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Microsoft, MCI Partner on Calls

Posted on: Tuesday, 13 December 2005, 06:00 CST

By Yuki Noguchi, Washington Post Staff Writer

Microsoft Corp. and MCI Inc. will partner to offer a new Internet-based phone service through Microsoft's instant-messaging service, adding another entrant to a growing number of competitors selling cut-rate, computer-based calling.

The partnership, which the companies plan to announce today, allows users to place calls from a personal computer to almost any phone in the world at a lower cost than traditional long-distance phone service.

Skype Technologies SA, owned by eBay Inc., has a two-year head start on Microsoft and has a worldwide user base that includes more than 2 million subscribers who pay to make phone calls to mobile or traditional phone lines. Last week, Yahoo Inc. launched a trial of a new version of Internet phone service in the United States and parts of Europe and Asia, offering rates cheaper than Skype.

All of those companies, and others such as Google Inc. and America Online Inc., offer free calling to users within the same instant-messaging system. Yahoo and Microsoft plan to integrate their systems next year so their IM users can send messages to each other.

The goal of expanding phone offerings is to tie communications services into other online offerings, analysts say. In the long term, companies hope to enable Internet surfers to talk to one another when shopping online, sharing music or discussing blogs.

The Microsoft-MCI offering will use messaging software called Windows Live Messenger, which will replace MSN Messenger. It will be available initially in five countries -- the United States, France, Germany, Spain and Britain -- with plans to expand broadly in early 2006. Calls must be purchased through prepaid accounts and initially will cost as little as 2.3 cents per minute, which is still more than the lowest rates offered by Skype and Yahoo. New subscribers to the Microsoft-MCI service will get an hour of free calling, the companies said.

Internet calling of this sort is likely to cannibalize time and money consumers might spend on their normal land-line telephone, a business that MCI will dominate under its pending acquisition by Verizon Communications Inc.

Reported By TechNews.com, http://www.TechNews.com

(20051213/WIRES /)

Source: Newsbytes

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