The new service, CallVantage Local Plan, let people make unlimited local calls for $19.99 a month. Local toll and long-distance calls in the United States and to Canada will cost 4 cents per minute. The plan will be available Sunday.
Customers will need to buy a telephone adapter from the company and have a broadband connection. The service will include features like call waiting and three-way calling available with traditional phone service.
"The AT&T CallVantage Local Plan was designed to serve the needs of those customers who make relatively few long-distance calls, but who are looking for an economical, feature-rich, local service alternative," Cathy Martine, AT&T senior vice president for Internet telephony, said in a statement.
AT&T's original unlimited local and long-distance VoIP plan is still available for $29.99 a month.