Already fretting over the Internet-calling threat from cable companies, the old-line phone industry is suddenly getting it on the other flank from the online giants looking to deliver the future of phone service.
The Net-calling market got a little more crowded Thursday as
unveiled a $30 phone service for broadband customers. Throwing out the previous voice-over-Internet platform, the
unit promises the new service will be easier and have many more features.
Seeing the opportunity,
MSN introduced a multimedia instant messaging service with free Internet calling Thursday. All the commotion has once again raised speculation that Net-search giant
will soon join the phone fun.
Though the announcements are seismic on the hype meter, some observers aren't exactly predicting an immediate collapse of the traditional phone industry. Still, that doesn't mean the phone giants aren't squirming.
Not to be left out of the Net-calling excitement this week,
let fly a fusillade of press releases introducing VoiceWing, which will cost $30 for unlimited voice-on-the-Net calling service. More notably, Verizon is making the service available in both its home turf and in states outside its 14-state Eastern region.
The move is bold and a bit puzzling to some industry observers.
As the dominant phone player in its own market, Verizon could easily undercut its already eroding higher-priced conventional phone service. And by going into rival territory head-to-head with the other Bells, Verizon crosses a battle line that phone giants have previously avoided.
"This flies in the face of their traditional operations," says Standard & Poor's stock analyst Todd Rosenbluth. But the industry is under fire and that requires some action by the likes of the Bells, he says.
"Competition is coming. They need to be on the offensive," adds Rosenbluth, who rates Verizon buy and has a hold on
Outfits like AOL and MSN, as well as VoIP upstarts like
, have a certain appeal to tech-savvy consumers and early adopters. Yet observers don't see the group as the most direct threat to the traditional phone customer.
That honor still goes to cable companies like
, Time Warner and
. Each of the cable giants has rolled out Internet calling service and
lined up service agreements with telcos to help connect the calls.
To date, cable companies have
captured only a sliver of the overall phone pie. But telcos and industry analysts worry that cable's triple threat of voice, video and Internet service is a formidable bundle.
Flushed out of its comfy turf, Verizon may lead other Bells to take up a more aggressive approach to Net calling.