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.
