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Best Buy First to Offer AT&T Internet Phone Service

Posted on: Monday, 23 August 2004, 06:00 CDT

Aug. 24--The latest move in Ma Bell's massive effort to market a high-tech answer to the old-fashioned telephone will debut this fall at Best Buy.

The Richfield-based Best Buy will be first national retailer to offer AT&T's residential CallVantage Internet phone service.

AT&T on Monday announced the partnership, saying Best Buy will promote CallVantage through in-store marketing at its 628 stores nationwide, as well as in print, broadcast and online advertising starting in early October.

For more than a week now, AT&T has bombarded consumers with advertising about CallVantage and unrelated Internet security services through a $5 million TV campaign running on channels showing the Olympics.

These messages come on the heels of an announcement last month from AT&T that it no longer will actively pursue residential local and long distance customers for conventional service and instead will concentrate on its lucrative business customers.

The two messages raise the possibility of confusing consumers. Some may have heard that embattled AT&T is no longer wooing residential customers. But now they're hearing that the Bedminster, N.J.-based company wants them back -- only AT&T is using what is still to most people a new-fangled technology called "Voice over Internet Protocol" or VoIP.

"I haven't met anybody who's confused," AT&T spokesman Gary Morgenstern said of the marketing push and pull.

Even the company's new commercials acknowledge the difficulty of explaining what VoIP is. One opens with an AT&T scientist agonizing over how to explain the technology to non-scientists.

That's because VoIP doesn't use conventional telephone technology. Instead, it breaks up voice calls into packets of data, the same way computers chop up e-mail, music and other files into data before sending them over a high-speed Internet connection.

Using the Internet to make phone calls is cheaper than sending it the conventional way, experts say. Internet phone providers can pass along large savings to consumers because long distance calls are no more expensive to send than a local one, and because Internet service isn't burdened with the same fees as regular phone service.

VoIP requires a high-speed Internet connection in the home or business, which limits its appeal somewhat, but broadband is growing.

AT&T tried to boost its Internet telephone service by last week announcing deals with cable providers. AT&T could sell VoIP service to consumers and if they don't have the necessary broadband connection, AT&T would forward them to cable providers.

AT&T declined to say how many subscribers it has drawn to its new broadband phone service.

Other broadband phone providers aren't sitting still. Edison, N.J.-based Vonage, the nation's leading provider of VoIP service with 230,000 customers, estimates it has spent more than $15 million on marketing this year, mainly on Web advertising.

Vonage sells its service through its Web site and through national retailers Radio Shack, Circuit City and Best Buy, spokeswoman Brook Schulz said.

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(c) 2004, Pioneer Press, St. Paul, Minn. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

BBY, T, CC, RSH,

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