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Net2Phone, Panasonic team for offline Net calls

The two firms plan to integrate lower-cost Net-based phone service into Panasonic phone products, allowing consumers to access Net2Phone's service without having to log on to the Net2Phone site.

Internet phone company Net2Phone and Panasonic Consumer Electronics today said they plan to integrate Internet-based phone service into future Panasonic phone products.

Panasonic, a subsidiary of Japan's Kyushu Matsushita Electric Industrial, said its "One Touch" voice over Internet Protocol (VoIP) service would give consumers a choice on the same cordless phone between regular long distance phone service or lower-cost Internet-based long distance service at the touch of a button on their phone.

The new phone will be on display at the International Consumer Electronics Show in Las Vegas this week.

Net2Phone's service allows a user to make a phone call over the public Internet from a computer equipped with a microphone and Net2Phone software. With the new phones, consumers will be able to access Net2Phone's service without having to log on to the Net2Phone site.

Shares of Net2Phone shot higher this morning, rising 4.77 percent or 2.44 points to 53.5. It was one of the few tech stocks gaining in early trading today. Shares closed at 54.94, up 3.88.

"This agreement marks a major paradigm shift in the telecommunications industry, enabling ordinary phones to be used as a tool to route IP calls," David Greenblatt, chief operating officer of Net2Phone, said in a statement. "Incorporating our services into Panasonic's new dual-mode phone presents an excellent opportunity for Net2Phone."

Internet telephony for now is an emerging technology; many analysts note that the quality of sound still leaves much to be desired. However, although users may not be willing to overlook the poorer quality for domestic calls, they might for more expensive international calls.

Net2Phone is the best known player in the field, having cut deals with several Net and telecommunications powerhouses including America Online and Qualcomm. But competition is heating up with rival Dialpad.com and ZeroPlus.com cutting in to the mix.

"If you are using an Internet system to send voice, it is inherently cheaper than using traditional analog switching systems," John McNenney, an executive at Panasonic Consumer Telephone Products, said in a statement. "These technologies show the potential of the Internet to deliver substantially lower cost long-distance services."