Telecom New Zealand halves phone bills with Internet link

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AUCKLAND -- Telecom New Zealand, the government-owned dominant provider, has begun a pilot Internet telephony program that will halve the cost of international phone calls using gateway servers bought from Israel-based VocalTec, and says it will offer a full commercial service with phone-to- phone and PC-to-phone connections on high-speed links by mid-year.

By doing so, Telecom NZ joins Telecom Finland, which in December became the first traditional phone company to offer Internet phone services that undercut its traditional core business.

Telstra, Australia's major telephony company has no plans to introduce the technology, even though its high ISD tariffs are being threatened by international gateway servers.

So far, the quality of Telecom NZ's new system is equivalent to that of a cellular telephone with a one- third-of-a-second delay, but Peter Hutterli, its strategy manager, predicts quality will equal that of regular calls by the end of the year.

Telecom NZ's aggressive move into the Internet is in response to an attack on its territory by Voyager ISP, owned by Australian ISP OzEmail, which has launched a similar cheap Internet telephony service for users in major Australian cities, but only to NZ, U.S. or U.K. destinations.

Copyright February 1997, Crain Communications Inc.

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