Voices On Broadband

By Anita Hamilton

Need another good reason to step up to high-speed Internet access at home? Here's one: it could save you money on your monthly telephone bill. That's because a technology called voice over Internet protocol (VOIP) lets you use your cable or DSL Internet connection to make cheap local and long-distance calls, all while using your regular home-phone handset. Previously offered mainly by small start-ups, VOIP has generated so much interest that long-distance giant AT&T began offering it this month.

VOIP works by converting the sound of your voice into digital packets of information that traverse the Internet in much the same way as e-mail and Web pages. But you don't have to hover by your computer or use a special headset to make a call. To get started, simply plug your regular phone into an adapter box that hooks up to your cable or DSL modem. Then place and receive calls as usual.

Launched on March 11 as a "market readiness test," AT&T's CallVantage service att.com/callvantage allows customers to make unlimited local and long-distance calls for $40 a month, vs. about $65 (including fees and taxes) for a similar service on their regular home-phone line. The CallVantage fee includes voice mail, caller ID, call forwarding and conference calling. You also get unique features like Do Not Disturb, which lets you send all calls received between 2 p.m. and 5 p.m., for example, to voice mail, except for those from people you really want to hear from. Available in about a dozen area codes in New Jersey and Texas, CallVantage is scheduled to be in 100 major markets by the end of the year.

AT&T isn't the first player in the consumer VOIP market; start-ups Vonage and VoicePulse have had similar offerings for $35 and $25 a month, respectively, since last year. But support of VOIP by AT&T, the largest long-distance carrier in the U.S., promises to bring the technology into the mainstream. "AT&T's entry should broadly legitimize VOIP for residential customers," says Steve Koppman, principal analyst for Gartner Group Dataquest. Research firm InStat/MDR estimates that as more major players, including Cablevision, Comcast and Time Warner Cable (a sister company of TIME), roll out their announced VOIP services, the number of residential VOIP subscribers will rise from about 135,000 at the end of 2003 to 3.9 million by the end of 2007.