Internet Call-Waiting - Part 1

Want some of the revenue associated with the promise of IP telephony without the headaches and uncertainty? Here's a promising line of business.

by Gerry Blackwell
[December 15, 1999]

Transforming yourself into a phone company or a hybrid Internet telephony service provider (ITSP) isn't the only way for an ISP to exploit the potential of voice over IP technology. And it's a long way from being the most painless.

If all you really want is to generate additional revenue and create, as the vendors like to say, "stickiness"—reasons for customers to remain loyal—offering Internet Call Waiting (ICW) service is probably an easier way to do it.

International Data Corp. predicts there will be 21.6 million households subscribing to Internet call waiting services by 2003, generating $399 million. Please, sir, could I have some of that?

Dollars from dialup
Internet call waiting is primarily, though not exclusively, aimed at residential subscribers with one telephone line who want to know if someone is phoning them when they're online. Priced typically from $6 to $8 per month, ICW is a cheaper alternative to taking a second line.

When someone calls an ICW subscriber, the phone company forwards the call to a server at the ISP's POP and the ISP remotely activates an ICW program on the customer's PC. A window pops up on his screen showing the name and number of the calling party.

But this is more than just visual caller ID. The ICW program also presents the subscriber with a number of "disposition" options—disconnect from the Internet and answer the call, forward the call to voice mail, forward it to another phone line, present the caller with a prerecorded message saying you'll call them back. And so on.

Where does IP voice come into all this?
The range of disposition options varies from one ICW vendor to another. But a few, including Beaverton Ore.-based eFusion Inc., give subscribers the option to take the call as IP voice using the speakers and microphone on their PC.

The ICW server at the ISP's POP incorporates IP voice gateways that translate the analog signal from the PSTN to a stream of IP packets—and translates the IP packets from the software IP phone on the subscriber's PC to analog.

How about quality?
There is only one router hop from the local POP to the customer. So subscribers won't suffer the dire latency and packet loss that software IP phone users experience on the open Internet.

On the other hand, if they're in the middle of downloading a file when they request the call be put through as IP voice, the voice connection will suffer. There's only so much bandwidth there.

EFusion marketing VP Jeff Gaus characterizes the connection cautiously as "near cell phone quality." It's probably good enough for a quick conversations. "I'm just in the middle of downloading something, I'll call you right back." Or, "I'll meet you at the coffee shop in 30 minutes."

Will they buy it?
When U S WEST offered ICW—which it calls Online Call Alert—to 300,000 customers in Minneapolis Minn. and Omaha Neb., a surprising number signed up at $6.95 a month plus as much as $3 for call forwarding.

According to Lily Sun, group manager of IP telephony services at U S WEST Enterprise! Networking, 14 per cent of subscriber's to the phone company's U S WEST.net Internet access service took Online Call Alert.

Even more impressive, seven per cent of targeted customers who subscribed to other ISPs' services switched to U S WEST.net so they could get Online Call Alert.

Customer draw
In fact, 78 percent of Online Call Alert subscribers had either been customers of other ISPs or did not subscribe to any Internet access service.

"This definitely indicates it's a tool for encouraging customer's to switch," says Sun. "We always thought that it would be. This proves it."

U S WEST ran "one big marketing campaign" when it launched the service in April, involving direct mail and outbound telemarketing. It has no ongoing marketing, partly because it's still in trial mode.

The company won't roll the service out to other cities until it can migrate to the new AIN (advanced intelligent networking) telco switching environment. The next cities—Denver, Seattle, Portland—will start turning on in late first or early second quarter 2000.

—End Part 1

In Part 2: What about ICW and smaller ISPs?
And how much does it cost?
Coming next month. Stay tuned!