Boston firm's Zooming in on Net calls
My new phone looks a lot like the old one, a six-year-old cordless job from Radio Shack. As a matter of fact, it is the same old phone. Instead of being plugged into a wall jack, it runs into a little black box that also connects my computers to the Internet at megabit speed.
The phone's linked to the Internet, too. It still makes calls over the traditional Verizon network, but hit the pound key before dialing, and it becomes an Internet phone, capable of calling other Internet phones around the world -- for the unbeatable price of zero. Granted, most people don't have phones that use this voice-over-Internet protocol or VoIP system, but the little black box will also relay calls to standard phones for a very low price. Say, 2.9 cents per minute to any phone in the United States, Britain, Spain, or France.
Americans are just starting to get comfortable with the idea of Internet-based telephones. Lots of the credit must go to Vonage Holdings Corp., the New Jersey outfit with a lavish advertising budget and 400,000 voice-over-IP subscribers. Now, lots of other companies want in on the action, including Boston's own Zoom Technologies Inc.
Boston is hardly a haven for consumer electronics firms, but you'll find Zoom's products on store shelves around the world. The company makes modems, the devices that let computers transmit data over phone lines. It started in the 1970s with the crude, slow-motion systems of that era; now, Zoom analog modems top out at 56,000 bits per second.
But the market for analog modems has also topped out. Most home computers still use these modems to connect to the Internet, but as customers in the United States, Europe, and Asia switch to broadband, Zoom's analog business is waning. Its future depends on the success of its DSL modems, for pushing broadband data over standard phone lines. So far, so good, said Terry Manning, Zoom's vice president of sales and marketing. Last quarter, Zoom took in more revenue from DSL modems than from analog products.
Zoom's DSL modems sell much better outside the United States than they do at home. And in many countries, traditional phone service isn't cheap. ''When you look at the markets where we're strongest," said Manning, ''the phone rates are significantly higher than they are in the United States."
Zoom execs figured these customers would embrace VoIP services. And they could deliver such service by modifying their DSL boxes. It was easy for Zoom to add Internet phone features to a DSL modem. That eliminates the need to plug an unfamiliar headset into the home PC, and use the keyboard to dial the numbers. Instead, you plug a standard phone into the Zoom box and press pound. This connects you to Global Village, a Zoom business unit that has set up a worldwide Internet voice network.
The modem user can choose from a number of cheap calling plans. International rates vary widely, because many foreign phone companies charge usurious rates to connect incoming calls. That's why dropping a dime on Vietnam actually costs 42.9 cents a minute, compared to 2.9 cents for Hong Kong. But if your friend in Hanoi subscribes to Global Village, or some other Internet phone service like the Free World Dialup system, run by Internet phone pioneer Jeff Pulver, the calls are free. Alas, there are no free calls to Vonage subscribers.
''It wasn't the US market that drove this so much as the international market," said Manning. Still, the technology might appeal to US gadget fiends, so Zoom peddles the modems at the CompUSA and MicroCenter chains.
The company's pushing into a headwind, though. American phone rates are already low. Except for those who make lots of international calls, consumers won't save much by paying $100 for the Zoom modem and joining Global Village.
But Manning said his company offers consumers and small businesses a painless introduction to VoIP. Unlike companies like Vonage, which encourage customers to abandon their old phone service, Zoom wants its users to retain their link to the traditional system. After all, those old copper wires deliver the DSL signal. With the Zoom system, users benefit from the standard voice calling service, too. It's always there as a reliable backup. If there's a power outage, the Zoom modem dies. But the regular phone line is live.
VoIP offers appealing fringe benefits. You can get an account with no monthly fee. It's easy to track your phone usage; the Global Village website instantly displays each call and how much it cost. If your friends have Internet phones, you can set up free teleconferences. There's free voice mail with every account, and you can have your voice messages e-mailed to you as audio files.
The phone companies are holding back cheap Internet phone service by giving away DSL modems that lack Internet phone circuitry. That discourages tightwads from paying $100 for a Zoom modem. But gadgets have a way of getting cheap fast -- a looming worry for Verizon, a fond hope for the rest of us.
Hiawatha Bray can be reached at bray@globe.com.
