Videoconferencing for the Rest of Us

A close-up look at some new technology making the face-to-face phone call affordable.

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New technology is making the face-to-face phone call affordable. Here's how to make it pay off

Susan Smith, a principal at Service Intelligence Inc., a $1-million market-research firm in Seattle, stares into the screen of a computer at a nearby Kinko's, an international chain of copy shops that offers videoconferencing services in many of its over 800 stores. Slowly, in a five-inch-square box in the upper right corner of the monitor, a roomful of people swims into view. Service Intelligence -- which measures customer satisfaction for clients like Starbucks, NationsBank, and Brueggers Bagels -- has been hired by a bank to teach its field agents how to verify that its investment officers are delivering quality service and complying with federal regulations. Rather than conduct on-site meetings for the dozens of field agents in Miami, New York, and San Francisco, Smith is staging a single two-hour videoconference. The cost? $1,500. The same task done the old-fashioned way would have cost $6,000 in travel expenses and taken 40 hours to accomplish.

Videoconferencing is an audio and video connection. It's also a data connection. Think of it as a phone call initiated by a computer. In the corner of your computer screen is a live video image of the party you're connected to. You can see and talk to each other. You also can look at and mark up proposals, color bar charts, even photographs. The technology isn't new: for years large companies have conducted formal videoconferences from specially equipped meeting rooms linked by leased high-speed phone lines. What is new is the much lower price tag and the applications for personal computers.

Today, small businesses are getting in on the act. For less than $2,000, you can equip your PC with the software, video board, camera, and phone lines you need to hold a videoconference with a similarly equipped party. In the last year or so, vendors like Apple, AT&T, Creative Labs, Intel, and PictureTel have begun to sell videoconferencing kits, most of which include all the essential components. (See "Quick Reference," below.) Or, like Smith, you can enlist the services of Kinko's -- which uses one of PictureTel's offerings -- for $150 an hour per site.

Although vendors and early adopters are betting that videoconferences will become as commonplace as telephone calls, right now most of your customers and colleagues probably aren't equipped to receive videoconference calls. Even if they are, there's a good chance that their systems won't talk to yours. The situation is roughly akin to the early days of fax machines, when my fax couldn't talk to your fax unless we owned the same brand. To remedy the situation, videoconferencing vendors are implementing communications standards that will enable their systems to talk to one another -- a capability we should begin to see by early next year, according to Gary Schultz, president of Multimedia Research Group, in Sunnyvale, Calif.

For the time being, low-cost videoconferencing makes most sense for companies that do business in a closed environment. One way to do that is to build your entire business around videoconferencing. That's what Michael Barron had in mind when he formed Virtual Realty two years ago. This September, in Newport Beach, Calif., he launched a mortgage-brokerage business, a one-stop-shopping clearinghouse for home buyers that represents a wide array of lenders and loan products. Barron is equipping 10,000 real estate offices around the country with pcs that run ProShare, Intel's videoconferencing product, at a cost to Virtual Realty of about $6,000 per office. That figure includes the installation of an integrated-services digital network (ISDN) phone line, which ProShare requires.

Here's how the service works: A home buyer sitting in a local real estate office has just had an offer accepted on a house and now needs to apply for a mortgage. Instead of heading down the street to a bank, she takes a seat in the real estate office's conference room, where a virtual loan officer (a Virtual Realty employee) greets her from a PC screen. "We exchange information in much the same way we would in person," says Barron. With the buyer's permission -- which she grants by signing her name on a tablet attached to the PC -- the loan officer pulls up a credit check on a computer in his office, which could be thousands of miles away. If the home buyer's credit checks out, he can qualify her on the spot. The entire process takes less than an hour.

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