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The price cuts were expected. When CallVantagetwo months ago, AT&T's critics said the $40 price was too high to keep the service competitive.
Also, No. 1 Net-phoning providerrecently reduced the price of its most popular plan from $35 to $30 a month. Meanwhile, newcomers like are trying to turn heads with a $20-a-month offer. Analysts expect even more price spasms, as the industry leaders emerge and others fail.
The market these companies all compete in is selling VoIP (voice over Internet Protocol), a technology that enables. By avoiding the local telephone companies' heavily taxed networks, VoIP calls are usually much cheaper than traditionally dialed calls.
There are about 600,000 broadband-connected households now using VoIP. Analysts project that the million-subscriber mark will be breached later this year and that there will be tens of millions of VoIP households by the decade's end.
"This is a new market, so pricing for it is not an exact science," an AT&T representative said.