Asian firm aims to ring in Net voice culture

When Internet voice company MediaRing wanted to go public last fall, it had to change the financial culture of a nation.

Over the past year, the Singapore-based company quietly became one of the largest Net-based phone companies in the world. But like most Net companies anywhere, it was still losing money. And Singapore's stock exchange forbade money-losing companies from launching initial public offerings.

Months of lobbying later, the company helped persuade stock market and government officials to let it and other start-ups into the exchange. Its IPO now behind it, the company is pushing for a far more ambitious change, hoping to make voice communication a basic part of surfing the Web.

This month, the company is launching a new set of services and a first big advertising campaign, hoping to solidify a place at the top of the nascent Web voice market. The timing piggybacks perfectly with recent news that AT&T is investing in competitor Net2Phone, highlighting a new maturity for the more traditional Net voice industry.

"A lot of this is convergence," said MediaRing chief executive Ng Ede Phang. "We're seeing more and more convergence between the old black telephone, the Internet and the Internet lifestyle."

The company is one of more than a dozen trying to make live and recorded voice commonplace on the Web. Analysts say the Net voice industry is on the verge of a radical change after years of waiting in the wings with other promising but immature technologies.

What path this evolution will take is still unclear.

Last week, AT&T led a $1.4 billion investment round in Net2Phone, which had already attracted investments from America Online. Other big carriers are working on their own various Internet voice services but haven't made them a centerpiece of their product lines.

At the same time, a new generation of companies focused more on voice chat and other Web-based voice services is springing up. Companies like FireTalk and HearMe are attracting millions of potential customers to their sites by giving curious surfers the ability to talk directly to each other online, one-to-one, or in massive groups.

As part of its new campaign, MediaRing has planted a foot in both the old and new worlds of Internet voice services. It's continuing its popular Internet telephone calling service, but it's also launching a new set of Web-based message and chat services.

"We'll try to encompass traditional telecommunications with partnerships," Phang said, citing links with GTE, China Netcom and others. "But we see the whole world coming together. The benefit of the Internet is its flexibility."

Web phones or something new?
Much of the Net voice market is breaking into two businesses. The older is basic Internet "telephony," which mimics a telephone but sends the call between two personal computers, or from a personal computer to another telephone.

Net2Phone, particularly

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with its recent round of investments, is one of the lead horses in this race. But it's a crowded field, with Deltathree.com, VocalTec, PhoneFree and other newcomers driving down prices and competing for deals. DialPad exploded out of the gates last year to capture more business than any of its competitors simply by offering a free service, according to analysts at Frost and Sullivan.

MediaRing, with 3 million customers centered in Asia and North America, has climbed near the top of this pack with potential to go considerably further. It offers free and paid PC-to-phone services, along with more traditional PC-to-PC calling and even calling cards for some of its services.

The company's base in Singapore gives it a leg up in the fast-growing Asian market. One of its board members is the former president of AT&T Asia, an invaluable connection to have in striking deals with Asian telephone companies.

But the company has its eyes on the other side of the Net voice market, which focuses on bringing voice applications into Web pages and chat rooms. Companies such as FireTalk, HearMe and Lipstream are already doing this, but without a starting base of millions of Net telephony users.

The company is releasing a suite of services this month that allows people to leave voice mail messages on Web pages, send them by email, or participate in live chats on the Web. Executives talk of a day when consumers' Web addresses can replace telephone numbers as "callers" get used to visiting people's individual communications portals.

Not all analysts are impressed by these types of services, however.

"Maybe this does give the companies a life beyond offering cheaper, inferior calls for free," said Amanda McCarthy, a Forrester Research analyst. "It's the only way to go, but I don't know that they're taking over the world."

Others are far more bullish on the concept and see a bright future for MediaRing and a handful of other fast-acting rivals.

"What we're talking about here is bridging the gap between the telecommunications and the Internet world," said Mark Winther, vice president of worldwide telecommunications for research firm International Data Corp. "Those are two gigantic markets. Put together, there is potentially an enormous revenue opportunity."

Analysts are quick to note that this link is still more of a rope bridge than a Golden Gate, however. The quality of Internet phone calls still trails that of ordinary telephones. But the small, fast companies are improving their technologies and attracting attention from the likes of AT&T and Yahoo, which haven't been able to build the technology internally, some add.

"Voice on the Web is in transformation," Winther says. "When you have that kind of transformation, old-world players aren't going to get it. So the new portals, or communications hubs, can get really big."