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T-Mobile USA plans to announce Wednesday that its new @Home voice service will be available nationwide starting July 2.

The cell phone operator has been testing the new Internet telephony service since February in Dallas and Seattle. And now the new service, which is meant to replace traditional home phones, will be offered to any T-Mobile cell phone customer.

Subscribers will be able to connect any regular home telephone to a T-Mobile router that will send calls over the Internet much the same way as services like Vonage operate. The service costs $10 a month plus taxes and fees for unlimited domestic local and long-distance calls.

Only T-Mobile wireless customers who subscribe to at least a $39.99 individual calling plan or families subscribing to at least the $49.99 monthly T-Mobile calling plan can get the service. The @Home service also requires that users subscribe to a separate broadband service from a cable operator or telecom provider. And they are required to use a special T-Mobile router, which also provides Wi-Fi Internet access throughout the home.

This router can also be used to provide T-Mobile's HotSpot @Home phone service. This service, launched last year, allows T-Mobile subscribers to use dual-mode cellular and Wi-Fi phones that switch between both networks. When subscribers are near their home Wi-Fi hot spot, they use the broadband network to make unlimited domestic calls. And when they are outside the home, the phone seamlessly switches to T-Mobile's cellular network.

The service, which also costs $10 extra per month, serves two purposes. It helps provide better in-home cell phone coverage and also helps reduce the number of minutes used on the T-Mobile cellular network.

Britt Wehrman, director of product development for T-Mobile says the service, which launched a little over a year ago, has been a big success. The company hasn't disclosed subscriber numbers for the service, but Wehrman said that 45 percent of the hot-spot customers are leaving competitors to get the T-Mobile service. T-Mobile currently has eight dual-mode handsets that work with the service, two of which were announced earlier this week. And it has four more to announce by the end of the year, bringing the total to 12 dual-mode handsets.

The @Home VoIP (voice over Internet Protocol) service is meant to work with the hot-spot phone service, Wehrman said. When the hot-spot service was first introduced, the company found that families were interested in the plan. But they weren't willing to cut the cord on their home phones.

"The hot-spot service offers parents a good way to limit overage charges, because the kids can talk on their cell phones while they're at home without eating up minutes," he said. "But we found that many families didn't want to get rid of their traditional phones. They still wanted one phone in the house for the whole family."

So the @Home VoIP service was created to give families who don't want to get rid of their traditional landlines a low-cost option for retaining that line while still using the hot-spot service. To ensure that E911 service works with the VoIP service, T-Mobile is requiring all users to register their home address before service can be activated.

But because it is an Internet-based phone service that is dependent upon a broadband modem for connectivity, families will still have to consider the risks of power outages and Internet interruptions that will make the VoIP service and E911 unavailable during those outages. But Wehrman said that the fact that T-Mobile requires that subscribers of the @Home service also have a T-Mobile cell phone subscription limits the safety concerns.

T-Mobile USA said Thursday it's testing a new Internet telephony service in Dallas and Seattle that will replace consumers' wireline home phone service.

Subscribers will be able to connect any regular home telephone to a T-Mobile router that will send calls over the Internet much the same way as services like Vonage operate. The service costs $10 a month plus taxes and fees for unlimited domestic local and long distance calls. But customers also have to be signed up for a T-Mobile wireless service costing at least $39.99 a month. The required router, which also provides access to the Internet, costs $50 after rebates. T-Mobile said existing phone numbers can be ported over to its service.

The company had been rumored to be working on a voice over IP wireless router since this summer when it was discovered that the company had filed plans for the device with the Federal Communications Commission.

T-Mobile, which is the fourth largest cell phone operator in the U.S., is upping the ante as it competes against, AT&T and Verizon Wireless, the No. 1 and No. 2 cell phone operators in the U.S. Aside from having more customers and larger network footprints than T-Mobile, these two operators also offer regular landline phone service to consumers. T-Mobile, which is owned by the German operator Deutsche Telekom, does not own landline infrastructure in the U.S. This makes it difficult for T-Mobile to compete against these players when it comes to bundling services and enticing customers to drop their existing phone service for service with T-Mobile.

