Net2Phone 1.2 to Immediately Allow PC-to-Telephone Calling Over the Internet Challenging VocalTec and Intel Products

HACKENSACK, NJ, August 5, 1996 - Just two weeks after releasing its Net2Phone service -- the first commercial system to allow people with multi-media PCs connected to the Internet to make calls to regular telephones -- IDT Corporation (Nasdaq:IDTC) announced today it is immediately releasing the full commercial version of Net2Phone, three months ahead of schedule.

The full commercial version of Net2Phone will immediately allow people to place calls from anywhere in the world via the Internet to any regular telephone around the world at rates up to 95% below traditional international long distance service. Calls originating from any country in the world and terminating in the U.S. will be billed at 10 cents a minute off-peak (12:00am - 6:00am ET) and 15 cents a minute peak. Net2Phone calls from the U.S. to England will be billed at 18 cents a minute -- a 60% savings over the average rates being charged by the major U.S. long distance carriers.

Since opening up the Net2Phone web site two weeks ago, nearly 10,000 Internet users have downloaded the free Net2Phone software from http://www.net2phone.com

"Because of the tremendous consumer demand for the service, we decided to go ahead and immediately release the full commercial version of Net2Phone ahead of schedule," stated IDT Chief Executive Officer Howard Jonas. "We are confident that our telecom service business model will win out over those companies providing PC-to-PC Internet voice products. We also believe strongly that our PC-to-telephone technology affords a greater mass market opportunity than the products recently announced by VocalTec and Intel."

IDT's Net2Phone Technology to Challenge VocalTec, Intel

Unlike the Internet voice products being offered by Intel and VocalTec which only allow voice communications between two PCs connected to the Internet, IDT's Net2Phone product is the first commercial service to allow PC-to-telephone communications over the Internet. By routing international calls over the Internet to IDT's centralized switching infrastructure and bridging the calls into the public phone networks from the U.S., IDT can charge 95% below the rates charged by international phone carriers for completing the call.

IDT's patent-pending Net2Phone service also differs significantly from VocalTec's recently announced "Gateway" product which requires each user to purchase an expensive Dialogic server which only allows access to 1 or 4 phone lines. In contrast, IDT's Net2Phone service only requires the caller to have a multi-media PC and Internet access and the second party to have a regular telephone. IDT's centralized Net2Phone switching infrastructure also leverages IDT's existing telecommunications infrastructure which routed over 33 million minutes of telephone traffic in the last fiscal quarter.

Unique Net2Phone Business Model

IDT's business model is also different from its competitors as Net2Phone will be distributed for free and IDT will make ongoing telecommunications revenue. Users will be charged on a per minute basis and IDT will earn at least a nickel above cost for every minute of voice traffic carried over the Net2Phone system. Payment for the commercial version will be handled by IDT's debit card billing platform. A full-duplex version of Net2Phone is scheduled for release this Fall.

"As the company which pioneered the international 'call-back' industry and as the only company offering Internet telephony services with extensive telecom infrastructure and expertise, we believe IDT is uniquely positioned to turn Net2Phone into a viable telecommunications service," Jonas concluded.

IDT Corporation

IDT currently provides international telephone service in 120 countries worldwide. The Company also provides domestic long-distance service in the U.S. bundled with its Internet access service. IDT currently provides Internet dial-up access to over 100,000 customers and provides dedicated Internet access to over 500 corporations in the U.S., France, Italy, and South Korea. The company currently offers Internet access through a nationwide network of 487 points of presence.