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AOL will bring Net phone service to 40 cities

Company will offer prices as low as $13.99 per month as part of an aggressive rollout campaign.

America Online will launch its new Internet phone service in more than 40 cities, offering prices as low as $13.99 per month as part of an aggressive rollout, the company said Thursday.

AOL revealed last month that it was on the verge of launching phone service based on VoIP, or voice over Internet Protocol. The service from the world's largest Internet access company will be similar to that from Vonage and several other companies, which use a customer's broadband Internet connection to send and receive telephone calls.

AOL, a division of Time Warner, said it would offer three pricing plans for its AOL Internet Phone Service to current AOL subscribers, from $13.99 for a local calling plan, up to $29.99 for unlimited North American calling and low international rates. The prices increase by $5 after three months.

For nonmembers, AOL will sell the phone service and its online service for $29.99 for the first six months. The package will jump to $39.99 thereafter. AOL's standalone service for broadband Internet users costs $14.95 per month.

The entertainment and online giant's phone service is $5 to $10 more expensive than most of its competitors, which are also engaged in a heated price war. Earlier this week, phone giant Verizon Communications introduced a $20 a month VoiceWing 500, its least expensive yet. Net phone operator Lingo, which is $5 cheaper than AOL, says it "welcomes the competition."

AOL's move into VoIP highlights the once-battered company's efforts to sell more subscription products on top of its popular online service. For the past three years, AOL has hemorrhaged more than 4 million dial-up subscribers, most of them leaving for broadband services offered by cable and phone companies. The company has tried to migrate its customers to AOL for Broadband, which costs less than the $23.90 it charges for dial-up.

AOL has also tried selling other subscription-only products that work with its online service.

Vonage, the VoIP service provider with more than 500,000 subscribers, offers unlimited calling for $25. Some smaller providers offer unlimited calls for less than $20 per month.

Reuters contributed to this report.