Telcos Slash Prices In Response to VoIP

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The popularity of voice-over-Internet-protocol (VoIP) telephony services is pushing the telecommunications industry to cut prices as customers jump ship for cheaper voice services.

As reported by the New York Times, Verizon and AT&T, faced with a diminishing subscriber base, recently dropped phone service and long distance prices by significant percentages to battle unprecedented competition in those areas.

Verizon began offering unlimited phone service for $35 per month, a 42 percent drop from $60 per month. Customers signing up through AT&T’s website can get unlimited long distance for $40, down from $50 last year. From the NYT article:

AT&T, among others, says the drop in lines is not as painful for the Bells as it looks.

Many customers cancel phone lines they used for dial-up Internet service, but then sign up for broadband services provided by their phone company. Other customers eliminate a phone line but buy a cellphone plan from Cingular, which AT&T owns with BellSouth.

These same telecoms have been at the center of a heated debate in Congress over a concept known as “Network Neutrality,” often called “the Internet’s First Amendment.”

Because of rising competition, telecommunications and cable companies have been lobbying in Congress to set up a tiered network though which they can maximize revenue by offering faster, higher quality connections to companies and Web entities willing to pay more for it. VoIP companies would be included among those companies.

Net Neutrality proponents fear that such a system would create a substantial barrier to entry for small businesses, non-profit organizations and start-ups, which historically have had the benefit of a cheap and easily accessible Internet, which helps level the e-commerce playing field.

Proponents also fear legislation proposed in both houses of Congress would give telecoms and cable companies too much power to pick and choose which Web presences are granted higher quality connections, even to the extent of blocking some services.

Congress thus far has denied protection for Net Neutrality, citing lack of a demonstrated need, but over a million petitioners at SaveTheInternet.com disagree.


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