The full deregulation of the telephone market and the impending sale of Cablelink may be shaking up the telecommunications market in the Republic, but globally the convergence of telephone and Internet technologies is causing bigger ripples. However, even as Internet telephony services are being launched here, one industry expert predicts the new convergence isn't all bad news for telephone companies.

Internet telephony was first associated with offering cheap long-distance calls. Computers could imitate phones, allowing those online to talk across the world for no extra charge. Then so-called Internet telephony service providers (ITSPs) popped up, routing the long-distance part of calls over free or cheaper data networks to provide long-distance calls for little more than the price of local calls. The telephone companies got worried, and some, notably Deutsche Telekom, joined the fray.

One such service is due to be launched in Ireland next month. The largest domestic Internet service provider, Ireland On-Line, and California-based Networks Telephony have teamed up to offer a cheap long-distance call service over a "private Internet protocol (IP)" network (as distinct from over the Internet itself). According to Colm Grealy, managing director of IOL, the service will operate similarly to existing pre-paid call services, but the cost will be below that of any other operator. The customer will use a special handset, which IOL will supply free.

The new service, yet to be given a name, will involve routing calls via IOL's Dublin office onto a global network owned by Infonet. The calls are then carried to the InfoNet point nearest the destination number, where they are routed back onto the local telephone network. IOL says there are currently about six points where the network breaks out to telephone networks, but this will rise to about 40 by the end of the year.

Barry Flanagan, creative and technical director of IOL, says the price will be set every month, and will be chosen to give a 50 to 60 per cent discount off the average cost of its competitors. Billing will be via pre-paid credits and customers will be able to view their statements on the Web, he says.

However, as "voice-over IP" (known as VOIP) matures, industry experts are pointing to the possibilities offered by converged technology rather than cheaper calls as its big advantage. For example, they say, besides companies saving money by routing calls over their data networks, Websites could feature buttons which, when pressed, allow someone browsing to talk to a company representative. A single phone line can be used to simultaneously access the Internet and make or receive phone calls.

One such expert is John Hart, the chief technical officer and senior vice president of communications technology provider 3Com, which employs around 1,400 people in Ireland. Hart, who was in Dublin last week to deliver the keynote address at the National Software Conference in UCD, says he is a keen supporter of VOIP, but has a number of concerns over its current implementation.

First, he is concerned that computer desktops are not yet reliable enough for PCs to take on the work of telephones. Saying 99.99 per cent reliability is needed the equivalent of one hour per year downtime he criticises current Windows-based desktops: "What people aren't thinking about is they never reboot their phone." Although he welcomes the latest developments in Windows 98 and NT 5.0, which make it easier for applications to request higher quality Internet voice "circuits", he says: "It looks like 99.99 per cent reliability is a little ways away in [Windows] 98."

To address this, he says he has had discussions with PC manufacturers Dell and Gateway, exploring the possibilities of keeping calls connected if the CPU fails or the operating system reboots. Although this would require some purpose-built add-ons, he describes this as a "huge opportunity for Dell and Gateway".

Hart is also concerned that using Internet-based networks for the whole length of long-distance calls will lead to poorer quality. VOIP proponents are looking to a new protocol or additional communications technique called the "reservation protocol" or RSVP, to solve this problem, but Hart is sceptical. "We're sitting here betting on this thing and we know it's problematic," he says, calling it an example of "linear thinking" being used to attempt to solve a dramatic change in requirements.

Trying to sell VOIP to customers, he says, he was asked why existing worldwide voice network for voice calls should not be used. Having thought about this he decided using IP networks for the long-haul part of voice calls was not just more inefficient, "it's more expensive".

Of course, as long as the bandwidth is free, such as on a corporate network, it's an obvious solution, a "no-brainer" as Hart calls it. But sending voice over networks designed for voice uses less than half the bandwidth of voice over IP networks and incurs less delays too.

So why are VOIP offerings, such as that planned by IOL and Networks Telephony, cheaper than existing telephone company calls? Hart says the savings are probably due to lower margins being accepted by the providers, but expects the proliferation of telephone companies to beat down voice-call prices. He suggests Internet protocols should be used to interface to the users, allowing them the features of converged networking, but that voice applications should be routed over existing voice circuits.

Although he claims this will offer better service to users, it's worth noting such a network would utilise 3Com's VOIP products as special gateways, instead of RSVP routers. 3Com's rival, Cicso, sells the lion's share of Internet backbone routers, with 80 per cent of the market.

But if such a scenario were bad news for Cisco, it's likely to be music to the ears of telephone companies, removing the threat of Internet telephony eating into their profits. That said, it all depends on them not overcharging. Hart's message to telephone companies is: "If you guys screw around and don't tariff it correctly, you're going to lose it." Whatever about the middle bits, converged services to the users are making progress. Internet application developer eFusion and 3Com last week announced a partnership to provide electronic commerce applications and enhanced telephony services, such as call waiting, later this year.

Oregon-based eFusion has already done a deal with France Telecom to provide applications which allow people browsing the Web in France to maintain access to phone, even receiving incoming calls while online. Vive le convergence!

Eoin Licken can be reached at elicken@irish-times.ie