March 7, 2005 3:55 AM PST

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As the Net phone business starts to take off, can Web portals such as Yahoo be far behind?

That's one of the big questions that will be on the minds of Internet and telecom luminaries as they gather Monday in San Jose, Calif., for Voice on the Net, a conference dedicated to promoting and exploring VoIP, the fast-growing technology for delivering voice calls over Internet Protocol.

Signs of activity in the space are growing, with America Online planning to enter the crowded VoIP arena later this month with its own phone service. That move has heightened speculation that on the horizon are similar announcements from AOL's biggest Web rivals--Yahoo, Microsoft's MSN and Google.

News.context

What's new:
Will the lure of Internet telephony draw search and portal giants Yahoo, MSN and Google?

Bottom line:
As voice over Internet Protocol attracts companies large and small--including America Online--these three giants are taking a close look at the technology.

More stories on VoIP

"We are definitely looking at the space closely," Yahoo spokeswoman Terrell Karlsten said. "We're figuring out how to enhance and expand into the voice space by leveraging those properties."

Yahoo and MSN have long offered rudimentary phone service using their instant-messaging software and a PC. Now there are signs that all of the major Web portals are exploring whether it makes sense to expand those offerings further. Yahoo has already launched a PC-based voice service in the United Kingdom. Microsoft plans to embed voice calling into its enterprise instant-messaging software. And rumors continue to swirl about whether Google is building the foundation for its own VoIP project, starting in the United Kingdom.

Google has not announced plans to offer VoIP service, and declined to comment for this story.

While none of the three has yet outlined a VoIP strategy, the technology is proving hard for them to ignore. Millions of people are signing up for cut-rate and free plans that route voice calls over a broadband connection. Dozens of competitors have jumped into the market, offering VoIP plans for as little as $14.95 a month, putting new pressure on traditional phone providers.

While that's great for consumers, it remains to be seen whether a VoIP play makes sense for Yahoo, MSN or Google. Yahoo and Microsoft could jeopardize important partnerships with telecom companies if they invest too heavily in voice services.

Despite potential risks, all of the portals have begun tentatively checking out VoIP providers to test possibilities, according to sources familiar with the talks.

Our first lovely contestant...
One company that has attracted attention among the Web giants is Skype, a peer-to-peer VoIP provider based in Europe that lets people make free international calls from their PCs. The appeal in Skype lies in its rapidly growing user base, although the company has not figured out how turn those users into a more powerful and profitable business.

Skype's Web site boasts more than 80 million downloads, 5.6 billion minutes served and more than 1 million people using the service at one time.

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Phone service through your PC
This up comming phone service through the PC has pretty cool implications. The typical phone companys IMO, would want to jump on that bandwagon in short order, if they haven't done so already. For customers it would be super to dial and talk and perhaps "see" the other person on the other end. I, for one, think it's great.
Posted by john1947 (1 comment )
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I Will Not Trust My Phone to Cable
I have several reasons for this statement.

First I live in Florida where we were hit by four hurricanes in 2004. Three of these were very severe in the Orlando area where I live. After water and sewer my POTS (plain old telephone service) was the most reliable utility we had. The power was out for up to 36 hours on two occassions and about 12 hours on the other. My phone was only out a few hours each time. However my cable was out four to five days the three storms. (I had to invest in rabbit ears to watch TV even after the power was on.) Having telephone service during and after an emergency lis this is a high priority.

Next there is the question of 911 service. If you dial 911 will they know where you live if you can not tell them? There may be a solution for this but I am not aware of it.

The next issue is who is responsible if the phone quits working. Is it the cable company or the Internet phone company. I am already responsible for the phone lines inside my house. Adding another layer of complexity is simply too much.

In the last 15 years I have seen an order of magnitude increase in my cable bill. (That is over 10 time for the mathematically challanged.) My POTS has only gone up a minimal amount in the same time. Yes, I have more channels now but there are only so many hours in a day that I can watch TV and I still have a problem finding something worthwhile to watch.

Finally, I do not need nation-wide free calling. My cell phone does that already.

In closing, I simply do not trust the cable company to keep the bills reasonable and keep the connection going and I do not see a benefit to me that would make it worthwhile to switch.

(I really should mention that my ISP, Road Runner / BrightHouse Networks does provide an excellent Internet connection most of the time. Other than hurricanes, I have had few outages and the speed is fantastic. Customer service on the other hand can be problematic.)
Posted by walterwood (41 comments )
Reply Link Flag
$14.95? $25 nationwide? try FREE WORLDWIDE
I have been a Skype user since the month I got Comcast internet.(almost five months)

First of all the cable has had only one time I noticed it wasn't working and that was for less than five minutes at 1:43am; a computer reboot after unplugging and replugging the Modem had me back up. (I suspect a problem with the driver but no repeat has occurred)

As for Skype itself, if you call another online Skype user the call is free no matter where either(any) party is physically located in the WORLD. If you need to call a non-user(or off-line user) you can call them with Skypeout where the charge is based solely on where the called parties are located. POTS is cheapest (0.017 euros per minute to twenty countries)(about 2.3 cents at current rates) if the called party uses a mobile phone then it likely will be more expensive.(all calls to USA are 0.017 POTS and mobile)

Skype allows up to five on a conference call (you plus four) and can be a mix of Skype(free) and Skypeout($) calls, each billed accordingly.

The only problems I have had with Skype appear to be related to non-compatibility with programs that take over the default settings of your audio in and audio out streams (total recorder for one and another that I've not yet reinstalled is also a program that tries to record computer sound channels)

These "problems" aren't as much of a problem as you might think since it is illegal to record phone calls without permission/knowledge of all parties anyway. (Also if the recorders didn't take over the sound channels then the user would have the control) This, in my opinion, makes the recording software the problem.

Skypeout has changed from credit card billing to two internet financial programs. PayPal is in what they call beta usage and appears to be working but is slow(they claim a five day wait for me)(credit card was immediate)
The other system they now accept I hadn't heard of before but it appears to charge the sender a fee for sending money. This might be tallied as a cost for immediate service but I haven't verified if it is in fact an immediate transfer.

I would have to talk for 650 minutes and 1087 minutes a month respectively and then only in the united states. I have called Germany, Indonesia, and an expensive Nigeria - Mobile call for a total of about $12.50 in the past five months.
Posted by qazwiz (208 comments )
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