But all this is past. Internet telephony is legal now. And that means several Indian companies are readying to offer the service. Here's a report on the goings on…

First, a reality check: A regular phone call to the US costs Rs 40.80 per minute. The same call with Internet telephony will cost Rs 4.95 per minute! That's just one eighth of the regular bill! It is no wonder then that everyone from big telephone companies and Web sites to cyber cafés are jostling to launch Internet telephony services.

All the telecom heavyweights like Bharti, Tata and Reliance are in the game. And though business experts believe these big companies are the only ones with the infrastructure needed to survive, the smaller players are the ones who have been the first to take off.

Two weeks ago, Net4India.com began its PC-to-phone service. CEO Jasjit Sawhney is very pleased with the response. He told Rediff Guide to the Net, "There has been tremendous response from customers and potential dealers and distributors. We have been selling up to 500 accounts a day from the phonewala.com site. We have appointed over 150 distributors, who have covered 3,000 outlets where our Phonewala cards are being sold."

Sawhney explains that even regular users of the Internet in India have not been very comfortable with Internet telephony. Yet, he claims, with increasing awareness of the service and the Phonewala card's retail option, Internet telephony is set for widespread acceptance. Among his target customers, he includes even those people who have never felt the need for the Internet but have a huge expenditure on international calls.

Phonewala's service is already showing promise: "The calling habits are very diverse in terms of the countries called. We've had traffic to almost all the 200-plus countries that we offer with US, UK and Canada amongst the most called destinations. We see an awareness for lower rates available through PC-to-phone services in the coming months," Sawhney claims.

However, Sawhney's optimism is not borne out by cyber café owners. ISP Satyam Infoway is gingerly testing the waters by deploying Internet telephony services via its chain of I-way Net cafés in Chennai. Smaller café operators in Calcutta and Pune too report customer hesitation.

Business is usual for the cafés

Divya Bhatia, who runs The AmaZone, India's first theme multimedia Internet café in Calcutta, says the demand for Internet telephony has not changed significantly since April 1. "People have enquired about it but no one is willing to buy an account with the service provider. Then again, Calcutta is slow at new things." In order to make PC-to-phone calls, surfers need to buy a prepaid account with a Net telephony service provider. Chat programmes like MSN Messenger and Yahoo! Messenger allow users to do Internet telephony by tying up with service providers like Net2phone.

"A prepaid account costs around $10," explains Divya, "few are interested in investing that amount. People are also afraid that their card details may be hacked." Because once you have bought a prepaid card you are responsible for the safety of your card and confidentiality of your account number and PIN. No refunds are made if your card is lost.

Nisha Rajwani, who runs a cyber café at Pune, says they still get around two to five Internet telephony users per day. "So far only 2 out of 10 people have shown an interest in buying an account over the Internet by using their credit cards. I suppose that when these companies actually start selling these accounts off the shelf, people might show a more positive response."

The market is likely to grow only with increasing awareness of the great difference between regular and Internet call rates. There are many companies such as NetCaller.com that offer unlimited calls for a fixed rate. Say, you pay $10 and can make unlimited calls to one or two fixed countries like USA or Canada. There will probably be some more downward price pressures in the future. However, it's not likely to decrease too much either. This is because there is something called a 'base termination cost' for each country. This cost is toward the expense involved in physically using the country's regular phone network to complete a calling session.

Yet, small players like Nisha's café in Pune could be the most influential in pushing Internet telephony. "We have been trying to talk to the customers and we are planning to launch a scheme soon whereby with the help of a tie-up we give free one-minute calling facility to our customers in the existing database, which is of about a 100 members, " says Nisha.

The customers hum and haw

Why are cafés not seeing a sharp peak in demand for Internet telephony? The answer could be that the customers determined to use Internet telephony are already using it elsewhere. And law enforcers have little means to track their usage.

Reveals Hiten Gala, Internet buff and IT training professional, "The service (Internet telephony) has been in existence for over five years now. People with computers at home get their friends or relatives or business contacts abroad to buy them a Net telephony account. They then download the software over the Web and get the account details from their friends. That is all they need to make a PC-to-phone call."

Poor voice quality and a terrible response delay could be the other reasons for keeping customers from rushing into Net telephony. But Amit Agarwal of Reliance Infocom believes that these may yet not be reasons enough given how cheap the calls are. He says, "The quality of the service is okay, not too good. But users are not complaining. Due to the network, the receiver will experience a five-second delay before hearing your voice. You may wish to inform the receiver of this limitation. At these low costs, talking international is quite a treat and people are willing to lose some to win some."

Despite a slow start, the big potential of Net telephony cannot be denied: "I do it all the time with the call cards," claims Sandeep Gujar, an engineering student from Pune. "I need to talk to my parents abroad and this is cheap and effective. I may not get the clearest sound but I can try when the network is not so busy," he says.

Akash Gupta's fiancée lives in Singapore and that makes him a typical customer. "If the Internet connection speed is good and the data transfer is good, I would surely use this service now that it is legal."

Yet, the ultimate customers for Internet telephony may be those who have never been anywhere near a PC. Phonewala's Jasjit Sawhney says, "Above our current offering of Phonewala, we are shortly adding IP phones and devices as well. These will allow non-PC customers who have significant international call spend to be able to take advantage of the lower rates without having to invest in a PC. This device would cost between Rs 5,000 and Rs 15,000."

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