March 7, 2005 3:27 PM PST
Vonage seeks a million users by '06
Now it's a different Internet phone operator--Vonage--singing the same million subscriber song, as about 6,000 gather for the Spring VON 2005 Internet phone conference here.
Vonage appears to have a better chance than AT&T of becoming the first commercial Internet-based telephone service provider with a seven-figure subscriber count.
The million mark would be a first for any commercial provider of exclusively voice over Internet Protocol services. VoIP is software that lets an Internet connection serve as a telephone line. VoIP calls are free if exclusively on the Internet, as in PC to PC or, increasingly, from cell phone to cell phone. It's typically $20 to $30 a month for unlimited North American calls to cell and landline phones.
Commercial VoIP providers are about $20 cheaper a month than traditional local phone operators--collectively known as the Baby Bells--largely because VoIP calls are unregulated.
VoIP operators with millions of paying subscribers--cable operators Time Warner Cable and Cablevision are on pace to reach the same plateau--are more ammunition for those in favor of regulating VoIP, which would take away a key advantage it has over traditional telephony.
State utility regulators and other VoIP regulation proponents say that as more calls flow onto the unregulated Internet, there will be less tax revenue from the traditional phone network--tax revenue that funds public phone projects and emergency services.
Vonage CEO Jeffrey Citron said Monday at the VON conference that Vonage will have a million subscribers by year's end if it continues adding an industry-leading 15,000 new customers a week. The weekly pace is the fastest in the United States, even outdrawing--to Citron's delight--VoIP sales by cable operators.
The cable providers sell VoIP as part of a triple play of voice, video and broadband priced at a steep discount for the full package.
"Do the math, and it's easy to see where we'll be by year's end," Citron said.
AT&T's CallVantange Net phone service has about 75,000 subscribers, according to a source. AT&T spokesman Gary Morgenstern said he had no comment Monday whether the goal of a million subscribers by 2006 is still in place. The company has never reported its CallVantage subscriber numbers.
To AT&T's credit, it has been through a lot in the last 12 months. First, government utility regulators eliminated key fair-competition rules that guaranteed inexpensive access to the Bell operators' mammoth local phone networks. That played a large role in AT&T's subsequent retreat from the local phone market and in local phone giant SBC's pending purchase of AT&T for $16 billion.
"Things have changed so much," AT&T spokesman Gary Morgenstern said.