Answering Concerns Over Net Phone Calls
April 30, 2004 -- In this week's Cybershake, we take a look at the rocky rise of Internet telephony. Plus, we take note of the latest news surrounding online music downloads.
The Rocky Marriage of Net Phones
When it comes to telecommunications, one of the hottest developments ringing in consumers ears is Voice Over IP, or "Internet telephony." Also known as VoIP, it is a computer scheme that allows telephone-like voice calls over high-speed Internet hookups such as cable TV modems.
"The advantage of broadband telephony, or phone service over your [high-speed] Internet connection, is that you can make phone calls a lot cheaper that with your traditional land line phone," says Louis Holder with Vonage, a VoIP service.
VoIP service providers such as Vonage handle "voice calls" with special equipment (about $100) that connects home telephones to subscribers' home PCs. When calls are made on the phone, the gear converts callers' voices into digital data that then travels over the high-speed Internet to the phone at the other end of the conversation.
By using the Internet instead of the public phone switch network, VoIP subscribers can make local, toll and domestic long-distance calls though the Internet for a flat fee — about $30 per month.
And since VoIP isn't dependent on the phone network, subscribers can use their phone equipment anywhere there's a computer connected to the Internet. So a New York business traveler might take his VoIP phone setup to use with the broadband connection in his hotel in Richmond, Va.
But, the system isn't infallible — or without its critics. Some public safety officials are worried about Internet telephones because it may not mesh with current 911 systems.
For the traveling New York businessman, for example, dialing 911 from his VoIP phone in the hotel might connect him with New York's finest rather than Richmond's police department.
"Vonage came up with a solution around that," says Holder. "It requires a customer to enter their physical location into our system and we'll route you to the correct public safety answering point."
But there are other issues that are bothering critics.
Part of the reason Internet telephony service is — for now — cheaper than ordinary phone service is that VoIP isn't regulated. Providers such as Vonage don't have to pay the mandated Federal taxes and fees for services such as 911 call centers.
Critics say that's unfair and are lobbying Congress for updated telecommunication legislation. But so far, government agencies such as the Federal Communications Commission are ignoring the calls for change.
— Michael Barr, ABCNEWS
The Low-Down on Downloads
The fight against illegal copies of digital music online is heating up again.
On Wednesday, the Recording Industry Association of America announced it has filed lawsuits against 477 more computer users for illegally sharing music on the Internet.
That brings the total number of copyright lawsuits to nearly 2,500 since the recording industry began pursuing suspect pirates last summer. And while a clear majority (only 437 people have settled with the RIAA so far) have yet to reach the courthouse, the threat of being sued has had a chilling effect among Net users.
According to the latest survey from the Pew Internet and American Life Project, more than 17 million online users in the U.S. have sworn off from using free "peer-to-peer" services such as KaZaA and Morpheus — networks known for trafficking in illegal copies of digital music.
"Among those former downloaders — those who say I don't download now but I used to — 33 percent say the lawsuits are the reason they stopped, says Mary Madden, at the Pew organization.
But Madden says the pendulum has since started swinging in the other direction as well.
"There's also been a slight increase — from 14 percent of all Internet users who say they download music to 18 percent," she says.
One of the reason for the increase in digital music downloads, say Pew researchers, is the rise of legitimate, pay-to-download music services such as Apple's iTunes. But another reason could be that illegal downloaders are finding and using newer — and harder to detect — pirate music sites.
Still, Pew researchers note that it is a very minor up-tick — much lower than last spring when it was estimated about 29 percent of Americans online were downloading music.
But no matter how small or large the download numbers may be, the record industry is adamant in pursuing suspect pirates. And while the minor up-tick in music downloading might be disconcerting to the record industry, others argue that the RIAA might be barking up the wrong tree.
"I've seen plenty of data that tells us that when you go online and steal music, the likelihood you're going to go out and buy it is reduced," says Mitch Bainwall with the recording industry.
But that could be an incorrect assumption, says Koleman Strumpf, an associate professor of economics at the University of North Carolina in Chapel Hill.
According to a study he co-authored with colleagues, it would take 5,000 downloads to reduce the sale of a particular album by one copy. And that, he says indicates that the overall effect of those downloads on music sales is practically zero.
How can that be?
"Sometimes people are downloading [music] to sample [it], to learn about some songs they might not have heard on the radio," he says. And in turn, that behavior might lead the person to actual buy the physical album or CD at a record store.
— Karen Chase and Larry Jacobs, ABCNEWS
Cybershake is produced for ABCNEWS Radio by Andrea J. Smith.