The demand for video-conferencing surged after the September 11 attacks as executives shunned business travel. But new developments in the technology could keep them using it beyond the current crisis.

The rise in interest in videoconferencing has been remarkable. Genesys Conferencing, a Nasdaq and Euronext-listed provider of audio and videoconferencing, saw volumes for all its services combined rise 58 per cent in the week ended September 30 compared with daily levels seen the week before September 11. PictureTel, a videoconferencing subsidiary of Nasdaq-listed Polycom, says telephone enquiries trebled and Teliris, a UK company, saw a quadrupling in demand.

But there are signs that growth may now be returning to saner levels. Kailash Ambwani, executive vice president of services and technology at Genesys, says: "Growth is now stabilising at around 30-35 per cent above pre-September 11 levels and we expect our revenues for 2001 to be about 20 per cent higher than those for 2000 on a pro forma basis."

PictureTel also expects sales to be at least 20 per cent higher in 2001 than last year. But some cynics believe today's high interest in videoconferencing will be short-lived. They recall the hype generated by suppliers after the start of the Gulf War when the death of the face-to-face meeting was greatly exaggerated.

Today's suppliers are more realistic and emphasise that it is still important to press the flesh from time to time. Nevertheless, the technology has moved on a long way since the Gulf War.

For example, Martyn Lewis, a former newscaster and chairman of Teliris, believes more lifelike videoconferencing will keep executives coming back for more. Teliris' system - used by UK venture capital company 3i and Lazards, the investment bank - has its own "virtual vectoring" software so participants feel as if they have eye contact with each other even if they are on opposite sides of the world. "When, for example, someone in the Paris office turns to look at the monitor showing a colleague in London, the New York office will see that, too," he says.

Hewlett-Packard Labs also believes the impression of eye-contact is essential to a successful videoconferencing system. "Research has shown that eye contact is an integral part of communication, but in current videoconferencing situations, people look at the screen and not the camera, which means no one can really tell who is looking at whom," warns Hewlett-Packard Labs.

The company is developing a technology that will allow people to see eye-to-eye. A small contraption containing five little cameras will be mounted on to each participant's desktop PC. These cameras will capture every angle of the person's face and feed them into a software program. So each person in the "meeting" will see an image of all the others and be able to pick up on the visual cues, such as who is looking at whom.

As well as improved eye contact, larger displays and greater bandwidth are helping virtual meetings seem more like the real thing. Mr Lewis' system displays participants on 42in plasma screens with no more than four people to a screen and transmits video signals over 4.5 megabits a second fibre-optic lines so there is no time delay when speaking to people in other countries.

Sharing documents in a video conference is also becoming easier. Ned Semonite, executive vice president of marketing at PictureTel, says: "Users of our conferencing technology can plug a device that looks like a mouse into the monitor port of a laptop during a meeting and whatever is on the laptop's screen will be visible at the remote site with the same clarity as the original."

Document facilities

Computer-based documents can also be examined in a virtual meeting when videoconferencing is added to the company network, says Phil Sewell, managing director of UK-based Global VideoCom.

In fact, there is now a huge variety in the type of videoconferencing systems. At one end are dedicated meeting-room systems such as that from Teliris: these cost $120,000 to $750,000, with line-rental costs of $13,000 a month for unlimited usage. In the middle are dedicated videoconferencing monitors, requiring an Integrated Services Digital Network (ISDN) close by. These cost from a few thousand up to £30,000, according to Mr Sewell.

More affordable are PC or network-based systems involving tiny cameras; equipping a PC with videoconferencing hardware can cost as little as £400-500. Mr Ambwani believes that desktop video is what will eventually make videoconferencing take off.

Yet limited access to high-speed, reasonably-priced bandwidth means that desktop videoconferencing is still some way off for most executives working from home. "Many companies find even ISDN too expensive at £150 an hour for a three-line 384 kilobits a second video link between Europe and New York. And the technology is not that reliable," says Mr Sewell.

Prices will fall, but until that happens audio and web conferencing are likely to prove popular alternatives to videoconferencing as they do not require such high-speed links. A web-based system launched by Genesys at the end of October lets its audio conferencing customers set up their phone conference calls, using a web browser to dial regular participants numbers automatically.

For an extra E39.95, up to 15 conference callers can get web conferencing too. This enables them all to look at the same document, Powerpoint slide presentation, or website page at the same time as they are chatting on the phone. Video will be added to later versions of the system so that the person who is talking will be displayed in a window of the web browser. Microsoft's NetMeeting software and some features of its new Windows XP operating system also enable real-time document sharing over the web, potentially cutting down on travel.

Market researchers Frost & Sullivan, expect the US videoconferencing equipment and services market to see a spike of 25 to 30 per cent in the next few months followed by a compound annual growth rate of 27 per cent a year - up from an earlier forecast of 17-18 per cent.

But in the short term, audio conferencing could be the big gainer. "When people had to reschedule meetings at very short notice," says David Alexander of Frost & Sullivan "they had to turn to the technology they had: the phone." Despite renewed interest in videoconferencing, eye contact with far-off contacts is still a luxury for most.