AT&T Officially Joins the VoIP Parade

After months of beta testing it's broadband phone service, the long-distance giant announced today that it's much anticipated residential Voice over IP service will launch early next year. According to the New York Times and the Wall Street Journal, both of which today run stories about the announcement based on leaks by so-called "industry executives close to the company," the news means the telephone will forever change.

After months of beta tests, AT&T CEO finally announced the company's much-anticipated Voice over IP consumer residential offering today before Wall Street analysts.

The company's intentions were leaked to the Wall Street Journal and the New York Times yesterday. According to the Journal, the long-distance telephone giant will make VoIP service available to about 1 million users over the next two years, beginning early next year in three East Coast markets.

According to the New York Times story, executives close to the company said that Dorman would refer to IP telephony as "the most significant fundamental new technology shift in telecommunications in decades."

Neither the Times nor the Journal reported how much the service will cost, nor what features AT&T will offer to compete with small but established VoIP providers such as Vonage, VoicePulse and Packet8.

AT&T's VoIP plans emerged just days after Time Warner Cable announced a major expansion of its VoIP service, called "Digital Phone," which offers unlimited calling within the US for $39.95 to the company's cable subscribers (non-subscribers pay $49.95).

Within the past month, several Baby Bells, including SBC, Verizon and Qwest, announced that they were about to join the fray with their own VoIP plans.

According to the Times story, AT&T's VoIP foray is motivated, in part, by the company's desire to significantly reduce the $11 billion it pays annually in fees to send phone calls over the landlines of local telephone operators. At the same time, the company hopes to recoup revenues it is losing to those same operators as they now offer their own long distance services.

AT&T is expected to provide its residential VoIP subscribers a new telephone adaptor manufactured by D-Link. The DVG-1120, which also serves as an internet router and firewall, includes two analog telephone ports and connection to standard telephone service the company calls a "lifeline voice port."

While new to the residential space, AT&T is no stranger to VoIP. The company has been offering IP based services to business customers since 1997.

Following is AT&T's press release announcing the residential service:

AT&T today announced a major new initiative to deliver a full complement of Voice over Internet Protocol (VoIP) services to business customers and consumers in 2004. The company, which already serves hundreds of businesses with its managed VoIP services, said it will expand its VoIP portfolio and aggressively market a full suite of VoIP-enabled services to business customers worldwide. AT&T will also roll out a new VoIP consumer offer in major cities across the United States in 2004, beginning with select metropolitan markets in the first quarter of the year.

AT&T Chairman and CEO David Dorman said the company is currently adding VoIP capabilities on the West Coast to complement its existing network facilities.   When completed in the first quarter, this infrastructure will enable AT&T to provide VoIP services to consumers in the top 100 markets in the United States.

"Unlike many of our competitors, who are constrained by geographic reach or broadband access technologies, our voice over IP offer will be available in cities across America to customers with different kinds of broadband access," said Dorman. "We will be deploying the best VoIP technology on the nation's largest IP network, but we will be doing it with the most trusted and proven name in voice services."

One week after announcing the appointment of William Hannigan as president of AT&T, Dorman today also created a new senior executive position to spearhead AT&T's VoIP efforts across AT&T's Labs, Consumer and Business divisions.

He appointed Cathy Martine, currently a senior vice president in the Consumer division, to oversee the ongoing execution of these and other initiatives being undertaken to leverage AT&T's industry leading IP network. In addition to her other duties, Martine previously managed the successful employee trial and the subsequent consumer trial of VoIP for AT&T.

"VoIP is the most significant, fundamental new technology shift in telecommunications in decades and will deliver tremendous value to all customers by leveraging the efficiencies and advanced communications capabilities of IP-based technology," said Dorman. "AT&T is uniquely qualified to lead the industry in this transformation. This is an area we intend to continue leading and that is why I have appointed one of our most talented executives to drive this effort."

AT&T already carries more IP traffic on its network than any other U.S. company.  It began offering the VoIP service to select business customers in 1997.  Just this year, the company has experienced a fourfold increase in the number of business customers using its VoIP services.

Dorman underscored AT&T's commitment to expand its IP services portfolio to deliver a full suite of VoIP-enabled services to its business customers in 2004. "AT&T has invested heavily in its network and networking capabilities to provide — over our own IP network, or any combination of IP and public networks — advanced voice services and features business customers want and need. No other company can make this claim," he said.

AT&T's strategy for IP-based services is driven by one simple principle–customer convenience and control over their communications, whether it involves telephones in their homes or a corporate campus with thousands of telephone stations linked to a PBX.

Businesses are attracted to VoIP technology because it simplifies access for both voice and data, and it means easier administration of the communications function.   Instead of having to manage separate voice and data networks to handle corporate traffic, enterprise clients can run voice, video, and data over a single, easy-to-manage IP network.

IP technology and networking not only saves money and increases productivity, it is becoming a critical strategic tool for companies. The ability to link a company's equipment and locations to deliver voice and other applications over any combination of networks clearly differentiates AT&T from other industry players, many of whom lack the network needed to scale and securely provide VoIP services on a regional, national and global basis.

For consumers, AT&T has been running a customer trial of VoIP services since October in three states to test market a residential VoIP offering that promises to provide a rich array of new, enhanced information services, including advanced call-management capabilities and unique web-based features.

The company's earlier trial offered participants unlimited local and long-distance services. The success of the trial has resulted in AT&T's decision to launch a new consumer VoIP offer in key markets across the nation beginning in the first quarter of 2004.