AOL Announces VoIP Service

Online provider America Online said Tuesday it plans to offer an Internet-based telephone service to its customers within a month, and will eventually offer it to anyone with a high-speed Internet connection.

Jonathan Miller, AOLis chief executive, announced the service in a speech at the VON Spring 2005 Internet telephone conference in San Jose, Calif.

It is not clear when AOL will offer the service to non-AOL customers and no pricing plans were announced. Mr. Miller said further details will be announced in the next 30 days.

The service by the worldis largest Internet access company will be similar to that of Vonage Holdings Corp., which uses a customeris high-speed Internet link to send and receive telephone calls. Vonage announced earlier this week it had reached 500,000 lines in service.

Known as Voice over Internet Protocol (VoIP), the technology allows those with high-speed Internet access to make phone calls using specialized or traditional telephone handsets. The advantage over traditional phone services is the lower cost -- as low as US$25 a month for unlimited local calling -- and the fact the service is not taxed.

VoIP is increasing in popularity. The largest VoIP provider in the U.S., Vonage, announced earlier this week it now had over 500,000 customers. Former long distance giant AT&T also entered the VoIP market last year.

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