More free Internet deals, at a price

More voice over Internet Protocol providers are offering free, unlimited dialing as a way to lure paid subscribers for other services.

Ben Charny Staff Writer, CNET News.com
Ben Charny
covers Net telephony and the cellular industry.
Ben Charny
2 min read
More Internet phone service providers are offering free, unlimited dialing as a way to lure paid subscribers for other services.

Voice over Internet Protocol (VoIP) provider 8x8 now lets anyone dial an 8x8 subscriber at no charge, but only if they buy a $75 phone converter from the company. It's a new version of its "Freedom Plus" plan, which usually costs $6 a month, company representatives said Friday.

Voiceglo, a VoIP provider that officially launches next week, is also offering a free dialing plan, according to the company's president, Edward Cespedes. Free calling between Voiceglo subscribers is included in its basic $12.99-a-month plan. Users will be charged 3 cents a minute when they make calls to traditional landline phones in North America, according to the company.

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The moves by Voiceglo and 8x8 are examples of how commercial VoIP companies are using free Net dialing to lure customers into paid subscriptions that allow them to reach traditional phones.

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The companies don't risk very much with these plans because dialing is usually free anyway if made between Internet-connected computers or phones. Substantial charges for carriers only arise when subscribers dial traditional telephone network customers. For that, VoIP providers have to pay access fees to get on a telephone company's network. That can be a big expense. One of the largest VoIP providers, Vonage, pays Qwest Communications International $1 million a month so its subscribers can make calls to traditional phones.

"We're doing this because we think there's a lot of people who'd like to try it, but are scared away (by) being obligated to pay $5.95 a month," said 8x8 spokesman Huw Rees. "We think there's a market for technology-savvy people who just want that one-time fee."

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These companies are adopting the same dialing strategy as SIPphone, Skype and Free World Dialup, which are the three largest free Internet phone dialing companies. But none of these companies says it intends ever to charge for its dialing service.

For 8x8, the move to free dialing was part of an overall lowering of subscription costs, which provides another example of the ways in which the hypercompetitive commercial VoIP providers are slashing their plans.

The current price war is erupting among VoIP providers with services that let callers seamlessly connect from an ordinary telephone handset to any phone number around the world. Two years ago, such plans offering unlimited local and long-distance dialing within the United States to residential customers typically cost a flat rate of $45 a month or more. Now some providers are selling these services for less than half that, although the industry average remains significantly higher.

Aside from replacing a $6 plan with a free one, 8x8 also said it will soon unveil a pair of $20-a-month, unlimited international dialing plans. They will be available to existing subscribers to its $20-a-month Freedom Unlimited plan. The company usually charges a per-minute fee to dial internationally.