BETTER LATE THAN NEVER
Interesting to see AOL make an offensive move (via USA Today), into internet telephony (aka VOIP) with AIM, it's market-leading instant messaging franchise. As this New York Times article explains,
"AOL is preparing to offer the 41 million users of its instant messaging system a free phone number that will allow people to call them from regular phones while they are online."
This is in addition to AOL adding MySpace type of community features to AIM in coming weeks (see post here). The move into telephony is more competitive than similar offerings by other mainstream providers like Yahoo! and Skype (part of eBay). I'd discussed the pros and cons of those two offerings in a post a few weeks ago. Google is also in this space, although it's offerings are more basic than it's competitors so far.
As I said in a post last fall, when eBay acquired Skype,
"...these opportunities to extract any kind of pricing for voice communications at all, may be fleeting, like a fistful of sand running through one's fingers."
And AOL is showing that to be the case, knocking down yet another revenue driver in internet telephony today: No charge to get a local phone number for incoming calls.
The New York Times piece elaborates,
"The free phone number is a new twist on services that allow calls between regular phones and PC's, an idea made popular by Skype, which is owned by eBay, and copied by others, like Yahoo through its instant message software. As with those services, the new AOL Phoneline service, to be introduced May 16, will allow users to call each other free if both are online, typically using headsets or microphones attached to their computers.
Other services charge about $30 to $40 a year for a telephone number to receive incoming calls, and about 2 cents a minute to place phone calls from a computer to an ordinary telephone line.
AOL will sell outgoing calls only as part of a flat-rate package that costs $14.90 a month for unlimited calling, or at an introductory price of $9.95 a month for people who subscribe when the service starts..."
The subtlety here is that,
"Skype has not taken off in the United States as it has in other countries because telephone rates are much lower here, said John McKinley, the president of AOL's digital services division.
Free incoming calls, he said, are more appealing in this country, especially for people who mostly use cellphones but do not want to give their cell number to casual acquaintances.
These people can give the AOL number out freely. They can then receive notifications on their cellphones of new voice mail messages left at their AOL number.
AOL will make phone numbers available in 50 metropolitan areas. The company hopes to profit both from displaying advertisements to users and from the outbound calling charges and additional services, like ring tones and call forwarding."
It's good to see AOL getting competitive in internet telephony after years of missed opportunities relative to incumbent and start-up competitors. Fred Wilson has a particularly telling story on this in his post today:
"In the late 90s, I was an investor in ITXC. Tom Evslin, the founder and CEO of ITXC, called on AOL and offered them the opportunity to use ITXC's global VOIP network to power a VOIP service for AIM. AIM could have and should have been Skype.
But it wasn't because AOL missed the opportunity to offer a free and easy VOIP service on top of AIM. I am not saying that they should have done business with ITXC, but they should have done business with someone and gotten agressive about integrating VOIP with AIM. By the time that AOL did offer VOIP on top of AIM, Skype had done it better."
I think AOL still has a good shot at taking a lead in this market, at least in the US, given that mainstream adoption of internet telephony is still ahead of us here.
Now someone just needs to make these internet telephone numbers more mobile by going wireless.
(Disclosure: I own shares in AOL's parent Time Warner, Yahoo!, eBay and Google)
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