Nationwide calling from your regular home phone is getting closer to being free.
Two new companies are trying to attract the average consumer to Internet telephony by bypassing the local phone and cable TV giants to provide free calls on standard-issue phone handsets.
For The Record
Los Angeles Times Thursday, September 20, 2007 Home Edition Main News Part A Page 2 National Desk 1 inches; 46 words Type of Material: Correction
Net phones: An article in Wednesday's Business section said a Yankee Group forecast of the market for Internet-based calling would triple to $27 billion in revenue by 2011. Yankee Group's forecast was that the number of Internet calling customers would triple to 27 million by then.
The free calls come at a price, of course -- either one-time hardware costs or low annual membership fees.
Still, analysts say the surge of inexpensive alternatives for making calls is likely to drive down prices for traditional phone plans.
Ooma Inc. has captured the attention of tech enthusiasts with its call-routing device, while arousing the curiosity of celebrity-watchers with its creative director, actor Ashton Kutcher.
The Palo Alto start-up today will start selling the $399 device, which plugs into a home network router to connect calls over the Internet. After that initial expense, phone service throughout the nation is free for life.
On Sept. 27, another start-up, MagicJack, plans to start selling a small device that plugs into a computer's USB port. At the other end of the device, which resembles a flash drive, is a jack that connects to a regular phone.
MagicJack will charge $40 for the device and a year of service for all calls in the U.S. and Canada, then $20 for each additional year. Unlike Ooma, the MagicJack will work only with when its host computer is turned on, but it does have an advantage: The device works overseas, so travelers can take it with them and, after finding a computer to plug it into, call home for free.
The two services are the latest efforts to lure everyday folks to the technology known as voice over Internet protocol, or VOIP. They're all trying to take the pioneering efforts of EBay Inc.'s Skype Technologies, the world's most-used Internet calling program, beyond the geek level.
"Free voice is popping off everywhere," said Patrick Monaghan, an industry analyst at Yankee Group research firm.
Yankee Group expects the Internet calling market, which is dominated mainly by big cable TV companies, to triple by 2011 to $27 billion. Most revenue, especially for smaller firms, will come not from selling voice minutes but from advertising and added services.
"As more and more of these companies drive voice prices to zero, with companies like Skype and Ooma leading the charge, there's less room for the major phone carriers to charge more for the same minutes," Monaghan said.
