Plug-in device allows callers to use phone on Internet

PhoneBridge offers privacy, freedom from computer keyboard

Small business

March 26, 2001|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

Long-distance communications with friends is as simple as tapping on a keyboard and clicking on a mouse for the millions of people who use e-mail and the Internet every day. But Columbia-based MHL Communications wants to move those Internet chats from the computer screen to the telephone.

The three-man company run from the basement of its CEO, Michael Leshner, produces a device that allows people to use their home phones to make Internet calls that avoid long-distance charges. It is called PhoneBridge, a small white box -- 4 inches wide, 5 inches long and about an inch thick -- that plugs into the computer and telephone. The phone functions as the microphone and speakers typically used to make Internet calls. The device gives users more privacy, unchains them from the computer terminal, and, by virtue of using a telephone, improves the quality of Internet calls.

"What's unique to this product is that it's an open system," said Leshner, an electrical engineer. "It works on whatever service the customer chooses to use here or overseas."

Internet telephony is a market that has grown in the past five years, and has prospects for more growth. Phonefree, Dialpad and Net2Phone are some of the services that offer free long-distance domestic calls and make up the cost with advertising revenue.

Although most consumers are unaware that it is possible to make phone calls using the Internet, the knowledge is growing, according to Frost & Sullivan, a San Jose, Calif., research firm. The group projects that the market for phoning via the Internet will grow from 18.5 billion minutes in 2000 to about 7.5 trillion in 2006.

MHL Communications wants to make PhoneBridge readily available to consumers. The company has signed about 20 deals with Internet telephone service providers and computer and telephone accessory retailers, including Phonefree, Dialpad, Ahern and Deltathree, to market and sell the device.

"It's certainly unique," said Andrew Smith, director of marketing for, which has sold the product for about a month. "It's selling pretty well, and people seem to like it."

Leshner said he expects the company to have about a dozen more agreements with providers and vendors by the end of the year. He is working on a second version of the device that uses a USB plug.

The 2-year-old company -- which began when Leshner's brother and business partner, Howard, asked Leshner to design a device that would allow him to use his cordless phone for Internet calls -- had revenue of about $100,000 last year after it started shipping its product in June, Leshner said. He expects about $500,000 in sales this year.

"When we look at the business we're doing month over month, we're very pleased," Leshner said.

Sales have been so steady, he said, that he is ready to move from his cluttered basement office to a real one within a few months. He also expects to hire a few employees.

But analysts warn while the product may be great for right now, it will have a short life span.

Telephone providers have special Internet lines used for voice instead of data that improve call quality, and they are expected to replace the "fad" public Internet calls, said Paul Strauss, research manager for International Data Corp. Businesses largely use the services now, but it will become more available to consumers in the future as broadband and cable line infrastructures widen, he said.

"If this company can hang on for two or three years, they have a potential market," Strauss said.

Leshner said he knows the PhoneBridge is a sort of "Band-Aid" for current technology, but he said there is still room to make money.

"There are currently millions of users, so just to be able to capture a few percent of that market makes a reasonable business for us," he said.

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