TELECOM Digest OnLine - Sorted: AOL Launches Internet Phone Service

AOL Launches Internet Phone Service

Lisa Minter (
06 Apr 2005 23:30:22 -0700

By MATTHEW FORDAHL, AP Technology Writer

SAN JOSE, Calif. - America Online Inc. on Thursday launched its
Internet telephone service, jumping into a market that's already
crowded with startups, cable operators and even traditional phone

The AOL Internet Phone Service, which is being offered to AOL members
and others in 40 markets at first, includes the regular features of
traditional telephony and combines them with advanced services that
are accessed on a PC over the Internet.

The offering "will uniquely combine advanced tools, competitive
pricing plans and AOL's hallmark ease of use to allow mass-market
consumers to take full advantage of the revolution underway in
Internet voice technology," said Jon Miller, AOL's chief executive.

Instead of traveling over the traditional phone system that's been
around for more than a century, calls are converted to packets of data
and streamed over the Internet. All providers generally charge less
and offer more advanced features than traditional phone companies.

The technology, known as Voice over Internet Protocol, VoIP, is being
touted as the next big revolution in communications.

Dozens of companies have entered the market in recent years, ranging
from startups like Vonage Holdings Corp. to traditional telecom
players like Verizon Communications Inc. Most major cable operators
are also developing or rolling out services.

AOL's subscribers must have a high-speed Internet connection and a
router. An adapter connects to the router, and a conventional phone
can be plugged into the adapter. Users will receive a number and can
make or receive calls.

AOL's starting price for new users is $29.99 per month for the first
six months; increasing to $39.99 after that. It includes unlimited
local and long-distance calling within the U.S. and Canada as well as
unlimited access to the regular AOL service over existing broadband.

Plans for current AOL users start at $13.99 a month (increasing to
$18.99 after three months) for unlimited local and regional calling to
$29.99 (increasing to $34.99) for a global calling plan with
low international rates.

The price for new users is steeper than the current Internet telephony
leader, Vonage, which charges $24.99 a month for unlimited
U.S. and Canada dialing. Packet8, a similar service offered by 8x8
Inc., charges $19.95 for its "Freedom Unlimited" plan.

AOL is apparently trying to differentiate itself by bundling its
online service. It also claims to make it easier for consumers to
manage their service from a Web-based "dashboard," which New
Jersey-based Vonage also uses to describe its Web-interface. From
there, users can change call-forwarding settings, view call logs and
access contact lists that will dial a number simply by clicking on it.

Subscribers also will be able to see if someone is online; and
theoretically available to chat by instant message or by voice, the
company said.

AOL also is trying to avert a criticism lodged at other Internet
telephone companies by providing enhanced 911 service that delivers a
caller's address to dispatchers in case of an emergency. Packet8
currently offers the same, but charges extra. Vonage takes a different
approach that requires users to register their address in advance.

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