Net telephony company eyes overseas calls

By Matt Hines
Posted on ZDNet News: Jun 7, 2004 5:42:00 PM

Primus Telecommunications pushed the market for Internet phone services a step further Monday, launching a flat-rate package that includes unlimited calling to the United States, Canada and Western Europe.

The introduction of the consumer-oriented VoIP (voice over Internet Protocol) calling plan will also test the lower limits of calling-plan pricing for Net telephony systems, as the package--dubbed Lingo--will retail for $19.95 per month. VoIP provider 8x8, by comparison, offers unlimited North American dialing for the same price.

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VoIP is a decade-old technique for digitizing phone calls and dispatching them over the public Internet or a corporate IP network. Such calls are generally less expensive, because they avoid traditional telephone networks, which are heavily regulated and taxed.

But VoIP technology and services are still in their nascent stages, and consumers have yet to embrace Net phone calling in huge numbers.

The leading North American provider of VoIP service is Vonage, which recently surpassed 150,000 subscribers.

Industry experts said Primus, based in McLean, Va., would likely generate a good deal of attention with its international VoIP service. On the other hand, they believe that the company will need to rapidly draw significant numbers of paying customers in order to compete with the likes of AT&T, as well as regional Bell companies and cable vendors, which are also moving aggressively into the field.

"It will be interesting to see how many customers and how much revenue (Primus) has been able to generate one year from now," said Will Stofega, an analyst at Framingham, Mass.-based IDC.

Primus announced plans to begin offering the Lingo service abroad later this year but did not discuss overseas pricing.