Microsoft Steps Toward Internet Telephone Services

Microsoft and Internet service provider deltathree plan to offer Internet telephony services via MSN Instant Messenger.
Microsoft and voice-over-IP service provider deltathree Inc. are in negotiations about a deal that would let MSN instant-messenger users talk to other consumers via computers.

Deltathree will use MSN Messenger and Session Initiation Protocol to let consumers make phone calls from their computers to any phone number in the world, according to a notice deltathree filed with the Securities and Exchange Commission to inform investors or security holders about the pending relationship. Both companies refused to divulge more details until the fourth quarter of this year when deltathree's Internet telephony services are expected to be delivered to MSN Messenger customers.

Partnering with Internet telephony service providers like deltathree and Nortel Networks Corp. fits into Microsoft's .Net strategy, says Ronald Gruia, a consultant with Frost & Sullivan. IP is central to that strategy and it's going to have to team up with IP service providers to carry it out, he adds.

If and when Microsoft makes a strong push into telephony and other IP services, the line between it being a product manufacturer and a telecom becomes very fuzzy, says Frost & Sullivan consultant Jon Arnold. "They Microsoft have a toe-hold in every household, like the phone companies," he says. "Once IP becomes a viable alternative to telephony, it changes everything. They become the equivalent to another Bell."