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Videophones get cheaper

Net phone operator 8x8 slashes prices to below $100, as it tries to jump-start the disappointing U.S. market for space-age telecommunications.

Net phone operator 8x8 slashed the price of its videophones and monthly videophone service on Thursday, as it tries to jump-start the disappointing U.S. market for telecommunications that were once only the stuff of newspaper comics.

The operator, whose service goes by the name Packet8, now sells videophones for $99, or a fifth of the manufacturer's suggested retail price, while supplies last. The associated service--unlimited voice and video calls to any Packet8 subscriber, plus unlimited local and long-distance voice-only calls in North America--now costs $20 a month, down from $30.

8x8 joins major equipment makers Cisco Systems, Avaya and others trying to make videophones and services more affordable, thus eliminating a major stumbling block that's keeping these space-age services from the mainstream consumer. In 2004, revenue from sales of video-calling gear was a disappointing $40 million, though that adds up to a 23 percent annual increase from 2003, according to analysis company Point Topic.

Videophone operators are mainly providers of VoIP--voice over Internet Protocol--a cheap telephone service in which phone calls use Internet Protocol to travel over the public Internet, or privately owned high-speed networks based on IP. The calls, both voice and video, are much cheaper than traditionally placed ones, mainly because of IP's efficiencies. Plus, most IP calls have so far avoided regulation, while traditional phone companies must collect fees and taxes from their customers.

Breaking the $100 barrier for the videophones will help spur some new business, according to Packet 8. That's cheaper than do-it-yourselfers can find by searching auction sites such as eBay, where $200 was the highest bid recently on a pair of Vialta Beamer BM-80 videophones a day before auction's end.

"Once we get our technology into the hands of more consumers, we feel confident its appeal will take hold and bring about the critical mass necessary to make videophone conversations an everyday experience," 8x8 Chairman Bryan Martin said in a statement.

In May, 8x8 also will join the swelling ranks of Net phone operators charging customers an additional regulatory recovery fee, in this case $1.50 a month.