Long-distance plans signing off

AT&T announced earlier this summer that it would no longer be marketing long-distance and local services, instead shifting much of its promotional efforts on the growing market for its voice-over Internet phone service, CallVantage. And according to a December 2003 study by industry watcher TeleGeography, international VoIP traffic alone increased 80 percent in 2002. According to the report, VoIP providers carried 150 million minutes of international telephone calls in 1998, less than 0.2 percent of the world’s international traffic. Four years later, the traffic had grown to just under 19 billion minutes, about 11 percent of the world’s international traffic.

The question of whether the majority of mobile wireless customers decide to eventually substitute cell phones for their fixed-line service is still murky. A study this spring from TeleGeography and accounting firm Ernst & Young found that while an increasing number of people are “disconnecting,” the bulk of dialers are keeping their land lines. With so many companies offering wireless services and most homes having multiple cell phones, the report said a precise study is near impossible.

Deborah Jones, a spokeswoman for AT&T, said the company will continue to serve its existing customers indefinitely and would continue to take on new customers as they called the company for service. For overtures from telemarketers asking if a household would like to lower their long-distance rates are decidedly a thing of the past.

“We’re doing everything possible to drive broadband penetration beyond its current levels,” said Cathy Martine, AT&T’s senior vice president of Internet telephony, in a recent release.

AT&T is now providing CallVantage to 170 markets in the United States and is also testing the service overseas for use by remote workers of multinational corporations.

Providence was among the new markets AT&T added in mid-July. VoIP lets customers talk over high-speed Internet connections instead of traditional circuit-switched phone networks. In most cases, all that’s required to hook up to an Internet phone service is a telephone adapter provided by the company and a broadband connection. Jones said AT&T provides traditional residential local service to more than 4.3 million households nationwide, but has not released figures yet for the CallVantage plan.

In August, Nielsen//NetRatings, a company specializing in Internet audience measurement and analysis, reported that broadband connections for the first time reached 51 percent of the American online population at home during the month of July, as compared to 38 percent last July. More than 63 million people connected to the Internet via broadband and overall growth for broadband connections rose 47 percent year-over-year, while narrowband dropped 13 percent.

Jones said what began as a slow charge toward offering VoIP services has accelerated over the past year, as AT&T, as well as established cable and Internet companies began pushing the service. AT&T, which has no local network of its own, has had to lease lines from rivals since the breakup of the phone giant in the 1980s. But the Federal Communications Commission changed rules recently that allowed AT&T and other firms to lease local lines at discounted rates.

While Jones said that returns on marketing dollars are always somewhat uncertain, AT&T believes that VoIP is a good bet, especially as cellular plans and even e-mail to a lesser extent, have reduced land-line phones as the primary way of communicating.

“For the consumers we’re focusing on now, we think the market penetration has just begun,” Jones said. “And with studies showing that 25 percent of homes now have broadband access, we think it’s something where the curve for growth is going to be pretty sharp.”