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AT&T Offers Internet Telephone Service in Raleigh, N.C., Area

Posted on: Wednesday, 30 June 2004, 06:00 CDT

Jul. 1--AT&T on Wednesday began selling a service that uses cheaper Internet technology to complete calls, a move that intensifies phone competition in the Triangle.

The country's largest long-distance company said it has made the service available in 72 markets, including the one that comprises Raleigh, Durham, Chapel Hill and surrounding areas. It's part of an effort to have the offering, which AT&T started selling in late March, in 100 markets nationwide by October.

AT&T is using a technology called Voice over Internet Protocol that treats calls like e-mail or Web traffic. Voice signals are broken into packets of data that scatter through a network and are reassembled on the other end.

VoIP is growing in popularity as an alternative to traditional phone networks dominated by carriers such as BellSouth and Verizon Communications. Time Warner Cable earlier this year began selling telephone service using the technology. Vonage, a New Jersey company, uses it to sell calling packages to customers in North Carolina and other states.

"VoIP is the future of voice telephony on all networks," Jeff Kagan, an independent telecommunications analyst in Atlanta, wrote in an e-mail message to reporters. "Over the long term, this move may wind up being the best move AT&T could ever make because it forces the company to focus on broadband offerings, while competitors are still focusing on more traditional phone services."

The company wants to have 1 million business and residential customers using its VoIP service by the end of next year, said AT&T spokesman Tom Hopkins.

AT&T, MCI and other companies had entered the local-phone calling business by leasing pieces of traditional phone networks from rivals. And they have won millions of customers.

But the strategy has come under pressure recently after a court ruling upset the industry's pricing structure. Analysts have said that more companies are likely to offer VoIP.

To get such services, customers must have a high-speed, or broadband, connection. They have access to 911 and other emergency services, but phone service won't work during a power failure, as it will on traditional networks.

AT&T is offering an unlimited package of local and long-distance calling, plus features such as voice mail, call logs to track incoming and outgoing calls, and location settings to specify where calls should ring. The phone service costs $19.99 a month for the first six months and $34.99 per month thereafter. Broadband typically costs an additional $35 to $50 a month.

AT&T plans to continue selling its service that relies on leased lines to reach customers without broadband access, Hopkins said.

That service with unlimited calling and extra features is about $55 a month. The largest local rival, BellSouth, offers a comparable plan for the same price.

Time Warner's service, which uses VoIP, starts at $39.95 a month.

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