Indians love to talk. And loudly too. So iWay, the largest cybercafe chain in India, is installing soundproof cabins in most of its 700 outlets across seven cities. For in a few days from now, many of the two lakh users registered with iWay-which is owned by Internet service provider (ISP) Satyam Infoway (Sify)-will not only be using the PCs in cybercafes for browsing the Net or sending e-mail but also for speaking to friends and relatives across the globe.

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TALKING ON THE NET HOW CHEAP... AND HOW CONVENIENT IT WILL BE Current ISD rate: 40   ISP Offer   Net4India 8 LOG ON to the Net if you have a PC with a sound card, register your password and call the desired number. Sify 7-10 IF YOU don't have a PC, you could use an Internet protocol device (Rs 3,000-15,000) to log on to the Net. NOW 6-7 PAYMENT options will vary from pre-paid calling cards to paying online through credit card and deductions from Internet subscription. Caltiger 2.40 CYBERCAFES could also operate as PCOs for Internet telephony. *Cost per minute for a call to the US in Rs

The Government's decision to allow Internet telephony from April 1 promises to bring the world closer to India-and pronounce the death of distance. It promises to slash the prohibitive tariffs of overseas calls by almost 80 per cent (see table). Sify users, for instance, will pay less than Rs 8 a minute for a call to the US as compared to the Rs 40 charged for a normal ISD call. Its rival Caltiger-which was the first isp in the country to offer free Internet access-claims it will charge only Rs 2.40 a minute. If the call is from one pc to another pc, the rate could be even lower.

The Internet can be used for long-distance calls in three ways: from a PC to a phone, from a pc to another pc and from a phone to another phone (see graphic). If you do not have a pc, you can use an Internet protocol (IP) device-a phone-like instrument that allows access to the Net without a pc-which could cost Rs 3,000-15,000. Right now, the Government has allowed only pc-to-pc and pc to phone (for international) calls. Though calls from a phone to another phone via the Internet have not been allowed experts feel there is no effective way to prevent or monitor this application.

GEORGE ZACHARIAS President & coo, Sify	SIDHARTHA RAY CEO, Data Access
"Long distance call rates should drop by 60 per cent."	"Calls to Europe will be costlier than to US."

The promise of unbelievably low Net telephony rates has resulted in a deluge of investors and potential customers. "In the past four days we have had more than 60,000 inquiries on our website for our prepaid calling cards," says Jasjit Sawhney, CEO of Net4India, one of the six companies that have announced plans to enter Net telephony business. Net4India plans to sell the cards at more than 10,000 outlets and has started training staff at various cybercafes to help its customers use Internet telephony. The low rates could change the pattern of international call traffic in India. Till now, almost 80 per cent of all overseas calls is incoming and only 20 per cent is outgoing. That is because telecom tariffs in foreign countries are very low compared to those charged in India.

Though promising, the hype about Net telephony may be a little premature. For one, the poor voice quality of Net telephony-it is only 70-80 per cent as good as a regular phone call-will be a drawback. That is why telecom majors don't see it as a threat to their businesses. "Retail customers may be willing to put up with poorer quality of calls, business callers won't," says Akhil Gupta, joint managing director, Bharti Enterprises, which owns the ISP Mantra Online and will also be among the first private-sector players to offer international long distance services. "Internet telephony will only remain one of the add-on services," he adds.

HOW INTERNET TELEPHONY WORKS

Significantly, Internet telephony has not taken off in developed markets like the US and accounts for only 2-4 per cent of the total voice traffic. But that's largely because long-distance telephone calls were never prohibitively priced in those countries. A caller from New York on the east coast can speak to someone in San Francisco on the west coast for the price of a local call. International call rates aren't much higher either.

In India, since the calls made through the Internet would cost only one-fifth of a normal ISD call, many people may not mind compromising on the quality of the voice. Besides, the quality of voice over the Internet has improved significantly over the years and will get better in the future. "Technology is moving fast and the voice quality gap will reduce as it has over the past few years," says George Zacharias, president and coo, Satyam Infoway.

Many even see in Net telephony synergies for the new economy. According to the Internet Service Providers Association of India, in the past two quarters, Internet subscriptions in India have grown at 8-9 per cent as against the dizzying 54 per cent growth registered every quarter till mid-2001. "There will be more calls being made out of India now, which will boost Internet usage," says Sidhartha Ray, CEO, Data Access. It is offering international long-distance services under the Network of the World (now) brand.

ISPs need to invest heavily in expanding their networks for carrying a larger volume of traffic because voice would now be added to the data flow. This is something the smaller players may not be able to do and the poor service could turn away people. In fact, many big players like VSNL, Sify and the Tatas are not going to town with their plans, focusing instead on ensuring that they are able to deliver.

Adding to this problem are the low margins expected from Net telephony. In a business where price wars have begun even before the service did, ISPs may be left with very little after they have paid the international telecom carrier for taking the call overseas. This could hasten the consolidation in the industry. Either way, one thing is for sure-Internet telephony will generate as much (if not more) interest than what the Internet did when it started in India in 1995. And Indians may find it easier and cheaper to do what they like best. Talk.

-with Malini Goyal