Net telephone company looks to avoid tolls

Tired of paying for phone calls? Convinced that PC-to-PC or PC-to-phone connections are too noisy, echo-filled and unreliable? Want to jump on the peer-to-peer thrill ride? Well, Free World Dialup Inc., a new company founded by long-time telecommunications industry analyst Jeff Pulver, thinks it has just the thing for you.

Free World Dialup (FWD) is a new company that hopes to use broadband Internet connections and peer-to-peer technology to eliminate long-distance phone charges. The system works like this, according to FWD executives: Anyone interested in the service must already have either a cable or DSL (digital subscriber line) Internet connection and a flat rate calling plan from their local phone company. FWD recommends that its users also have two phone lines and use the second for the FWD service. The user then purchases a US$150 Cisco Systems Inc. Komodo Fone (though the cost may eventually come down and other devices may be used) that uses the Internet, rather than phone lines, to place calls. Attaching the Komodo Fone to the broadband connection makes that Fone a “node” on the FWD network. When its owner is not using the phone, anyone who also has a Komodo Fone can place a call to anyone in the city where the node is located. The call will be routed through FWD servers and over the Internet, thus bypassing phone company charges for long-distance calls.

But the system may not be as convenient as it initially seems. Each Komodo Fone will only be able to support one phone call at a time, so if there is only one FWD node in a particular city, no other FWD calls can be routed into that city until the first call is over, according to company executives. The system is “like a telecom timeshare,” Jeff Pulver said. Pulver founded and funds FWD, but a separate executive team including: Thomas Anglero, former acting CEO of TrulyGlobal Inc., runs the company.

Unlike a timeshare, though, if the phone is picked up while the node is being used for calls, the first call on the line will be disconnected. This “will probably annoy some people” Pulver admits, but priority for the phone’s use has to be given to its owner and so far, the company and its users have had no problems with interruption, he said.

The quality-of-service issues that could occur “might frustrate people,” but will likely not deter them, Pulver said. Free World Dialup will be “as available as the number of FWD customers make themselves available,” FWD CEO Anglero added.

“Once people start building critical mass in the community, that critical mass will bring people in by definition,” thus creating more free lines, Pulver said, adding that he expects that critical mass to be achieved in 18 to 24 months. FWD will offer a detailed listing of node availability and will include a light on the phone, which indicates that the line is being used by another user, he said.

Despite the potential problems FWD’s plan may face, some observers are willing to give the company a chance due to Pulver’s long-standing position and good reputation in the industry.

Calling the service “very unique,” Tom Jenkins, director of consulting at TeleChoice Inc., who was unaware of the company and its plans, said he would not imagine that Pulver would have started such an enterprise without having thoroughly planned and targeted the service.

Even with the credibility Pulver has built up, though, Jenkins had a lot of questions about the service. How will it be better than the existing PC-to-PC calls, he asked, noting that there are already likely 100-plus sites which offer similar services over the Internet. Plus, if a user already has a broadband connection, it is likely that they also have a powerful PC capable of making reasonably good quality calls over the Internet.

Sound quality will also be an issue because of the unreliable nature of the Internet, as “there will be times that it is not a toll quality call,” Jenkins said.

Pulver allows that sound quality could be an issue, but adds that FWD’s service “uses dedicated Internet appliances which are optimized for telephony… and until a PC is optimized for telephony, the performance will be better using the dedicated Internet appliance.” Additionally, calls placed with the Komodo Fone will require a comparatively small 64K bps on broadband connections (many connections are 128k bps or more).

TeleChoice’s Jenkins is not the only analyst who is skeptical of the plan. Alex Winogradoff, a vice president at Gartner Dataquest Inc., was also unfamiliar with FWD’s plans, knew Pulver and reacted negatively to FWD.

FWD sounds like “a gimmick more than a real opportunity to make a phone call,” he said. “I have no idea why (the system) would be of value to anyone.”

“To use another person’s phone to complete my call seems irrational,” he said.

Despite Winogradoff’s thoughts, 40 people worldwide, from Sydney to Stockholm to St. Louis, are currently hosting Free World Dialup nodes. More than 300 nodes in 20 countries should be up and running by the public launch, Anglero said. Currently, friends, family, colleagues and industry players who attend Pulver’s conferences are involved in the beta test, he said. After that, the service will go live to the general public as soon as Cisco can commit to shipping the Komodo Fones in the quantities FWD needs, Pulver said.

When this happens, FWD will make money not through selling phones or by charging a subscription fee – the point of the service, after all, is to get the calls for free – but by selling services from communications ASPs to its customers. Pulver did not elaborate on what those services might be, but TeleChoice’s Jenkins speculated that they might include call forwarding, messaging, voice mail, conference calling or possibly even applications that could be downloaded to the phones.

No matter what services Free World Dialup offers, though, it’s likely to only serve “a very small niche,” Jenkins said. The system will work in a viral, “friends-and-family” way, much like America Online Inc.’s Instant Messenger, which is only useful when other people users want to chat with are also online, he said. However, unlike Instant Messenger, FWD is not free. The need for other users to make the system work, as well as the cost, Jenkins said, may make it very difficult to convince consumers that Free World Dialup is the way to make their phone calls.

Free World Dialup, in Melville, N.Y., can be reached at