Verizon Flies into VoIP Service

By Colin C. Haley

July 22, 2004

UPDATED: The company entered the consumer VoIP market today with VoiceWing.

UPDATED: Verizon entered the consumer Voice over Internet Protocol arena today with its announcement of VoiceWing, the company's consumer VoIP offering. The move is sure to challenge rival telecoms, cable companies and startups.

Some phone companies have been cautious about VoIP over concern that the technology would eat into their own landline customer base, an issue known as "cannibalization."

Verizon isn't too worried.

"We see this first and foremost as an opportunity to grow the broadband market," Bob Ingalls, president of Verizon's retail markets group, said during a conference call with reporters. "Will [cannibalization] happen? Sure. But we are also offering an alternative to customers who have left us."

Verizon's entry comes at a time when service providers, including carrier AT&T , cable operator Comcast and VoIP upstart Vonage are fielding strong demand for the service.

Although there are less expensive packages, Verizon believes its reputation for quality and service, as well as a strong Web interface for VoiceWing, will give it an edge. In coming months, the company will also gear up its marketing and advertising machine to promote the service.

In addition to seeing VoiceWing winning back erstwhile customers, Verizon thinks VoIP, bundled with voice, high-speed data and, someday, video service, will prevent defections to other providers.

A broadband connection breaks users' voices into data packets and sends them over the Internet or a private network, thereby bypassing large sections of the legacy phone systems. Consumers have been clamoring for VoIP, because it can cost significantly less than traditional calling. New offerings that tie VoIP into home Wi-Fi systems are also making the technology more attractive.

The offering has become more feasible in the last year, as federal regulators have signaled they will impose a light regulatory touch to encourage its growth. The posture angered state officials who face the loss of taxes that they are used to receiving.

There are still issues to be resolved to further VoIP adoption. First, quality of calls is not as reliable as the circuit-switched network. Delays and interference do occur.

"There is no VoIP offering out there that's going to offer the same quality [as traditional service]," Ingalls said.

The industry is still looking to perfect and standardize 9-1-1 service and allow for law enforcement agencies to obtain taps.

VoiceWing is available nationally to anyone with a broadband connection. The service includes call forwarding and detailed call logs among other features. Phone numbers can be chosen from a list of area codes in 139 markets in 33 states, as well as Washington, D.C.

For customers who also subscribe to Verizon's DSL service, VoiceWing is $34.95 per month. Those connecting through a non-Verizon link will pay $39.95 per month. Discounts are offered to those who sign on before Oct. 31.

VoiceWing customers receive an adapter that allows them to use their own phone with their broadband connection. There is a one-time set-up fee of $39.95, and a one-time shipping and handling charge for shipping the adapter.

The phone company is also planning a business version of the service for 2005.

This is the second recent large consumer technology announcement from Verizon. Earlier this week, the company unveiled new details about its strategic fiber-to-the-premises (FTTP) push, including pricing, data speeds, future markets and a launch date for television service. VoIP can also be delivered over FTTP.

Originally published on .

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