Originally created 01/19/00

Start-up company wades into free-long-distance fray



By now you're probably used to seeing great deals on long-distance phone calls. Even the "Dime Lady" will sell you long distance for a nickel a minute at night.

But how about this one: Call any phone in the United States free, anytime, day or night.

It seems crazy, but if you have a PC, a microphone and an Internet connection, you can do it by pointing your Web browser to www.dialpad.com. The Web site, run by a Silicon Valley startup, is the latest entrant in the battle to turn the Internet into a medium that competes with the traditional phone network.

The most interesting thing about Dialpad is that it works. Sitting at my computer, I was able to call all over the country and hold understandable conversations with friends and family. The quality wasn't quite as good as a regular phone call, but it was certainly good enough to hold a normal conversation.

And the price was right. That's because Dialpad hopes to make its money from banner ads that flash at the top of the telephone dialer applet that appears on your screen when you log onto the company's Web site.

I learned about Dialpad from my 17-year-old son, Ben, whose friends have been using it to talk up a storm. Although I'd fooled around with Internet telephony over the years, I hadn't paid much attention to it lately. That's because the programs I tried were always too awkward and the connections were too iffy for day-to-day use.

But the times are changing. Software and hardware have improved, and the system is far more flexible today. Where Internet telephony once required both sides to be logged onto the World Wide Web using compatible programs, it's now possible to call from a PC to a regular phone.

As a result, according to Probe Research estimates, calling minutes using the Voice Over Internet Protocol grew from 200 million in 1998 to 2.7 billion in 1999 and will top 4 billion minutes this year.

While that's a drop in the 6 trillion-minute bucket of worldwide phone calls, the service is growing rapidly. The successful IPOs of Net2Phone and DeltaThree -- companies that offer PC-based callers domestic long-distance service at 3.9 cents per minute and international calls at even greater savings -- show that investors take the technology seriously.

What makes this possible is that the Internet is a cheap way to move data around and no one company controls it.

When you make a regular call, the collective entity known as Ma Bell theoretically provides a direct circuit between you and the phone on the other end.

When you make an Internet phone call, your computer turns your voice into a collection of digital ones and zeros, assembles the data into small packets, and sends them on the way to their destination. These packets may travel by various routes, but eventually they're reassembled and turned into voice on the other end. That end may be another PC, or it could be an electronic gateway to the local phone system that dials the recipient of your call and delivers your voice to his phone.

The problem is that packets don't always travel at the same speed, particularly when there's a lot of traffic on their path. This translates into the lags, echoes and static that have always vexed Internet phone calls. Better software and hardware have improved voice quality considerably, but it still isn't as good as Ma Bell's.

In terms of cost, PC-to-PC phone calls are relatively easy and always free. You don't even need special software -- Microsoft Windows 98 includes a program called NetMeeting that will do the job. But Dialpad, Net2Phone, DeltaThree and ZeroPlus offer free, downloadable software that will do the job better -- as long as your recipient is using a compatible program.

What sets Dialpad apart is that it doesn't charge for the part that costs real money -- relaying your call to the regular phone system in its destination city. When you sign up, you'll be asked for personal demographic information -- which the company says it aggregates in order to target ads but doesn't share on an individual basis.

That done, you'll automatically download a Windows plug-in that displays a telephone keypad on your screen. All you have to do is punch in the phone number and wait for the person on the other end to answer.

Like most VOIP programs, Dialpad works best with a headset microphone. You may also have to tweak the volume settings on your mike and speakers. At best, the quality is close to that of a regular phone. More often, there's a mildly annoying background hiss.

During peak periods in the evening, it sometimes took a couple of tries to log onto Dialpad's Web site (which you must do to use the system). I also got occasional busy signals, which usually means that all the phone system gateways in the city you're calling are occupied. But when it worked, which was most of the time, Dialpad worked well enough.