AT&T, Vonage slash Net telephony rates

A price war is brewing in the world of Internet telephone services, as providers try to win over consumers who now have a host of options when it comes to making calls.

On Thursday, both AT&T and Vonage said they were slashing prices on voice over Internet Protocol (VoIP) plans beginning Friday. AT&T said its CallVantage service will cost $29.99 per month, down from $34.99 per month. The rate will apply to all existing customers and includes unlimited local and long-distance calling in the United States and Canada. AT&T also will offer a month of free service to new customers who are signing on until Jan. 31, 2005.

Vonage said it is lowering the price of its Premium Unlimited plan--which includes unlimited calls anywhere in the United States and Canada--by $5 to $24.99 per month. The company also said it is upgrading customers who were on its $24.99-per-month Unlimited Local plan to Premium Unlimited.

VoIP pricing

Provider: AT&T

Plan: CallVantage. Unlimited local and long-distance calling in the U.S. and Canada.

Price: $29.99 per month, starting Friday. One month of free service to new customers who sign up by Jan. 31, 2005.

Provider: Vonage

Plan: Premium Unlimited. Unlimited calls anywhere in the U.S. and Canada.

Price: $24.99 per month, starting Friday. Customers who had been on Vonage's $24.99-per-month Unlimited Local plan are being upgraded to Premium Unlimited.

Provider: 8x8

Plan: Packet8 Freedom Unlimited. Unlimited calling to anyone in the 50 U.S. states and Canada and to Packet8 subscribers worldwide.

Price: $19.95 per month.

Provider: Primus

Plan: Lingo Unlimited. Unlimited minutes each month to speak with anyone in the U.S., Canada, and Western Europe.

Price: $19.95 per month. One month free offer.

Daryl Schoolar, an analyst at research firm In-Stat/MDR, said the price cuts aren't surprising, given VoIP companies are fighting a range of foes besides each other. Cable companies and traditional regional phone companies are offering bundles of services, he said, and mobile phone service providers frequently include long distance in their packages.

"It's a very competitive market" for VoIP players, Schoolar said. "Cell phones are probably the biggest competition."

Internet telephone service provider 8x8, which sells a VoIP package that includes unlimited calling in the United States and Canada for $19.95, has no immediate plans to trim its pricing, said company CEO Bryan Martin. "We're still the low-price leader," he said. "Before we lower our price, someone's got to come in below us."

VoIP is technology that lets people talk over a broadband Internet connection, rather than a traditional telephone line. Net telephony packages also offer features found in traditional telephone services such as call waiting and forwarding. Because VoIP calls are placed over the Internet, they are generally less expensive than calls sent over the heavily taxed and regulated traditional phone network.

AT&T's price cut underscores its push to spark growth in its Net phone service, as VoIP becomes more central to its long-term plans. The phone giant in July said it would stop selling voice services to new customers due to changes in regulatory law, but added that it would aggressively market less-regulated VoIP services.

"Pricing the service for the holiday shopping season fits our expansion strategy and makes AT&T CallVantage Service even more affordable, which is great news for consumers as we give them more of what they want for less," Cathy Martine, AT&T senior vice president for Internet Telephony, said in a statement.

Recently, America Online confirmed that it is working on a Net telephony plan as well.

Are consumers ready for VoIP?

AT&T also on Thursday said it has begun shipping a "do it yourself" guide for multiple phone connections in homes, although technical help is available for a fee.

Broadband dependency

The thing that I dont like about the VOIP service is that it depends on your Internet connection. Last night I woke up at 1:00AM in the morning to use my computer, but my cable connection was down. What if that was an emergency call. I however favor cable internet as it is more reliable than DSL.

[jamie.p.walsh]

RE: Broadband dependency

I agree. Looking to the future though, if we ever see decent Broadband over Power Lines get rolled out, I think we'll have a winner. By that time though, I'm sure our gov't and the whiny Baby Bells will scream for VOIP to become regulated and taxed. Once that happens, I wonder if VOIP will still have the same appeal. Savings over landlines and cell phone pricing is what is driving the boom for it.

Why do consumers not get Quality of Service near business standards??? That would be the better near-term solution.

[Tex Murphy PI]

Forget VOIP, just give me POTS

It's not out of the love for the telephone company that made me say that. Nor is it the "stellar" service I get from them either.

It's simply because of security. Traditional phone lines are point-to-point calls, while VOIP is routed through the INTERNET.

Although it is easy to tap a phone-line, it is less likely to happen than tapping a VOIP call. The problem with VOIP is that anyone along the path in the Internet can easily intercept the packets for decryption.

VOIP is fine for daily calls, but I wouldn't trust it when I call the credit card company, bank, or any other financial transaction where you have to furnish your name, social security number, etc. etc.

Does not apply to Canadians!

I received this reply when I asked them why their prices are not being updated for Canadian customers:

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Dear B.Ramin,

Thank you for contacting customer care. I am sorry for the delay in
response.

In response to your email, Canada is a newly acquired market for
Vonage, so we are not able at this time to provide the Canadian
cusomters with price reductions.

Thank you for contacting customer care, I hope I answered your
question. If you have any further questions please contact us.

Sincerely,
Latoya W.
Vonage US
1-VONAGE-HELP 1.866.243.4357
[e-mail]
Vonage Canada
1-877-272-0520
[e-mail]
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