Earthlink Testing VoIP Phone Service

Following the lead of competing Internet service providers, Earthlink is test marketing a trial of a voice over IP (VoIP) phone service with Covad, a purveyor of business communications services. Earthlink will begin the trial in October in three markets: Dallas, San Francisco and San Jose, and Seattle.

The service will be powered by Covad's Digital Subscriber Line Access Multiplexer (DSLAM) technology over existing "last mile" copper phone lines. It will include familiar call waiting, caller ID and voicemail capabilities associated with traditional telephone services. To address some of the safety concerns associated with IP-telephony, the service will offer e911 and will operate during power outages.

"Our customers are looking to us for an expanded portfolio of low-cost, high quality voice and data products to meet their growing communications needs," said Steve Howe, EarthLink vice president of voice. "Partnering with Covad on a market trial of this scale builds upon our existing voice strategy and better positions us to deliver an exciting package of voice and data services."

VoIP has economized both local and long distance calling by introducing cut-rate prices into what were once considered to be venerable markets for Incumbent Local Exchange Carriers (ILECs). As ILECs migrate from their standard telephone networks, cable operators and Internet firms like Vonage are all vying for market share.

Smaller, alternative providers were first to market, but tech giants such as America Online, AT&T/SBC and Comcast have since launched their own VoIP offerings.

In a 2005 Yankee Group report, analyst Kate Griffin predicted that traditional telecoms will obtain as 25 percent share of the local VoIP market by the end of 2005 as compared to their 0 percent share at the end of 2003. The report also predicts that alternative voice providers such as Vonage will see their share fall to 16 percent from 66 percent in 2003.

EarthLink is funding the trial by prepaying for future services from Covad. EarthLink will provide all sales and marketing support for the duration of the trial.