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AT&T to Offer Internet Telephony Service in 10 Florida Markets

Posted on: Tuesday, 15 June 2004, 06:00 CDT

Jun. 15--AT&T Corp. said Monday it was starting Internet telephony service in 10 Florida markets, including West Palm Beach, Port St. Lucie and Fort Pierce, giving residents and small businesses another option for receiving the growing technology.

AT&T's CallVantage Service costs $19.99 a month for the first six months and a one-time $9.95 charge for the equipment. The service works by using the Internet to make phone calls, so consumers also need a broadband high-speed Internet connection, which most cable and telephone companies now offer.

Bedminster, N.J.-based AT&T said last December it was joining phone companies such as Qwest Communications International Inc. of Denver and cable television companies such as Time Warner Inc. to offer Internet telephony service. It now offers the service -- commonly known as VoIP, for Voice over Internet Protocol -- in 46 of its 100 target markets.

The company declined to say how many people have signed up for VoIP service, but Cathy Martine, AT&T's senior vice president for Internet telephony marketing and sales, said on a conference call Monday that the number of subscribers continues to increase weekly.

"We believe that AT&T will prove to be the industry's most reliable service today," Martine said.

But analysts say it will be a while before VoIP even makes a dent in a telephone or cable company's revenues. In the $100-billion-a-year telecommunications industry, Internet telephony now brings in less than $100 million, said Susan Kalla, a New York-based analyst with Friedman, Billings, Ramsey.

"At this point, as far as we're concerned, it's more in the hype phase," she said. "Nobody is going to want to cannibalize their existing customer base."

Large phone companies -- BellSouth Corp., Verizon, Sprint -- are starting to offer VoIP, but Kalla said they aren't doing so at prices that are low enough. After six months, AT&T's CallVantage Service costs $34.99 a month.

"They will be the net gainers and not the consumers," Kalla said.

Nonetheless, the number of options for Floridians to get VoIP service has been increasing steadily during the past six months. Net2Phone and Vonage have been key players nationwide, but Boca Raton-based i2 Telecom and Broadline Communications, based in Orlando, offer the service as well.

Broadline, a subsidiary of FDN Communications Inc., launched its service last November in Orlando, Brevard County and Jacksonville and then moved into South Florida, Tampa, St. Petersburg and Atlanta. The service costs $19.95 a month for unlimited local calls, $29.95 a month for unlimited calls across Florida and $39.95 a month for unlimited calls across the United States.

Craig Greenfield, Broadline's business development director, declined to release consumer figures but said the numbers are "already exceeding business-plan expectations."

Comcast Communications Corp., the cable TV provider, is offering VoIP in some markets nationwide but has not yet started the service in its Treasure Coast markets of St. Lucie and Indian River counties. Adelphia Cable, Palm Beach County's dominant cable TV company, plans to start service next year, executives have said.

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