Long Distance Providers

Industry Changes      How Does It Work?     How Good Is It?      Traditional Companies     Service Providers

Changes in the Telephone Industry

            The telephone industry has been undergoing rapid changes that have greatly affected long distance rates and service. Recently, price wars among the strongest telephone companies have forced the industry to introduce fixed-rate long distance packages and reduce long distance charges for the majority of their customers. Some experts believe that the days of paying for long distance phone calls are rapidly coming to an end, thanks to Internet technology.

            The Internet is very capable of relaying telephone messages at a very low cost, and is increasingly doing so for free. A new telephone service industry has been created called Voice Over Internet Providers (VOIP). Using VOIP, any user can make a phone call from their personal computer, provided it has a modem, sound card, and microphone. The calls are transmitted over the Internet to phone switches that automatically relay calls to their final destination, which could be another computer, landline phone, or a fax machine.

How Does Internet Long Distance Work (top of page)

            There are basically four different ways to make calls using the Internet. The first Internet phone connection available was computer to computer. You and the person you wish to call must both be registered users of an Internet telephony program, such as Microsoft Netmeeting (http://www.microsoft.com/windows/netmeeting/). To make the call, you and the person you are calling must be online at the same time and connect using your Internet Protocol addresses. A second way to make a call is using the computer to phone method. When you place a call from a personal computer to a landline telephone, the call travels through an Internet gateway to the telephone system of the person you are calling. The person making the call must be connected to an online telephony program, such as Dialpad.com, while the person receiving the call does not need any special equipment or Internet service. The third way to make a call is by using the phone-to-phone via the Internet method. To make a call, you dial an 800-number using a personal identification number, and the call is routed over an Internet gateway to another telephone. One of the companies offering phone-to-phone Internet calling is Broadpoint.com. Finally, you can place phone-to-phone calls using an Internet telephone appliance. Using this device, which plugs into your phone and wall jack, you can place calls over the Internet to anyone else that also has the Internet telephone appliance. The device, which costs around $199, is available from Aplio/Phone (http://www.aplio.com/).

            Users can subscribe to an Internet long distance service online or by calling a listed 800 number. They complete a questionnaire detailing their demographics, areas of interest, and shopping habits. Some providers require specific software to be downloaded while others connect through 800 telephone numbers using a personal identification number. Internet phone services make their money from advertising. The sites that provide service through a dial-up Internet connection will bombard you with banner advertising while you talk. Others require you to listen to recorded commercials on the phone to earn your free minutes. Not all Internet telephone service providers are free. Many offer flat discounted rates.

How Good Is the Free Service? (top of page)

            With each service provider, reliability and consistency vary. The majority of calls come close to traditional long distance quality and is at least as clear as a good wireless phone connection. On rare occasions, calls can deteriorate to the point that the call has to be terminated and redialed. A number of factors will affect how good your Internet calling experience will be. You can improve the clarity and voice delay by using the right equipment. Most computers running Windows 95 or greater will have all the equipment required for a decent connection. A fast PC processor, a good quality duplex sound card, and a microphone headset will increase your chances for a good quality connection. Other factors, such as the degree of congestion on the Internet when you call, are out of your control. Having a good Internet Service Provider with ample bandwidth helps ease congestion problems.

Free Internet Service Puts Pressure on Traditional Phone Companies (top of page)

            So, how can long distance providers afford to offer long distance phone service for free? The long distance for free business model assumes that there will be continued reductions in local exchange carrier access charges to the point that the cost per minute of long distance service will approach the Internet transport rate of 2 cents per minute. As communication companies diverse in to offering many types of communication services, such as long distance, Internet, cellular, cable, etc., most providers will begin to bundle their services and offer discounts and convenience billing for users who are willing to sign up for more than one service with the same company. When long distance service becomes bundled with rates for other services, a different dynamic comes in to play. Companies can now offer free long distance to customers who sign up for a bundled package. However, the cost of the long distance service is covered by the higher costs of the other bundled services. The idea of “free” is attractive to most consumers and they will be more likely to purchase the other services from the same company, believing they are getting a better or more convenient deal.

Free Long Distance Providers (top of page)

            Several companies offer free long distance service or reduced calling prices. Here is a brief description of just a few of the more popular services available. This is by no means a complete list and is not ranked in any particular order.

Dialpad.com http://www.dialpad.com/

Provides:  (No longer free) Two calling plans: dialpadUSA--$9.99 per month with 400 anytime minutes to and within the United States, dialpadWorld—prepaid plans in $10, $25, or $50 amounts with great low rates to over 200 countries.

Go-2-Call.com http://www.go2call.com/

Provides: PC-to-phone (U.S. rates as low as 3.5Ë per minute) and International PC-to-phone calling plans with low rates to over 200 countries around the world.

PhoneFree.com http://www.phonefree.com/

Provides: Free PC-to-PC calls worldwide; PC-to-phone calls no longer available; offers voice mail, video calling, video mail, teleconferencing, picture and file transfer, bubble chat, and instant messaging.

Iconnecthere.com http://www.deltathree.com/

Provides: PC-to-phone (U.S. rates as low as 1.9Ë per minute) and International PC-to-phone calling plans with low rates to countries around the world. Millennium Calling Plan is a flat-rate plan offering 1000 anytime minutes to the US and Canada for $9.95. Additional minutes cost 3.9Ë per minute. The North American Calling Plan is another flat-rate plan offering 400 anytime minutes to the US and Canada for $1.99 per month. Additional minutes cost 3.9Ë per minute.

Net2Phone http://www.net2phone.com/