BellSouth Launches Corporate VoIP Services

BellSouth on Thursday launched Internet-based voice services for corporations, joining competitors in trying to grab a share of a growing market.

The Atlanta-based company also announced a three-year agreement with Lucent Technologies, which will provide the equipment and software for the new services. BellSouth is offering its voice over Internet protocol services first in its nine-state territory in the Southeast, eventually expanding across the nation.

VoIP technology carries a huge advantage to businesses because of its potential for converging the personal computer with the telephone.

Today, data networks tapped by computers are separate from traditional telephone service. In the future, however, both are expected to be on one Internet-based system that will make it possible, for example, for someone to access voice mail through their laptop and respond by email, or send a fax.

The benefits of merging data and voice communications are expected to increase as high-speed Internet connections become available in more public places, such as cafes, airports and hotels. "Companies will be able to cash in on the advantages of IP networks," Vamsi Sistla, analyst for ABI Research said.BellSouth is not the first telecommunications company to announce corporate VoIP services. SBC Communications said in November that it would offer those services in its 13-state region and 100 metropolitan areas across the nation by the end of 2004.

On the consumer side, Qwest Communications International and AT&T have already rolled out Internet-calling services, and Verizon Communications is expected to offer its plan later this year.

In time, however, margins are expected to narrow in the consumer business, as companies compete with price for similar services, Sistla said. The corporate market, however, is expected to give telephone companies the opportunity to sell higher-margin specialized services to existing customers.

"There's a huge markup on the business side, and it's going to be more lucrative than the residential market," Sistla said. "BellSouth is getting into the corporate market first, because it knows there's going to be huge pricing pressure on the residential side."

BellSouth will offer VoIP over its existing Centrex service, which means customers won't have to buy new equipment, company officials said. Some competitors, on the other hand, may require companies to up grade their in-house, PBX telephone switching system.Nevertheless, while the technology offered by the different telephone companies may be different, it's all equal in quality, Norm Bogen, analyst for market researcher In-Stat/MDR said.

"The technology is good and getting better," Bogen said. "The reliability of the latest technology is good, and in terms of voice quality, it's often hard to distinguish from traditional telephone service."