But the new Talk Forever Home Phone service along with another T-Mobile service called HotSpot AtHome, which was launched last year and enables T-Mobile subscribers to use their home Wi-Fi network to talk on their wireless phones, are designed to entice consumers to abandon their traditional telephone service for T-Mobile's service.

Both of these services fit into T-Mobile USA's bigger strategy, which is to expand its network footprint and add capacity to attract more customers. This year the company is expected to upgrade its network and roll out new services using spectrum it acquired in the Advanced Wireless Services spectrum auction run by the Federal Communications Commission in the summer of 2006.

Earlier this week, T-Mobile also announced that it would offer an unlimited voice, data and text-messaging cell phone service for $99.99 a month. This announcement came after competitor Verizon Wireless announced a similar plan. AT&T also announced it would offer unlimited voice and data for the same price.

Sprint Nextel and Verizon Communications both see an opportunity to make a buck on their IP telephony patents after successfully suing Vonage Holdings last year.

On Thursday, Sprint Nextel said in a U.S. District Court in Wichita, Kan., that it was suing four small phone companies. Sprint alleges that Nuvox Communication, BroadVOX Holdings, Big River Telephone, and Paetec Communications are infringing on six of its patents.

Those patents, part of a larger portfolio of patents that cover voice over IP technology owned by Sprint, are the same ones used to successfully sue Vonage. The two companies eventually settled the dispute last year. And Vonage agreed to pay Sprint a total of $80 million, which includes $35 million for past use of the license, $40 million for a fully paid future license, and $5 million in prepayment for services.

Verizon Communications, which won a $120 million settlement from Vonage last year, is also asserting its patent claims. Earlier this month the company filed a suit in the Eastern District Court of Virginia against cable operator Cox Communications for infringing on eight patents that had to do with voice over IP technology. Two of the patents in the Cox case are the same ones Verizon successfully sued Vonage for infringing.

Since Sprint and Verizon have already successfully asserted these patents, it certainly strengthens their new cases. And it's very likely the companies will either win in court or be able to pressure these companies and any other VoIP providers into licensing deals.

This is very good news for Sprint, which would benefit greatly from turning its existing patent portfolio into a cash cow. The beleaguered cell phone carrier has been bleeding customers and is in desperate need of new revenue growth to boost earnings.

Start-up IP telephony providers Jajah and Jangl are teaming up to take on the competition, the companies said Thursday.

The companies are part of a new generation of voice-over IP providers that have crept up recently hoping to replicate the success story of Skype, which was bought by eBay two years ago for $2.6 billion. The market is already crowded with dozens of these small players. Typically at this stage of the game, start-ups are too busy duking it out against each to forge partnerships, but executives at Jajah and Jangl say it makes sense for them to partner even though some of their products may overlap.

"It is rare to see companies at this stage do something like this," said Michael Cerda, CEO of Jangl. "But it's such a confusing market out there and the press and VCs often lump all VoIP providers together. But our strategies and technologies are really very different. And when we sat down together, we realized they're actually complementary."

Jajah is focused on providing low-cost international calling. Already it has the ability to terminate calls or transfer calls from the Internet to the local telephone network in more than 122 countries around the world. Earlier this year it received funding from the German phone company Deutsche Telekom. And it has ambitions to grow into a major telecommunications platform provider in the future.

Jangl, on the other hand, is focused on providing secure phone calling for social-networking and dating Web sites. The service essentially provides alternative local phone numbers that can mask a person's actual phone number, so that they don't have to give out a personal telephone number to strangers.

But while their focuses may be different, Cerda and Frederik Hermann, director of global marketing for Jajah, say they see benefits in working together for both companies. For example, Jajah is about to launch an in-call advertising platform. The way it works is when a user is being connected to a call, he has the option of listening to a short 10-second advertisement. As a reward for listening to the commercial, the user earns credit, which can be used to defray the cost of making future calls over the Jajah network.

