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Vonage Offers Web-Phone Service In (501) Area Code

Vonage In Print News

November 13, 2003
By Dan Zehr

One of the country's hottest communications companies has introduced a service that will allow residents in the (501) area code to place phone calls over the Internet.

Vonage, based in Edison, N.J., on Wednesday added much of Arkansas to its more than 1,800 service areas nationwide.

The Web-phone company routes calls using "voice over Internet protocol," which channels a voice signal across the Internet rather than the traditional telephone network.

In essence, a customer can send his voice much like an email message.

Vonage provides a Motorola manufactured box into which one plugs the phone and a highspeed Internet line. It requires some configuring, but most published accounts have suggested the setup is fairly straightforward.

The company is offering two residential rate plans. Its premium offering provides unlimited local and long-distance calling in North America for $34.99 a month. The plan does not include the cost of the broadband access.

SBC Arkansas and AT&T offer a similar package for $48.95, but Internet access is not necessary for those plans.
Voice services over the Internet have created a stir among telecom observers, who are especially excited about the technology's business applications.

"For business, I'm very much bullish because it's solving a legitimate problem," said Vijay Bhagavath, a telecom analyst for Forrester Research. "It integrates voice into the data infrastructure. The voice gets into the business processes."

When Vonage started rolling out its service in April 2002, it focused primarily on a residential market devoid of many Internet-phone providers. It has since moved into the small-business market, which now makes up about 20 percent of its customers, said Lou Holder, executive vice president of product development.

"We're spending equal marketing dollars on both now," Holder said.

In Arkansas, Vonage will offer two business plans. The premium plan includes unlimited calling and a dedicated fax line for $49.99 a month.

The benefit of combining voice with other business applications has made this technology popular, Bhagavath said. But the residential offering has not become as rich, he said, and the price isn't low enough to beat other offerings.

"My concern is if you say $35 a month for all you can call, who cares?" he said. "My cell phone is the same."

Not that Bhagavath is down on residential voice over the Internet. It has a potential to provide a sort of "presence" that current telecom technologies can't, he said. For example, a customer can type in the person he wants to call and see that person's availability - away from home, on the phone, not taking calls, awaiting the call, etc.

Also, because the technology is not tied to a specific geographic location, a resident of Little Rock can select, for example, a Los Angeles area code. If a business is located in central Arkansas but most of its customers are in New York, it could select a 212 area code, making those incoming and outgoing calls local.

The flexibility of voice over Internet has attracted more traditional providers as well. Cable companies have looked at the voice service as a way to round out their packages of entertainment and broadband access. Analysts expect voice to enhance cable's competitive position against phone companies.

The phone companies also have taken note of voice-over-Internet protocol. SBC Communications Inc. is testing the technology in some of its markets, said SBC Arkansas spokesman Ted Wagnon.

"It's something that SBC is looking at and working on," Wagnon said. "But with today's technology, there are still some significant drawbacks to using the Internet for voice transport."

Chief among those is system reliability. If the power goes out, so does the computer and the Internet phone service. Some security issues concerning sending voice signals across the Internet have also been raised. Also, in many cases local 911 emergency service is not accessible unless an extra service is ordered.

"The idea is to give something a little different than [SBC] would," said Holder, of Vonage. "It's more feature-rich. It's at a lower cost. We think there's a market for that, and we want to hit that market."

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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 for details.

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