Traditionally, telecommunications and data communications have been separate services. But now, with the distinction between voice and data fast disappearing, telephone companies and Internet service providers (ISPs) have to take a fresh look at their services and how they charge for them.
The convergence of voice and data has been mirrored by the merging of the telecommunications and data communications providers.
Mr David Nee, managing director of EUNet, says this means telecommunications companies will become just communications companies, and ISPs will become communications providers.
ISPs have already been drawn under the wings of bigger, usually telecommunications companies: TInet and Indigo are owned by Telecom Eireann, EUNet was recently bought by ESAT, IOL is owned by An Post, and MediaNet, a smaller ISP in the Irish market, has a partnership with Global One, which is owned by Deutsche Telekom, France Telecom, and Sprint.
"The appetite for data is insatiable," Mr Nee says. The amount of data carried by a service provider depends on the applications which customers use, he adds. He has seen a four- or five-fold increase in the amount of data transferred over the last two years. "A service provider next year with the same number of customers will need [to carry] three or four times the amount of data," he says.
Mr John Stone, a systems engineer with Cisco Systems, which provides the vast majority of the equipment for routing traffic on the Internet, says the latest routers allow for ISPs to bill users based on the type of applications they are running.
He says a user could be billed based on his or her amount of Web usage, voice-over Internet usage, or file transfer usage. "The ISPs need this," he says. It will be available within about six weeks, he says. Cisco says all the Irish ISPs are using its routers.
Mr Nee predicts that providers catering for the corporate market will offer value-added services, leading to different charges. "I believe that in general flat rate pricing on IP [Internet protocol] networks is on the way out," he says. He expects to see voice-over data sometime in 1998, although it is too early to say when a full, commercial service will be available.
However, the ISPs catering for the home-user market cannot easily adjust their charges. If prices unilaterally rise customers may go to another ISP, but the popular rate of £10 per month is too low, says Mr Nee. $20 a month is the average in the US, and communication costs there are lower.
Mr Barry Flanagan, technical and creation manager at IOL, also bemoans the rise in per-user data volumes. He says IOL has not had a price rise in four years, but says there "will always be a flat monthly fee". He says ISPs will find other sources of income, such as advertising, and looks forward to deregulation of the domestic market in 2000 when network providers will offer cuts in rates.
Indeed, this is a much greater issue for home-user ISPs than the spread of voice-over Internet. "IOL receives 38,000 calls a day, with an average of 13 minutes each," Mr Flanagan says. He reckons this generates £12,000 to £15,000 a day for Telecom Eireann. He looks forward to competition for the local call market, when ISPs can form partnerships with a new service provider.
