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Fri, Jul 23, 2004 - Page 12 News List

Verizon offers US Internet-phone service

LATEST CONTENDER The firm is joining rivals such as AT&T and Vonage in targeting the consumer market, including the millions of homes without broadband

NY TIMES NEWS SERVICE , NEW YORK

Verizon Communications, the US' biggest telephone company, was scheduled to announce yesterday that it is introducing Internet-based phone service to customers across the nation, according to executives close to the plan.

Verizon is the latest and largest player to offer the technology, which divides voice calls into packets of data and sends them over high-speed Internet lines. The service can be significantly cheaper than traditional phone calls because sellers of the service do not typically have to pay access charges and other fees related to telephone transmission.

In the last year, the service has been introduced by several phone companies, including AT&T, some cable providers and start-up companies like Vonage.

Most regional Bell companies have been hesitant to offer Internet phone service because it undercuts their main business of connecting calls over copper wires. They have also argued -- rightly, many analysts say -- that Internet calls are inferior in quality and reliability to traditional phone calls.

Yet the phone companies are under pressure to enter the market because cable providers are starting to package that service with their high-speed data and video services. A company like Vonage, meanwhile, has captured more than 200,000 customers, many of whom have abandoned their traditional phone lines.

Verizon wants to use its size to grab a nationwide consumer audience, including the tens of millions of homes currently without the high-speed Internet connections needed to make the service work.

Two other Bell companies, Qwest Communications and SBC Communications, have already introduced Internet-phone plans, but they are focusing mainly on business customers.

Qwest has started marketing the service to consumers on a limited basis in Minneapolis, according to Silvia McLachlan, a Qwest spokeswoman, and expects to sell it by the end of the year to consumers in the 14 states where it operates.

Customers who sign up for Verizon's Internet phone service and also subscribe to its high-speed broadband, or DSL, service will pay US$34.95 a month for unlimited local and long-distance calls within the US. The cost of the broadband connection is separate.

Customers who buy a high-speed connection from another provider will pay US$39.95 for the phone service. Verizon will offer US$5 discounts for the first six months of service for customers who sign up by Oct. 31. By comparison, unlimited local and long-distance service over traditional lines costs US$59.95.

The prices for Verizon's service are similar to those of AT&T, Vonage and other providers.

Verizon hopes that by offering Internet calling, it will entice more customers to sign up for its broadband service, according to one of its executives.

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