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Vonage In The News
Vonage Holdings Corp. Reports Fourth Quarter and Full Year 2013 Results

Carolyn Katz Elected to Board of Directors of Vonage Holdings Corp.

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Mexico Warms Up To Voice Over Internet Service


Vonage In Print News

Mexico Warms Up To Voice Over Internet Service

December 16, 2004

By Cyntia Barrera Diaz

MEXICO CITY (Reuters) - VoIP, or voice traffic over the Internet, is headed for Mexico offering an opportunity for upstart telecommunications companies but a headache for traditional companies, who see pressure on their earnings as the cost of long distance calls decline.

The new service, known as voice over Internet protocol (VoIP), requires a high-speed broadband connection and has caught the eye of customers around the world because of its wider array of features compared with traditional telephony.

The service is yet to be regulated by local authorities.
In Mexico, companies like VoxIP, owned by telecom entrepreneur Carlos Peralta, was formed recently to take advantage of the service in a market dominated by Telefonos de Mexico (Telmex) (TELMEXL.MX: Quote, Profile, Research) (TMX.N: Quote, Profile, Research).

Alestra, 49 percent owned by AT&T Corp. (T.N: Quote, Profile, Research) , also plans to launch Voip services in the first quarter of 2005.

Alestra's president, Rolando Zubiran, told reporters on Wednesday that about 500 clients, including residential and small businesses, will be offered Voip as part of its added value services package.

The introduction of the new service is already sending shockwaves among Mexican cable operators, whose technology, while ready for Voip services, lacks the permits necessary to operate a public telecommunications network.

"Regardless of the technology used to carry voice services, whoever makes a commercial use of such services should have a public network concession to operate" in the country, a source at telecom watchdog Cofetel told Reuters on Wednesday.

The services will not break new ground, however, as Mexican residents already can use Internet telephony services from foreign firms, like upstart Vonage Holdings Corp., as long as they have a U.S. billing address and credit card.

Vonage, which does not offer its services directly in Mexico, charges $15 for its basic package that includes an adapter, a U.S. phone number and air time throughout the United States and Canada. Calls to other countries carry a separate fee.

PROFITS? NOT NOW
For new companies like VoxIP, Internet telephony is a good chance to cash-in faster on customers' need for cheaper services without the broader investment that thorough networks like Telmex's require.

Telmex, owned by Latin America's richest man, Carlos Slim, owns the biggest and most state-of-the-art telecommunication network in the country. Next year it plans to invest $2 billion in network expansion.

But company officials have said Telmex is not too eager to lead the country to Internet telephony as Voip would likely cut into its long-distance revenue.

Yet, it is already testing the service for the time that it becomes a fully-fledged service with wide appeal.

Analysts think the new service won't change the rules of telephony in the short term for one simple reason: prices for high-speed broadband connections, particularly those for the residential market, are still too high.

Mexico, where more than half of its 104 million inhabitants live in poverty, has slightly over half a million high-speed Internet connections.

"This is a long-term issue," said analyst Jose Luis Ramirez with Deutsche-Ixe brokerage. "It will change the rules of the market, but you will see the difference in (at least) two years."



 
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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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