AT&T to offer Internet calling

AT&T plans to let customers place telephone calls using Internet technology, an increasingly popular option for businesses and individuals that's cheaper than routing calls over the century-old telephone system.

The long-distance giant announced Thursday that it expects to have a service delivering voice over Internet Protocol (VoIP) available to consumers in the top 100 markets by the first quarter of 2004.

AT&T already offers managed VoIP services to some businesses and has been testing a consumer service in three states since October.

The company said in a press release that it would "expand its VoIP portfolio and aggressively market a full suite of VoIP-enabled services to business customers worldwide."

AT&T is the latest and largest telecommunications company to embrace VoIP, but it is far from alone. Several start-ups, such as Vonage, 8x8 and VoicePulse, offer a similar service, and many Baby Bells are also testing the waters or are expected to do so soon. VoIP providers typically charge about $40 a month for unlimited local and long-distance. AT&T did not release pricing information Thursday.

Using the Internet to send phone calls is generally cheaper than standard methods, because users don't have to pay access charges to the various telephone companies that route the calls over their networks. Such charges can amount to 20 percent to 30 percent of the cost of offering local service.

Cathy Martine, a senior vice president in AT&T's Consumer division, has been named to oversee the new VoIP project at AT&T, CEO David Dorman said in a release. Martine had previously managed the employee trial and the subsequent consumer trial of VoIP for AT&T.

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AT&T's plans emerged the same week that cable giant Time Warner Cable said it reached deals with Sprint and MCI to expand its VoIP service. The company's Digital Phone plan costs $39.95 a month and allows unlimited local and long-distance service. Those who aren't Time Warner Cable customers pay an additional $10 a month.

And Qwest Communications International on Monday began selling Internet telephone service to a few hundred broadband customers in Minnesota.

"Unlike many of our competitors, who are constrained by geographic reach or broadband access technologies, our voice over IP offer will be available in cities across America to customers with different kinds of broadband access," Dorman said in a release.