Internet telephony services banned, U.S. service provider eager to reopen foreign connections

A move by four signatories of the World Trade Organization's basic telecommunications agreement has IDT Corp. up in arms.

The Czech Republic, Hungary, Iceland and Portugal have instituted bans on Internet telephony, the service that Hackensack, N.J.-based IDT provides to allow long-distance phone connections via the Internet. IDT believes the bans are related to its release of a new version of its Net2Phone PC-to-telephone product, which the company says has increased its sales by 50% and driven the average length of a call via its service from three minutes to five-and-a-half minutes.

IDT believes those increases, coupled with IDT's plans to introduce a phone-to-phone product, caused the governments in those countries to take measures to protect their PTTs against the increased competition.

But while IDT is eager to fight for enforcement of the WTO accord, there's nothing under terms of the agreement that the company or the agencies that enforce the agreement can do until at least January 1998, when the telecommunications agreement goes into effect.

Of the four countries that have instituted bans, only Iceland agreed to meet the terms of the international services and facilities portion of the agreement - the segment under which IDT's business falls - by that date. Portugal is not obligated to meet the services and facilities requirements until 2000, the Czech Republic has until 2001 and Hungary agreed to meet the terms by 2004.

Still, the bans took IDT by surprise. The company found out that its services were being banned in those countries when customers began calling and e-mailing to say they couldn't access IDT's services, a company spokeswoman said. The PTTs are enforcing the ban by blocking access to IDT's Web site, through which IDT's services are obtained.

The increases in business volume and average length of call have offset lost revenue from the countries where bans have been instituted, she said. But IDT still plans to fight the bans, if necessary.

"It's an injustice to all U.S.-based companies operating these services," the spokeswoman said.