IM Services Offer Alternative to Phones, But Are No Bargains

(See Corrections & Amplifications item below.)

All over the world, consumers are turning to the Internet for phone service. Companies like Skype Technologies and Vonage Holdings have been marketing inexpensive, even free, calls. Now, Internet giants like Google and Yahoo, and software manufacturer Microsoft are upgrading their services and features to win the same customers.

Instant-messaging services with voice calling have been around since the late ’90s, but the sound quality was poor, and most customers could only text message or call people with the same service.

That is changing. Google recently launched Google Talk, a call service integrated into its messaging service. And Yahoo and Microsoft have announced plans for next year to have users trade messages and eventually conduct voice conversations. The two companies also recently released versions of their services that aimed to improve voice quality and offer new features like free voicemail.

I have been testing the latest versions available at Yahoo Messenger and Microsoft’s MSN Messenger on my Windows PC, focusing on IM voice services. Both voice services worked well, but they still need to improve voice quality, especially for international long-distance calling.

Yahoo Messenger is a simple, straightforward instant-messaging program. It took about 14 seconds to download it on my Windows PC. After creating a Yahoo email account, you’re ready to communicate with other Yahoo IM users. Users can trade files and photos, and also send text messages to cellphones. The files moved quickly, photos were clear and text messages went through immediately.

Like most IM services, Yahoo IM allows its users to make unlimited, free PC-to-PC Internet calls to others on their “Friends” lists, provided both parties have microphones and speakers, as well as the same software.

I tested the audio feature of Yahoo IM with a colleague and it worked very well. After downloading the messenger service and hooking up a headset with a microphone, I signed in and added my friend’s name to the contact list. When I clicked his name, a window popped up, featuring a “call” button. Clicking the button triggered a dialing sound. After several seconds, my buddy answered, by clicking on an “accept” button on screen. (Free conference calls are also possible.)

But when I used the service to call friends in Baghdad and Cairo, voices sounded grainy and loud static interrupted our conversations often, even though we were all using a broadband Internet connection. Every 40 minutes or so, they signed out and reconnected to Yahoo because we couldn’t hear each other. Calls to Stockholm were just as grainy, though audible.

Yahoo improved its audio quality in August with the new version of its Messenger, based on the SIP (session initiation protocol) standard. It also spiced up its service with features like Free Voicemail service, where callers could leave a voice message even if their friends are offline.

The rates are high. A PC-to-phone call in the U.S. costs two cents per minute; an international call can cost from $1.30 to Afghanistan to 45 cents to Zimbabwe. That’s compared with 35.5 cents and 8.9 cents, respectively, with Skype Technologies. Across the board, Yahoo rates are significantly higher than Skype rates.

Users also can make calls to landlines and cellphones if they buy a rechargeable Yahoo phone card (starting at $10 and available only at But they can’t receive from them yet. The company says it plans to launch soon a separate PC-to-phone and phone-to-PC service.

MSN Messenger also offers a quick way to call and send text to friends, but unlike Yahoo, it can’t call phones.

The service, launched in 1999, is also easy to install, though downloading took a full minute, at least on my PC. To use, customers create a Microsoft Network Passport account, then sign up for an email address.

MSN Messenger 7.5, the latest version released in August, has some VOIP (voice over Internet protocol) features, such as VoiceClip, where you can record a message to other users. The audio service worked well locally, but it sounded grainy when I called Stockholm.

One upside: MSN IM users can make Internet phone calls to other users with different versions of the product. With Yahoo, I had to send friends the latest version.

But MSN IM has its drawbacks. When I tried to invite more than one person to join a voice conference, a box popped up warning only two users could talk at a time. The others had to resort to text messages. MSN says it’s looking into changing this in the future.

With about 27.3 million U.S. customers using the MSN service, and about 21.9 million on Yahoo’s, Internet messaging and online phone capabilities are in demand.

Both services are good for making calls, but they aren’t set to replace phones just yet. The services connect only their own users, and don’t even allow access to 911 in an emergency. Yet they are fine additions to existing IM-text chatting services — and it’s hard to beat free calls.

Corrections & Amplifications:

Yahoo phone cards are sold at The Personal Technology column yesterday gave an incorrect address for the Web site.

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