December 9, 2005 6:01 PM PST

BellSouth, 8x8 launch VoIP service

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BellSouth is following other large local carriers that have begun offering home services powered by voice over Internet Protocol.

As part of a partnership with 8x8, a provider of voice and video broadband phone services, BellSouth announced on Friday that it will, over the next several weeks, offer customers the means to make phone calls via their computers. For $20 a month, BellSouth subscribers can order the new service, which features voice mail, caller ID, unlimited free phone calls to anywhere in the U.S. or Canada, and cheaper overseas calls, said Bryan Martin, chairman and CEO of 8x8.

"This validates our technology," Martin said. "We're a small, 200-person company, and to have BellSouth endorse us says a lot."

Financial terms of the deal were not disclosed. Atlanta-based BellSouth chose 8x8 after testing other VoIP providers, Martin said. BellSouth continues to work on creating its own VoIP technology, according to news reports.

In the United States, VoIP has yet to catch on with a broad audience even while its adoption expands quickly in many other countries. Analysts, however, expect rapid growth in the U.S., and some experts have predicted that traditional phone companies could lose a third of their business by 2008. SBC, Verizon Communications and Qwest have either launched or said they intend to launch a residential home phone service using VoIP.

The news sent shares of 8x8, headquartered in Santa Clara, Calif., climbing sharply. After rising 52 cents to close at $1.74 in regular trading, they surged another $1.31 in after-hours trading to end the day at $3.05. However, they are still about half their value from two years ago, when the company was considered one of the major VoIP services players.

BellSouth has already rolled out the 8x8 service in Florida, and in coming weeks the company will begin to release it to the other areas it serves. To set up 8x8's service, a BellSouth subscriber must order the equipment needed that enables the service to work on whatever high-speed connection the user has. Under the agreement, BellSouth will handle marketing while 8x8 will oversee customer service, fulfillment and billing.

 

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