Circuit City Answers VoIP’s Call

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March 8, 2004

By Greg Scoblete

Edison, N.J. - VoIP service provider Vonage announced last Friday that it has secured retail distribution with Circuit City, making the Richmond, Va.-based retailer the first national chain to offer the Vonage VoIP phone service in all of its 600 stores.

Starting next week, Circuit City will sell a Vonage self-install kit for $99.99, which customers with broadband Internet access can then use to set up a Vonage account and place Internet calls with their regular home phones. As an initial promotion, Circuit City will offer customers two months of free service and free activation.

The Vonage service allows consumers with broadband Internet access to make local, toll and domestic long distance calls over the Internet using their regular landline home phone.

The starter kit includes a Motorola Multi Terminal Adapter (MTA) which plugs into a cable modem's Ethernet port and into a home phone jack to enable VoIP telephony across Vonage's network.

Once the MTA is connected to both a home phone jack and the cable modem, consumers can place VoIP phone calls over their broadband Internet connection using their existing home phones. Users sign up for the service and choose calling plans online.

As a part of Vonage’s retail business model, Circuit City will receive an activation bounty for each customer that signs up for Vonage service, as well as a residual commission, said Matthew Deatrick, vice president, retail channel sales, Vonage. This model will be applicable for all of the company’s prospective national retail accounts, Deatrick said.

Circuit City is the first of what Vonage hopes is many national retail partnerships. To date, the VoIP provider has signed up most of its 115,000 users online and through third-party reseller arrangements with cable MSOs, who offer Vonage’s cable telephony under their own brands.

"We’re pursuing retail as the best way to access the general market," Deatrick said. "People want to see new technology [like VoIP telephony] in a familiar environment."

Vonage has been test-marketing the service at Best Buy in the Minnesota, California and Florida markets since September 2003, and at RadioShack in the greater Philadelphia market since June 2003. It had no tests with Circuit City prior to the partnership.

The company offers rate plans starting from $14.99 for residential customers to $49.99 for small businesses. All rate plans include caller ID, call waiting, voicemail, call forwarding, and emergency calling service. Vonage also offers a number of enhanced voicemail features, such as e-mailed voice mail where a .Wav file of the voice message is sent to a user’s e-mail.

For its part, Circuit City described the partnership as a way to cater to a growing base of high-speed Internet subscribers.

"Offering Vonage in our stores enables us to provide a new service to a rapidly growing base of customers who are also broadband subscribers," said Ron Baime, senior vice president, general merchandise manager of audio, video and technology, Circuit City.