America Online, the nation's leading Internet service provider, announced an Internet
telephone service for its subscribers -- a milestone that pushes the technology of
voice over Internet in front of one of the most mainstream audiences.
The service -- which will be rolled out in more than 40 markets, including the Bay Area --
is being announced a day after Verizon revamped its own Voice over Internet Protocol, or
VoIP, service offerings to include a scaled-down $20-a-month version for price-sensitive
AOL's move proves that in the highly competitive VoIP arena, phone service of the future
will come in many shapes, sizes and colors. It's a field where consumers are already being
bombarded with VoIP messages from big names such as AT&T, Comcast and SBC as well as
start-ups such as Vonage and Skype.
AOL is focusing on simplicity in its offerings, true to the name it made for itself
by offering beginners an easy-to-use Internet service in the mid-1990s.
For VoIP to take off and jump from the estimated 700,000 subscribers at the end of 2004 to
an expected 12 million subscribers by the end of 2009, credibility is going to be
Because VoIP only works over a broadband connection, the quality of the call is usually
comparable to traditional phone lines. But that also creates some challenges for AOL.
Only 5 million of its 22.2 million subscribers are broadband customers. The remainder
are on slow-moving dial-up connections.
Converting the dial-up folks to broadband won't be easy -- but AOL is probably best
equipped to tackle such a large marketing campaign.
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