AT&T Corp. said on Monday it was launching an Internet-based local phone service in northern New Jersey, part of a drive to have 1 million subscribers for voice-over-Internet services by 2005.
The largest U.S. long-distance company is counting on Internet-based phone service to help staunch a steady decline in its traditional businesses. AT&T has forecast a 15 percent to 17 percent decline in consumer revenues this year, and doesn’t see the trend reversing before 2006.
Internet phone services have been hailed as a cheaper alternative to traditional phone calls. Typically, long-distance telephone calls are charged access fees for connecting to and from the public telephone network. A similar call made from or received by a phone on an Internet service is usually treated as a local call, avoiding such fees.
Such services often require a broadband Internet connection, something only about 20 percent of U.S. homes have. Several companies, such as Vonage and Net2Phone, already offer Internet-based phone service, while a few companies are exploring Internet voice services that bypass telephones entirely.
AT&T has set a goal of rolling out its Internet service in 100 markets by the end of this year. An AT&T spokesman said the roll-out would spread gradually to areas with high rates of home broadband access.
The company said it would offer the service, which includes unlimited local and long-distance calls, for $19.99 a month for six months until the end of May. The regular price is $39.99 a month.