Verizon Launches Nationwide Internet Calling Service

Verizon Communications Inc., the nation's largest phone company, launched on Thursday a nationwide Internet calling service that's expected to give a major boost to the low-cost communications technology.

The New York-based company's VoiceWing service includes unlimited local and long-distance calling in the United States for a flat fee of $39.95 a month for non-Verizon subscribers. Customers can subscribe for $34.95 a month. Verizon is offering the service for $29.95 a month for the first six months to consumers who subscribe before Oct. 31.

The service, which is available in the District of Columbia and more than 130 cities in 33 states, costs less than traditional phone service because it sends voice as data packets over the Internet and the phone company's network. Subscribers need a high-speed connection and a special telephone adapter provided by Verizon, which charges a one-time set-up fee of $39.95.

Besides Internet calling, Verizon's VoiceWing service also includes voice mail, which can be accessed through a desktop or laptop; call forwarding and an address book that enables subscribers to make a call by clicking on a phone number.

Verizon is not the first phone company to offer Internet calling, often called voice over Internet protocol, or VoIP. AT&T rolled out its own service earlier this year to 100 cities for $34.99 a month and $19.99 for the first six months. Qwest Communications Inc. offers Internet calling in its region, and plans to expand to other parts of the nation by the end of the year.In launching its service, Verizon apparently wanted to avoid a price war, given its decision to stay above start-ups such as Vonage, which offers a basic calling service for $29.99 a month. In addition, cable company Cablevision Systems Corp. has bundled Internet calling, cable television and high-speed services in a package for under $100 a month.

"(Verizon's announcement) is a pretty big validation that VoIP is here to stay, but the price point in which they entered the market doesn't put them in the driver's seat," Vamsi M. Sistla, analyst for ABI Research, said, adding that he expects the phone company to drop its prices over the next several months.

Nevertheless, the move is seen as Verizon's latest step in battling rival cable companies that have been taking local phone service away from phone companies.

Earlier this week, Verizon announced that Keller, Texas, would be the first city where it would offer a high-speed Internet service with data speeds up to 30 Mbps, making it on par with broadband services from cable companies. Verizon plans to announce deployments of its fiber-optic cable service in California and Florida, as well as more cities in Texas, by the end of the year. The company expects to launch a video service competing with cable companies in 2005.

"Verizon's announcement clearly raises the stakes in the broadband arena for cable operators," Allan Tumolillo, financial analyst for Probe Group LLC, said in a report released Thursday.But Verizon, as well as other phone companies, are not expected to match cable companies' TV service for at least a decade. "The tricky part is the technology," Sistla said.

Phone companies will have to build an infrastructure that can deliver video service through multiple channels, such as fiber-optic cable, copper wire and wireless, in order to reach the same number of subscribers as cable companies, which have built their networks over the last several decades.

Phone companies, however, could increase their coverage area quicker through partnerships, Sistla said, pointing to SBC Communications Inc.'s partnership, announced last year, with satellite operator EchoStar Communications Corp.