Deep discounts on IP telephony

Internet phone company SunRocket is setting new pricing lows to get more people interested in Internet telephony by slashing its service to $9.95 per month.

On Tuesday SunRocket is expected to announce its Limited Edition service, designed to give consumers an opportunity to try voice over IP (VoIP) without severing ties with their old phone companies.

Roughly 40 million households in the United States have broadband access to the Internet, but only about 3 million of them are using VoIP, which lets service providers route calls over the Internet instead of the traditional phone network. Many people are still skeptical of VoIP and need to test drive the service before committing to it, said Joyce Dorris, chief marketing officer and co-founder of SunRocket.

"Most Americans have heard of Internet telephony," she said. "But they aren't ready to cut the cord yet. We saw an opportunity to make it easier for them to try VoIP and experience it for themselves."

As part of the new service, consumers get unlimited inbound calling plus 200 minutes of outbound calling to the U.S., Canada, Puerto Rico and 41 international destinations. The service includes Enhanced 911 and free calls to other SunRocket subscribers. All taxes are included in the flat rate. Extra phone numbers and voicemail can each be added for $3 per month.

Like similar services offered from Vonage, SunRocket's service enables people to use their existing telephone to turn their broadband connection into a phone line. Users who don't already have a phone adapter will be charged $39.95 for the equipment, but without term contracts or penalties for canceling the service.

SunRocket, which officially got into the VoIP market in 2004, has been offering a yearly subscription to its service for $199, which comes to about $16 per month. That service, also with no term contracts or early-cancellation penalties, provides unlimited calling in the U.S. and an hour of free international calling each month.

SunRocket's competitor Vonage, a leader in the VoIP market, has more than 1 million customers. Vonage offers a monthly service for $14.99 for 500 minutes for outbound calls anywhere in the U.S., Puerto Rico and Canada. Its unlimited calling plan costs $24.99 per month.

But SunRocket isn't just competing against Vonage. More than 100 companies allow consumers to use their existing telephones to talk over the Internet. And companies like Skype enable computer-to-computer calling for free.

Skype, which is being acquired by eBay, has expanded its service to allow people to make calls to regular telephones, too. Others like America Online, EarthLink and Google are starting to offer voice capability as a feature of instant messaging clients and Web portals.

While many of these services are free, they don't offer a traditional phone calling experience, Dorris said.

"I think it's true that voice service will eventually be free," she said. "But people will still have to pay for Enhanced 911 and access to phone numbers. Those services cost money to provide."

Of SunRocket's roughly 50,000 customers, 96 percent have access to E911 service, the company said in a letter filed with the Federal Communications Commission. E911 allows operators to see call-back phone numbers and addresses when an emergency call is received.

The company expects to have 99 percent of its customers covered by E911 by the end of the year. Many of its competitors, such as Vonage and 8x8, offer E911 service to a small fraction of their customers and don't expect provide access the majority until the end of 2006.