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Vonage In The News
Vonage Expands International Presence with Investments in Asia Pacific Region

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Vonage Customer Reviews
Salt Lake City: impressions after several months
Salt Lake City: impressions after several months



Review: My First Day With Vonage, Excellent!
Review: My First Day With Vonage, Excellent!



Great Price, No Complaints
Great Price, No Complaints



You need some common sense.
You need some common sense.



Vonage Customer Review: One month with Vonage, and...
Vonage Customer Review: One month with Vonage, and...




Vonage Reviews

Rivals AT&T And Vonage Slash Price


Vonage In Print News

Rivals AT&T And Vonage Slash Price Of Internet-Phone Service

October 1, 2004

By Ken Brown

Internet calling is getting cheaper -- again.

AT&T Corp. cut the price of its Internet phone service by $5 a month yesterday, only to see rival Vonage Holdings Corp. slash its prices to stay $5 below AT&T's latest offer.

AT&T has stepped up the marketing of its CallVantage service in the past two months, including a slew of ads show during the Olympic Games in Athens. Yesterday, AT&T cut the price of its unlimited calling plan by $5 to $29.99.

Vonage, an upstart Internet-phone company with more than 275,000 subscribers, responded by cutting the price for its unlimited calling plan from $29.99 to $24.99. "We were going to announce this on Oct. 1," said Vonage Chairman and CEO Jeffrey Citron. "Coincidentally AT&T made their announcement today so we accelerated ours." AT&T hasn't said how many Internet-phone customers it has.

The price cuts raise the question of whether anyone will ever make any money selling Internet-phone service, which is also known as voice over Internet protocol, or VOIP. Internet-phone calling requires a broadband Internet connection, and the calls are treated as if they are data, so the cost is lower.

The lower prices announced yesterday also make it more attractive for people who have conventional-phone service through the Bell phone companies to switch to Internet calling. No action is required by consumers to receive the lower rates.

AT&T spokesman Gary Morgenstern said he believes Voip prices will eventually stabilize. He adds that AT&T still makes a profit on the service at its new price level, and will not be deterred by Vonage's price cut. "They're not scaring us," he said.

Other players are piling into Internet calling as well. Verizon Communications Inc. recently launched its own Internet-calling service called VoiceWing, for which it charges as little $29.95 a month. The company bundles the service with high-speed Internet Digital Subscriber Line service and modem, which is required to make Internet calls. The combined package costs $59.90 per month.

Cable modems and broadband service can cost upward of $40 per month, not counting the monthly charge of Internet-calling service such as Vonage or AT&T. "If customers don't look at the two components -- the broadband connection and the phone service -- they kid themselves," says Eric Rabe, a spokesman for the company.

Closely held Vonage, Edison, N.J., cut prices in May, soon after AT&T announced its Internet-phone service. Vonage's two price cuts total nearly 30%. Mr. Citron said the company was able to reduce its prices again because it has doubled its customers. He said after the price cut, Vonage should be able to generate free cash flow after marketing costs.

Reflecting a growing rivalry, Vonage even sued AT&T earlier this year, claiming AT&T's CallVantage name infringed on the Vonage name. The suit has since been settled and details weren't disclosed.



 
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†AK and HI residents pay $29.95 shipping. ††Limited time offer. Valid for residents of the United States (&DC), 18 years or older, who open new accounts. Offer good while supplies last and only on new account activations. One kit per account/household. Offer cannot be combined with any other discounts, promotions or plans and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.

1Unlimited calling and other services for all residential plans are based on normal residential, personal, non-commercial use. A combination of factors is used to determine abnormal use, including but not limited to: the number of unique numbers called, calls forwarded, minutes used and other factors. Subject to our Reasonable Use Policy and Terms of Service.

2Shipping and activation fees waived with 1-year agreement. An Early Termination Fee (with periodic pro-rated reductions) applies if service is terminated before the end of the first 12 months. Additional restrictions may apply. See Terms of Service for details.

HIGH SPEED INTERNET REQUIRED. †VALID FOR NEW LINES ONLY. RATES EXCLUDE INTERNET SERVICE, SURCHARGES, FEES AND TAXES. DEVICE MAY BE REFURBISHED. If you subscribe to plans with monthly minutes allotments, all call minutes placed from both from your home and registered ExtensionsTM phones will count toward your monthly minutes allotment. ExtensionsTM calls made from mobiles use airtime and may incur surcharges, depending on your mobile plan. Alarms, TTY and other systems may not be compatible. Vonage 911 service operates differently than traditional 911. See www.vonage.com/911 for details.

** Certain call types excluded.

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