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Verizon Communications this week joined the Voice over Internet Protocol crowd, introducing a service that lets broadband users make unlimited phone calls around the United States over a data network.

VoIP converts voice calls into data packets and can transport them along with Web and other data traffic, which generally costs less than using a traditional phone network with dedicated circuits. It also allows service providers to set up new features, such as controlling calls and accessing messages through a PC. Startups such as Vonage Holdings and Skype Technologies pioneered the technology, which is finding growing popularity.

Verizon's VoiceWing service, which transports calls partly over the open Internet, is geared toward consumers and has a basic price of $40 per month. Another Verizon VoIP service, geared toward small businesses and enterprises and probably debuting next year, will run over a fully managed network to better ensure call quality, says Michelle Swittenberg, executive director of consumer VoIP product management at Verizon. She did not provide any additional details on the business service.

Mature Market?

The entry of Verizon, the largest of the nation's former regional phone carriers and a major provider of broadband service, is a smart move and just the latest sign that VoIP is maturing, according to Yankee Group analyst Jim Slaby.

"Verizon has chosen not to sit there with its hands over its ears and eyes and chanting, 'There is no monster under the bed,' when in fact there is a monster under the bed," Slaby says. VoIP is not only presenting a lower-cost alternative to traditional phone service but is also bringing cable providers, the archrivals of DSL carriers such as Verizon, into the business, Slaby says.

VoiceWing users will plug their phones into an adapter roughly the size of a videotape and connect that to any broadband Internet connection. When traveling, they can carry the adapter with them and do the same with any conventional phone and broadband connection, Verizon spokesperson Bobbi Henson says.

Customers can choose phone numbers with area codes from 139 markets in 33 U.S. states and the District of Columbia, Henson says. In addition, they can manage the service from any Internet-connected PC through a Web-based service called the Personal Account Manager. Among other things, it lets users itemize all their calls, play back voice mail by clicking on a link, or direct their calls to be forwarded to any phone number, starting immediately or at a set time.

The service, available throughout the continental United States, offers unlimited calls within the country and some territories, according to Verizon. International calls are charged per minute, including 3 cents per minute to Canada, 4 cents to the UK, and 21 cents to India.

Extra Savings

In addition to the standard price, the carrier is offering some special deals: For Verizon Online DSL customers, the service costs $35 per month, or $30 per month for the first six months if customer signs up by October 31. Users of other broadband services can get an introductory price of $35 for the first six months if they sign up by October 31. There is a one-time setup fee of $40, plus shipping and handling for a free adapter. Verizon is offering a 30-day money-back guarantee.

Customers can turn incoming long-distance calls from a certain area into local calls by using an Alternate Telephone Number in the area code of that place. Each alternate number costs $10 per month, Henson says.

Traditional 911 emergency numbers can't be reached through VoiceWing, but Verizon is providing an emergency response service. That service doesn't have all the features of a regular 911 service, and customers will have to identify their location to the operator, Henson says.

For some customers, a low price can make up for VoIP's shortcomings, says Yankee's Slaby.

"The voice quality and the uptimes aren't up to the level of traditional telephony, but people are willing to make compromises," Slaby says.

Over time, features and related services will count for more than low cost, and major providers such as Verizon will have a leg up on "non-facilities-based" VoIP startups, he says.

"Somebody like a Verizon has a lot more leverage there, because they own the local broadband connection," Slaby says.