Jangl, which claims to be on some 40 million social-networking profiles on sites such as Match.com, says it brings an important target audience to advertisers because its service is already integrated into the media-rich social-networking world.

"Jajah brings the ads and we bring the customers," Cerda said.

Also as part of the deal, Jangl will be able to terminate calls onto the regular phone network from the Internet in all of Jajah's 122 countries. Today Jangl only offers termination service in 32 countries.

"Over the past two years, we've built a huge back-end system for terminating calls all over the world," Hermann said. "So we're able to allow Jangl to use that resource and we recover a small margin on that."

But Jajah and Jangl's main competitor Jaxtr says the companies are merely running scared. "I see it simply as the weak banding together," said Konstantin Guericke, CEO of Jaxtr.

One thing is for certain, partnerships are tough to manage no matter the size or stage of growth of the companies involved. But who knows? Maybe this partnership will be a prelude to a merger. Executives from Jajah and Jangl haven't ruled out the possibility, but they each say it's not on the table right now.

"Merging the two companies might make sense at some other juncture in the future," Cerda said. "But both companies are still so young. And they have something they want to be when they grow up. And we have something we want to be when we grow up."

Updated at 7:25 a.m. PDT Friday.*

Vonage said Thursday it had resolved an ongoing patent dispute with Verizon Communications at a price tag of up to $120 million, ending what has been a mostly gloomy saga for the struggling Internet phone company.

The announcement comes about a month after New Jersey-based Vonage, which has yet to turn a profit, lost the bulk of an appeal regarding three voice over Internet protocol patents held by the nation's second largest telephone company.

The appeals court upheld a jury finding that Vonage had infringed on two patents that are arguably central to its service. It ordered a new trial on a patent infringement finding, dealing with a feature considered less significant to Vonage's service, but the settlement covers that patent, too, so that court action appears unlikely to proceed. Because the jury deciding the case did not distinguish which damages applied to which patents, the court also threw out a $58 million judgment against Vonage.

The precise amount of Vonage's final payout to Verizon depends on whether the federal appeals court grants a rehearing Vonage has requested on the two central patents, Vonage said in a statement.

If Vonage wins a rehearing or manages to secure relief from an injunction affecting one or both of the two core patents, it has agreed to pay Verizon $80 million. If Vonage is not granted a rehearing or if the injunction, which is currently on hold, is reinstated, Vonage said it will pay $120 million, of which $2.5 million will be "payable to certain charities." Vonage said it has already deposited $88 million into an escrow acount.

"We're pleased to put this dispute behind us and believe this settlement is in the best interests of Vonage and its customers," Sharon O'Leary, the company's chief legal officer, said in a statement. "This settlement removes the uncertainty of legal reviews and long-term court action and allows us to continue focusing on our core business and customers."

Verizon representatives declined to comment on the settlement.

Vonage has claimed all along that it has a technical work-around that will allow its service to continue working without disruption to its customers, even if a court ultimately decides to enforce an injunction prohibiting it from using Verizon's patents.

The settlement decision struck Stifel Nicolaus analyst Rebecca Arbogast as a bit surprising--at least from the perspective of Verizon, which she described as "in the catbird seat."

"Unless Vonage had an airtight work-around, which was unlikely, Verizon was in a position to enforce an injunction against a core aspect of Vonage's service, which could have put them over the brink," she told CNET News.com after the settlement announcement, which arrived just after the 4 p.m. EST close of the stock market. "I would expect that Verizon ultimately decided they'd rather have Vonage alive than dead. And some settlement money to boot."

In addition to the Verizon deal, Vonage has now settled patent disputes in recent weeks with Sprint Nextel for $80 million and Klausner Technologies, a privately held company that specializes in voice-messaging technology, for an undisclosed amount.

