November 16, 2004 1:58 PM PST

SBC joins the VoIP party

SBC Communications will begin selling residential phone services that use the Internet in 2005, aiming for those in its existing U.S. markets who buy broadband access but gave up their traditional home phone.

SBC is the latest major local phone company to dabble in home phone services using a broadband connection, rather than the heavily taxed and regulated traditional local phone network. The nation's leading local carriers see voice over Internet Protocol (VoIP) plans in the works from cable companies and VoIP-specialist upstarts as a threat, given that cheaper VoIP services could lure customers away in droves.

The local phone giant said on Tuesday that it began trialing such a service last month in Los Angeles, Dallas, Chicago and San Antonio.

Two other local carriers, Verizon Communications and Qwest have either launched or said they intend to launch a residential home phone service using VoIP. With the entrance of such heavyweights, as well as cable providers with their own VoIP plans, upstarts like Vonage Holdings and 8x8 that pioneered commercial VoIP services more than two years ago will feel more pressure in the coming years.

SBC's entry into the residential VoIP market helps validate analysts projections that by the end of the decade about 10 million U.S. homes will have a VoIP line.

By selling Internet phone calls, the top four local phone companies could also, conceivably, target each other's markets--something that would otherwise be impossible. While they won't refuse to sell a VoIP plan to a customer from outside their well-established market areas, most of the regional "Baby Bell" operating companies are preferring to market the plans within their existing territories, mainly as a way to interest people in buying high-speed Internet access.

For SBC, VoIP will serve as more of a salvage operation. Up to 12 percent of United States phone users have only a cell phone. Such "cord-cutters" have eliminated traditional phone lines from their homes, but typically have both a cell phone and a broadband connection.

"These folks aren't interested in the landline, so if they are going to leave, we at least want to be their provider of some service," said SBC spokeswoman Sue McCain.

 

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