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September 30, 2004 11:25 AM PDT

Price wars in the Net phone biz

by John Borland

AT&T said today it is cutting its monthly charge for unlimited Net-based phone service to $29.99, from $34.99. Vonage promptly followed suit, cutting its fee to $24.99.

Net calling is a high priority for AT&T, and the company has said it's willing to stick it out for the long run. It has a network that allows it to have reasonably low costs. Looks like it's trying to squeeze rivals out of business by driving margins so far down that the profit is gone.

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