Residential Internet Phone Service Rates Dropped By AT&T, Vonage
Posted on: Thursday, 30 September 2004, 06:00 CDT
Oct. 1--Prices for residential Internet phone service tumbled Thursday as AT&T and Vonage each said they will cut $5 off their monthly rates for unlimited local and long distance calling.
AT&T, which had set its basic monthly rate at about $35, will now charge about $30. As a promotion to win new customers, AT&T had been offering $20 rates for the first six months of service.
Vonage, which pioneered service known as voice over Internet protocol, or VoIP, had offered unlimited service for $30 and will drop that to $25 a month on Friday. Vonage will also offer a service with some limits for $15.
Monthly rates for Internet phone service cannot be compared directly with rates for standard phone service because in order to use VoIP a customer must also have a high-speed Web connection. That usually comes in the form of DSL or a cable modem that can cost anywhere from $30 to $50 a month. Customers who buy DSL from SBC Communications Inc. are required to also pay for a regular phone line in order to get DSL.
As a general rule in recent months, rates for VoIP phone service have been falling while rates for standard service have increased.
In response to higher wholesale prices to lease lines from phone companies such as SBC, AT&T and MCI have raised rates they charge consumers for local service. This summer, AT&T announced that it would stop marketing traditional phone service to consumers.
As long-distance rates charged to business customers have fallen, AT&T, MCI, Sprint and other carriers have levied new charges on many residential customers for long-distance service.
Beginning in October consumers who get local phone service from AT&T will be charged a monthly 99 cent regulatory assessment fee, and MCI will charge a new $2 line fee for secondary residential stand-alone lines, said Bill Hardekopf chief of the phone rate comparison Web site SaveOnPhone.com.
Hardekopf noted that last week California regulators followed a national trend and allowed SBC to raise wholesale rates in that state by almost 20 percent. He predicts that more increases for traditional phone service are in the works.
"Since regional Bells have been freed from the restraint of competition, consumers shouldn't be surprised to see an increase in the rates for bundled plans or extra services like Caller ID and Call Waiting," said Hardekopf.
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T, SBC, MCIP, FON,
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