AT&T hangs up on Internet telephone service

The final notice came in a slew of e-mail this week. AT&T Inc. said that it was disconnecting my CallVantage service Nov. 17 and that I had to make arrangements quickly for another carrier.

AT&T had announced that it was getting out of the Internet calling business, a blow to what little competition there is among the major land-line telephone operators.

As an online service using voice over Internet protocol, or VoIP, CallVantage was able to reach into the home territories of Verizon Communications and Qwest Communications, as well as areas covered by smaller regional land-line carriers. Just as Verizon’s VoiceWing online service did before it was closed this year.

But neither company promoted their programs, shunting them aside as communications afterthoughts. And then, among the reasons cited for discontinuing the service, they pointed to a drop in customers. Small wonder. They simply wanted to promote so-called growth areas -- their own broadband connections limited to the territories they serve.

The elimination of perfectly good programs, CallVantage and VoiceWing, ensured that the phone carriers weren’t going to compete against each other for land-line service.

Sure, more people are moving to wireless-only phones, and there is a bit more competition in a field still controlled mainly by Verizon and AT&T. But in the home telephone market, land lines still prevail -- and each carrier has a near-monopoly. The only competition for wired phones comes from cable companies such as Time Warner Cable and Comcast.

Moreover, regardless of wireless, the line is still important: It also delivers the all-important Internet connection. For most folks, the choice of broadband service also is limited to two: the phone company or the cable company.

That’s not much competition. That’s why it was comforting to know that at least you could use your Internet connection to open up a bit of free or low-cost competition for phone service.

You still have Vonage, MagicJack, Skype and a host of other players that are using the Internet connection. Google Voice may be one more program to help fill the void, but it’s not yet quite as simple to use as a regular phone.

For me, the loss of CallVantage is not crucial. As the paper’s former telecom reporter, I had tried out all sorts of calling services, and decided to take CallVantage as a home-office phone because it was the best. Most tech surveys also rated it as the best VoIP service, just a notch above VoiceWing and far ahead of anything else.

Still, hanging up on CallVantage and VoiceWing leaves consumers with fewer options -- again.

-- James S. Granelli

Is a telecom price war in the offing?

Just as federal regulators again hammer cable companies over the fast-rising prices in pay television, Verizon Communications said it would reduce its bundled prices for Internet, phone and TV services.

The nation's second largest phone company -- which controls home phone lines throughout Southern California's affluent beach communities -- said it was cutting prices to keep customers from fleeing to such cable firms as Time Warner Cable, the largest cable services provider in the greater Los Angeles region.

Verizon is offering a choice of triple-play bundles ranging from $79.99 to $119.99 a month, down from a low of $95 previously, spokesman Bill Kula said. Verizon also is introducing pared-down bundles of voice and Internet or TV at lower prices.            

Bloomberg News suggested that the cuts may make Verizon more attractive than Time Warner and Cox Communications, which covers some of the same SoCal beach communities that Verizon does. Time Warner's triple-play package starts at $89.85 a month for the first year of a three-year contract.

"More than anything, it just reflects the intense competitive nature of the industry right now and the need to get more aggressive on price to win share,'' Robert W. Baird analyst Will Power told Bloomberg News. "Price still matters in telecom.''

It's been easier for cable companies to offer phone service than it has for phone companies to offer pay TV, and that has helped cable take a big chunk out of phone carriers' customers. Verizon lost nearly 1.2 million home-phone customers in the third quarter, while Comcast, the nation's largest cable firm, gained 483,000 phone customers.

Verizon's effort may prove hollow to many. As Bloomberg pointed out, the deals only affect those still on the carrier's copper phone lines and using DirecTV Group's digital TV service.

Verizon's much-superior fiber-optic network, called FiOS, has given it an edge where those lines are installed, but the company is still a long way from being able to offer FiOS pay TV programming in all of the more than two dozen states where it operates.

Meantime, cable companies, pooling their resources through a research arm called CableLabs, have been developing a higher-speed technology that would let them use their existing network to compete with FiOS.

For those who want and can get the top-notch services, which offer high-definition TV, the Verizon price cuts won't mean a thing.

-- James S. Granelli

SightSpeed folds into Logitech

Telephone rebels have long flocked to Skype, Vonage and other Internet-based calling services that offer cheap to free calls.

Now SightSpeed, with its well-regarded video conferencing capabilities, hopes to take its Internet calling service beyond computer-to-computer -- or even phone-to-phone -- connections as part of a deal announced late tonight to sell itself to Swiss peripherals maker Logitech International for $30 million in cash.

Berkeley-based SightSpeed, which has been battling bigger rival Skype Technologies, hopes that the all-cash acquisition will lead to new ways to make video calls through other devices, though founder Peter Csathy declined late Tuesday to provide much more information.

One could surmise, though, that Logitech hopes to use the television, among those other devices, to let friends and relatives call each other to show off the baby's first steps or the senior in graduation garb.

The deal, which both sides hope to close in the next few weeks, gave the companies a chance to be somewhat obtuse in a statement on which they wouldn't elaborate.

The acquisition should "help us move more quickly toward our goals for video services that complement the way people socialize, communicate and enjoy entertainment," said Junien Labrousse, executive vice president of Logitech's Products group.

He said the company's research shows that there is a "large untapped market" for communicating through video calls. But folks want the technology to be "integrated into their family lifestyle, which means going beyond the PC," Labrousse said.

SightSpeed, of course, isn't the only Internet calling company with video. Skype itself has long had a video component, and some customers see little difference between the two.

Founded in 2001, SightSpeed has 25 employees. Csathy said he and all the employees would remain with Logitech.

-- Jim Granelli