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AOL jumps into VoIP

Wed, 04/06/2005 - 8:00pm
Dave Gussow

Copyright 2005 Times Publishing Company

St. Petersburg Times (Florida)

April 7, 2005 Thursday

Available today in the Tampa Bay region, only customers with high-speed Internet access can use the service.

America Online made e-mail famous and instant messaging indispensable. Now AOL hopes to make its mark with phone service.

The Tampa Bay region is one of more than 40 metro areas where AOL Internet Phone Service will be available starting today. The company hopes to be in 85 percent of the country by the end of the year.

Yet while AOL will emphasize ties to its well-known e-mail, instant messaging and brand, the service will be available only to people who have high-speed Internet access. Most of AOL's subscribers use slower dialup connections.

"There was a conscious desire to use telephony to help people to find reasons to migrate from dialup to broadband," James Tobin, AOL vice president for voice strategy, said Wednesday. "We know that a lot haven't moved to broadband because they didn't have a compelling reason why."

AOL is joining a crowded field. In this area, Internet phone service is available from companies such as Bright House Networks, Knology, Verizon Communications, Vonage and others.

Technically called voice over Internet protocol, or VoIP, Internet phone calls have received increasing attention in recent years as more people switched to high-speed Internet connections on cable modems or digital subscriber lines.

According to the Yankee Group research company, the number of people using Internet phone service will grow from about 2.8-million this year to 17.5-million by 2008.

Yet a survey by Forrester Research shows 3 percent of the respondents used a pay VoIP service, 1 percent a free service and more than half of those "can be described as tech optimists who like to try new technologies."

"We think the transition point is at hand from the techie (early adopter) to the mass market," Tobin said. "The mass market wants this to be simple, easy to use, kind of open up the box and launch the service, no technical acumen required."

According to Forrester's survey, saving money is the main motivator for switching. Tobin says AOL's pricing, even with people switching from dialup to high-speed access, will do that. Introductory pricing includes $29.99 a month for phone and AOL service for new subscribers ($39.99 after six months); $13.99 a month for local and regional calls ($18.99 after three months), with long distance at 4 cents a minute; $24.99 per month for unlimited local and long distance in the United States and Canada ($29.99 after three months); and $29.99 for unlimited local, long distance and international ($34.99 after three months).

VoIP, while growing, is a challenge. Most consumers are only vaguely aware of it, according to the Forrester survey, and 43 percent use less than an hour of long distance a month, so Internet service would provide minimal savings.

In addition, more than 60 percent say they are satisfied with the service provided by traditional phone companies.

While AOL brings a big name to the field, competitors aren't standing still. Verizon Communications announced a new plan for $19.95 a month for 500 minutes of local and long-distance calling. And it extended introductory offers as low as $29.99 a month.

"We want to give people as many options as possible to participate in the broadband world," Verizon spokesman Bob Elek said.

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