VOICE SERVICES OVER INTERNET U.S. Service Providers Eye Asia Despite Challenges.(INTERNET & TECHNOLOGY)

Byline: Sarah Z. Sleeper

Peddlers of Internet voice products see great promise in Asia. But they'll have to overcome more than just technological hurdles.

Talk to Ofer Gneezy, chief executive of Internet telephony firm iBasis Inc. In 1997, he carefully planned a sales meeting in Beijing. Gneezy brought gifts for his potential clients -- engraved travel alarm clocks.

During the meeting, his Chinese manager signaled furiously not to hand out the gifts. Gneezy found out why afterward.

"In China, if you give somebody a clock, it is a sign of the death of the relationship," he said.

Four years later, Gneezy knows better. But he and other U.S. telecom firms still have a long way to go in Asia. As China and other countries prepare a massive upgrade of telecom systems, American firms are scrambling for a piece of the action.

Many are pushing a technology called Voice over Internet Protocol, or VoIP, which uses Internet technology to handle phone calls. The question: Can U.S. firms find the right mix of local courtesy and Western innovation to win Asian customers?