But Vonage's legal woes aren't over yet. The company revealed in an federal regulatory filing last week that it's facing a new patent infringement suit from AT&T in Wisconsin federal court.

*This blog was updated to note Verizon's decision Thursday not to comment further on the settlement.

Vonage has asked a federal appeals court to revisit its recent decision to uphold most of a patent infringement ruling in a case it lost to Verizon Communications.

The Internet phone company characterized the request for a rehearing as the "next logical step" in the litigation process and in "moving our business forward."

The struggling firm also continues to "explore all legal options available to put the Verizon litigation to rest," Chief Legal Officer Sharon O'Leary said in a statement Wednesday.

Could that mean another out-of-court settlement is on the horizon? Earlier this week, Vonage settled a patent dispute with Sprint Nextel to the tune of $80 million. That development arrived just weeks after a federal jury ordered Vonage to pay $69.5 million for infringing six voice-over Internet protocol patents.

In late September, the U.S. Court of Appeals for the Federal Circuit upheld a jury's finding earlier this year that Vonage had infringed on two Verizon patents, which are seemingly critical to the way the Net phone company's service works. (Vonage has maintained it has a workaround that doesn't infringe, but some analysts say Verizon may challenge those supposed fixes as well.)

The appeals court opted to send the infringement decision on the remaining patent at issue, which is considered less significant to Vonage's offerings, back to a lower court for a new trial. The court also threw out a $58 million judgment against Vonage because the jury didn't specify how the damages would be divvied up among the three patents at issue.

Update at 2:33 p.m. PDT: Rebecca Arbogast, an analyst with Stifel Nicolaus and constitutional law professor at Johns Hopkins University, said requests for appeals court rehearings are "routinely sought" but "seldom granted."

After months of battle, Vonage has lost the bulk of its appeal in the Verizon Communications patent infringement case.

In March, a jury in Virginia found that Vonage had infringed on three patents held by Verizon. And it awarded Verizon $58 million in damages along with future damages of 5.5 percent on the revenue that Vonage was making during the appeal process.

The judge in the case imposed an injunction on Vonage that would force the company to stop delivering a service using technology that infringes on Verizon's patents. But because Vonage has been appealing the case, the injunction has not yet gone into effect.

On Wednesday, Vonage's appeal essentially came to an end. And as the legal dust settles, the small voice over IP company now faces the possibility of paying hefty monetary damages and a total shutdown of its IP telephony service.

But as is often the case in complicated legal disputes, the actual outcome of the case is still far from certain. In its final judgment, the U.S. Court of Appeals threw out one of the three patent verdicts and upheld the other two. And because the total damage award was assessed based on Vonage violating all three patents, the appeals court asked the lower court to reconsider the entire $58 million damage package awarded in March.

On the one hand, this sounds like a partial victory for Vonage. And the company has said as much.

"We thank the appellate court for its thoughtful consideration of the merits of our case," Vonage's chief legal officer, Sharon O'Leary, said in a statement. "We are pleased with the decision to vacate the 880 patent and the damages. However, Vonage remains confident that it has not infringed on the 880 patent--a position we will continue to vigorously assert and look forward to presenting at trial."

But the reality of the situation is altogether different. For one, the two patents the court upheld happen to be the most fundamental to Vonage's service. Essentially, U.S. Patent No. 6,282,574 and U.S. Patent No. 6,104,711 define how phone calls are routed over the Internet, which essentially is the basis of Vonage's IP telephony service today.

By contrast, U.S. Patent 6,359,880, which is the patent the appeals court said would have to be retried by the lower court, has to do with how public wireless and cordless Internet gateways communicate with the Internet. Because this technology is not a big part of Vonage's commercial service today, sending the case back to the lower court will likely have little impact on Vonage's actual business.

And because the '880 is considered less significant, when the lower court reassesses damages, as it's been asked to do by the appeals court, it could just re-enter the same amount without holding an entirely new trial.

