[IP] AT&T, Vonage Cut Prices on Internet Calling
Begin forwarded message:
From: Dewayne Hendricks <dewayne@xxxxxxxxxxxxx>
Date: September 30, 2004 4:20:07 PM EDT
To: Dewayne-Net Technology List <dewayne-net@xxxxxxxxxxxxx>
Subject: [Dewayne-Net] AT&T, Vonage Cut Prices on Internet Calling
Reply-To: dewayne@xxxxxxxxxxxxx
AT&T, Vonage Cut Prices on Internet Calling
Thu Sep 30, 2004 01:51 PM ET
By Justin Hyde
http://www.reuters.com/newsArticle.jhtml?
type=technologyNews&storyID=6380857&src=rss/technologyNews§ion=news
WASHINGTON (Reuters) - AT&T Corp. and Internet telephone provider
Vonage said on Thursday they were cutting prices for their residential
Internet calling services by $5 per month, the strongest signs yet of a
price war in the nascent market.
AT&T, which made Internet calling services a priority after announcing
its retreat from traditional residential telephone services in July,
said it was lowering the price on its CallVantage service by $5 per
month to $29.99. It said the cut, along with an offer of one free month
for some new subscribers, was meant to spur demand ahead of the holiday
season.
Vonage, the largest U.S. Internet calling service with 270,000
subscribers, announced a few hours later that it would lower the price
of its unlimited service by $5 to $24.99 per month. Vonage also said it
would upgrade customers on a limited plan that had cost $24.99 to the
unlimited service for free.
More than a dozen companies currently offer voice over Internet
Protocol, or VOIP, services to U.S. residential customers. Most offer
unlimited local and long-distance calls for $30 per month or less, with
some as low as $19.95, although those fees do not include the broadband
Internet connection that VOIP requires. Comparable plans for
traditional service from the dominant U.S. telephone carriers typically
cost about $60 to $70 per month.
The rise of consumer VOIP has been driven by the growing number of
U.S. households with broadband Internet access, as well as steep
declines in the cost of the infrastructure necessary to run VOIP
services. Vonage, a New Jersey start-up, was able to garner more than
200,000 subscribers for about $103 million in venture capital and
raised another $105 million last month for expanding into foreign
markets.
While industry experts estimate the current residential VOIP market
has less than 1 million subscribers, they expect sharp growth starting
in 2005 as large cable companies such as Comcast Corp. roll out their
VOIP services. Communications consulting firm Yankee Group forecasts
VOIP services will win 17.5 million residential users by 2008.
Analysts say more VOIP competitors will add even more pricing pressure
that may imperil some small companies. Before Thursday's moves, AT&T
had already lowered the price of CallVantage once, and other providers
offer free months, or limited calling plans for as little as $10 per
month.
"The low barriers to entry makes the business all the more competitive
and currently all players are competing on price with very little
differentiation," UBS analyst John Hodulik said in a research note.
Archives at: <http://Wireless.Com/Dewayne-Net>
Weblog at: <http://weblog.warpspeed.com>
-------------------------------------
You are subscribed as roessler@xxxxxxxxxxxxxxxxxx
To manage your subscription, go to
http://v2.listbox.com/member/?listname=ip
Archives at: http://www.interesting-people.org/archives/interesting-people/