AT&T begins selling Net phone service

AT&T has begun selling unlimited local and long distance Internet phone service for $40 a month, a move that's expected to roil the telephone industry.

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The former Bell operating company is making CallVantage available to any broadband subscriber, regardless of where they are located. But its only giving out New Jersey and Texas telephone numbers for now, which is expected to limit sales to those two states.

For $40 a month, subscribers get unlimited local and long distance calls, voicemail and caller ID. Other CallVantage features include sending incoming calls to up to five different phone numbers simultaneously, or one at a time. A comparable service on a traditional telephone networks would cost more than $60 a month.

The company wants 1 million homes and business customers in 100 U.S. markets by next year, said Cathy Martine, AT&T senior vice president of voice Internet services and consumer product management.

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With the start of CallVantage, AT&T now begins battling the nation's leading phone companies that, having built the original telephone networks, dominate the local phone market. But CallVantage, and other so-called voice over Internet Protocol (VoIP) services use the Internet to avoid the heavily taxed and bandwidth-wasting telephone networks.

Aside from the traditional phone companies, AT&T is battling a small coterie of VoIP start-ups that have helped seed the U.S. Internet telephone market. They include 8x8; Vonage, which has about 150,000 subscribers; and VoicePulse, a smaller VoIP provider known for the special features only a broadband network could provide.

"AT&T brings a lot of attention to this technology," VoicePulse Chief Executive Ravi Sakaria said. "In the consumer's mind, they are validating VoIP as a legitimate service."