by offering a cheap international phone service on the Internet.

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