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Companies Cast Wide Web To Offer Internet Phoning

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Companies Cast Wide Web To Offer Internet Phoning

PR News --December 22, 2004

By Stephen Pounds

How do you reach soccer moms and NASCAR dads? You sell where they shop.

That's how every new technology has found its way to the American home, and it's the strategy that Vonage Inc. and AT&T Corp. are following to make phone calls over the Internet as ubiquitous as traditional land-line service.

Vonage, the largest player in the so-called Voice-over Internet Protocol, or VoIP, market, began offering its trendy phone technology in major electronics and office supply retail outlets this year.

And Tuesday, the New Jersey-based company added CompUSA's 200-plus stores to a list that has grown to include retail heavyweights such as Circuit City, Best Buy, Radio Shack, Sam's Club, Staples and Delray Beach-based Office Depot.
AT&T is following suit. Together, they're pushing mainstream consumers to try VoIP, a technology that most, even those with PCs in their homes, still barely know anything about.

"It's brought a lot of credibility to what we're doing," Dan Elwell, Vonage retail sales director, said of the retail store presence. "You can talk to a sales associate and ask how it works. It brings Vonage to the consumer in a concrete form."

With VoIP, a call is transmitted from a typical phone through a router over a high-speed Internet connection to a call-processing center where it is sent to its final destination.

It's a complicated technology that retailers can demystify for the everyday consumer shopping for digital cameras, flat-screen televisions, movie DVDs, portable audio players and laptop computers.

"They want to offer something that is familiar to you," said analyst Jon Arnold of the research firm Frost & Sullivan. "The more you can look and see and touch this, the less the technology gets in the way."

Another sign that voice-over Internet phones are gaining momentum in the retail world was AT&T's global advertising campaign during the summer Olympics for its CallVantage service.

"The ads were a watershed event for the industry," Frost said. "It was the first time (VoIP) was marketed as a mainstream thing. It's what gets you from early adapters to the mainstream population."

During the past two years, Voip providers have improved the voice quality of their service and dropped their prices to undercut traditional long-distance and local phone companies.

They also have added what are now basic consumer services such as call waiting, voice mail and caller ID. In addition, they have made the product less intimidating by converting Voip to a shrink-wrapped product that's sold as a router or phone adapter.

You hook it up at home, much like a high-speed cable modem, and sign up for the service over the Internet or by calling an 800 number.

Typically, Vonage's router and adapter can cost about $130 and $50 to $60, respectively.

The monthly cost runs about $25 for unlimited local and long-distance, about half of traditional phone services.
There is evidence that it is catching on. Vonage has 350,000 subscribers and says it is adding 25,000 subscribers a month.

AT&T doesn't release subscriber data, but analysts say it has the second-largest provider of voice-over Internet service in the U.S.

Moreover, analysts project that 15 million consumers could sign up for Voip service by 2008 as more companies, including the cable companies and the Baby Bells, jump into the market.

To date, however, voice-over Internet services have struggled to pry traditional phones from the hands of consumers who have stubbornly held onto them like a favorite pair of shoes.

Now, as cellular service and high-speed Internet have become more widely accepted, mobile-phone users have begun to look to Voip as a second service for the home.
"It's cheaper than traditional phones," said analyst Daryl Schoolar of the research firm In-Stat/MDR. "Secondly, (consumers are drawn by) the phone number. It's not geographically tied. You can live in Tampa and have a New York number."

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