The reason is simple. Both Vonage's and Verizon's experts who testified during the original trial, stated that the '880 patent should have little impact on determining damages. This means that the damages that were assessed were based mostly on the cumulative contribution from the two other patents, '711 and '574. And the judge could look at this testimony and re-enter the $58 million for damages.

But in addition to the hefty damages the company will still likely have to pay, Vonage is now facing the possibility of having its service shut down.

During the appeal, the injunction issued by the judge in the case was not in effect. But once the appeals court's decision is final, which should happen within two weeks to a month, the injunction barring Vonage from using any technology that infringes on Verizon's patents goes into effect.

Vonage is adamant that its service will continue.

"It's business as usual," O'Leary said in a statement. "We have had our workarounds for the '711 and '574 patents in place for some time and will remain focused on providing a great customer experience."

But these claims will have to be verified. Right now it's unclear how this will work. Either the court will step in to determine if the new fixes violate the patents as they were examined during the trial, or Verizon will have to challenge the new workarounds.

One thing is certain, Vonage's troubles are far from over.

"I think there is definitely a threat that its service could be impacted," said Rebecca Arbogast, an analyst with Stifel Nicolaus. "Vonage says it has a workaround, but who's to really know? My hunch is that Verizon will likely aggressively challenge these fixes as well."

This latest legal blow comes just one day after a jury in Kansas found that Vonage infringes on six patents held by Sprint Nextel. The jury awarded damages of $69.5 million in that case. All in all, the news looks bleak for Vonage, said Arbogast.

"These are different patents in a different court," she said. "But the damages in the Sprint case are significant, and it's just piling on one more shovel full of penalties on the company at a time when it already has a significant amount of money tied up in escrow over the Verizon case. Plus, there's the threat of an injunction, and it makes investors wary."

Indeed, Vonage's stock dipped another 26 percent to close at 96 cents per share.

Despite SunRocket's recent implosion, venture capitalists are hot to invest in voice over IP start-ups.

A company called Jaxtr announced Tuesday that it's raised $10 million. The company, which hopes to emulate the success of eBay's Skype, actually attracted some of the same investors as Skype. Draper Richards, Draper Fisher Jurvetson and Mangrove Capital, all early stage investors in Skype, contributed to Jaxtr's first round of funding.

Jaxtr is one of a growing number of IP telephony start-ups hoping to make it big. These companies are leaning more toward Skype's business model as a complementary voice service rather than billing themselves as a replacement to traditional telephone services. This was the strategy that Vonage and SunRocket took when launched. Now SunRocket is out of business, and Vonage is gasping for air.

But the new crop of start-ups are cleaning up in terms of funding. Rebtel has raised $20 million, Truphone got $23.4 million, Jajah score about $20 million and Ashton Kutcher's Ooma raised $27 million.

Jaxtr allows people to make free international calls from their cell phones by assigning users with a local number. Callers use this number, which routes calls over the Internet. Jaxtr's CEO Konstantin Guericke co-founded LinkedIn, and the service actually incorporates social networking by creating a widget that allows people to embed the number on their blog or social-network profile, such as MySpace and Facebook.

Several readers blasted me for my blog post last week about the Skype outage. I assumed that many of the people using Skype's messaging and voice over IP service didn't rely on the service for their primary form of communication. But several people pointed out that many small businesses use Skype to communicate with clients, employees and partners.

These comments got me thinking about this segment of the market. And now I'm working on a story that will take a look at how small businesses use free communications services like Skype instead of products that they would have to pay for from Microsoft or Cisco Systems.

I'd love to get some perspective from business users who rely on Skype for day-to-day communications. Specifically, I'd like to know why these users have chosen a free service over one they'd have to pay for, and whether or not the recent outage would change their minds about this choice. On the flip side, I'd also like to hear from some small-business owners who decided to go with a unified communications solution from Microsoft, Cisco or any of the other competitors in that market. So if you fit into either one of these categories and you'd like to help me with my story, please send me an e-mail at maggie.reardon@cnet.com.