VoIP Prices: Monthly Subscription Fees Stabilize
by Cynthia Brumfield
At this time last year, VoIP service prices were seemingly on a downward slope toward zero. Conventional wisdom held that IP-based voice services would continue to decline, with free online providers such as Skype (which was then on the cusp of its acquisition by eBay) pushing VoIP price points ever south.
However, our review of current VoIP residential service prices (see table) shows that VoIP prices, or at least the prices for premium subscription VoIP services, have stayed relatively flat over the past year, particularly for the more expensive, more feature-rich VoIP offerings.
VoIP Prices for Selected Providers
August 2006
Price of Lowest
Price of Highest
VoIP Service Package
Package
AT&T Call Vantage $19.99
$24.99
Bell Canada $34.00
$40.00
BroadVoice $9.95*
$24.95
Cablevision na
$29.95
Charter na
$39.99
Cogeco na
$44.99
Comcast na
$39.95
Cox $39.95
$43.95
EarthLink TrueVoice $14.95
$24.95
ECR Voice $14.95
$24.95
InPhonex $24.95
$49.95
InteleFone $9.95
$39.95
ITP $9.99
$19.99
Lingo $7.95
$21.95
Opex $14.99
$44.99
Packet8 $19.95
$49.99
Rogers $21.95
$41.95
Shaw na
$55.00
Speakeasy** na
$27.95
Sunrocket $9.95
$16.58***
Time Warner na
$39.95
Verizon Voice Wing $19.95
$24.95
Viatalk $9.95
$15.95
Videotron na
$16.95
VoIP.com $16.95
$19.95
VoIPYourLife $14.97
$29.97
Vonage $14.99
$24.99
VoxFlow na
$24.95
ZingoTel $5.95
$14.95
Source: Emerging Media Dynamics, Inc. compilation of company data.
*In-state calling only.
**Customers must buy SpeakEasy DSL to get VoIP service. Total price of package is $83.90.
***Reflects annual payment of $199.
Note: Bell Canada, Rogers, Shaw, Cogeco and Videotron prices are in Canadian dollars, while Time Warner, Cablevision, Cox, Charter, Cogeco, Comcast, Rogers and Shaw prices reflect the discounted price for cable video and high-speed data subscribers. Note that Cablevision's $29.95 price is billed as a promotional rate, applicable for only one year. After that the price reverts to $34.95.
It’s true that for a group of these subscription VoIP providers, price points have drifted down from around $30 per month to around $25 per month over the past year. AT&T CallVantage was available at this time last year for around $29.99 but now is generally priced at $24.99. Likewise, the price for Verizon VoiceWing service has gone down from $29.95 to $24.95.
This price point of around $25 seems to have been driven by the level set by independent VoIP provider Vonage, which hasn’t changed the price of its top-tier service, $24.99, for over a year. EarthLink’s entrée into the VoIP business has also helped to establish this $25 market-based rate.
It’s also true that a few feisty upstarts, such as SunRocket (which just completed a $33 million Series C financing round) have lowered the floor on entry-level VoIP service. In December 2005, SunRocket debuted a “Limited Edition” monthly service for only $9.95 that features enhanced 911 service, free calling features such as call waiting, caller ID and three-way calling, 200 minutes of global calling and unlimited inbound and SunRocket to SunRocket Internet phone calling.
The biggest VoIP providers, cable operators, have stood pat on their digital voice service pricing with virtually no North American provider cutting monthly service rates over the past year. The possible exception is Cablevision Systems, which unveiled earlier this year a bundled triple-play promotional offer that prices VoIP service at $29.95. However, Cablevision has been careful to label this price as a promotional, one-year price. Presumably once the year has ended for the relevant subscribers, the price reverts to $34.95.
Cablevision’s promotional offer highlights one big caveat to any analysis of VoIP pricing. Virtually all of the mainstream VoIP providers and resellers that appear in the accompanying table offer promotional or discounted service rates and it’s often difficult to determine what the standard rate card prices are.
Cablevision also underscores another drawback to analyzing VoIP prices across a group of providers. The Long Island-based cable operator offers an international calling plan called Optimum Voice WorldCall, which allows 500 minutes of international calling for an additional $19.95/month. Combined with the $29.95 rate, Cablevision’s VoIP service with a generous allotment of international calling costs customers around $50 per month.
But, many of the independent VoIP providers include some amount of international calling in their deluxe monthly plans. For example, Lingo's $34.95/month service includes 300 minutes of international calls to several dozen countries (although not “anywhere in the world,” which is the reach of Cablevision’s WorldCall program).
So, to a large extent, the top-drawer service from one VoIP provider differs from the highest level of service from another VoIP provider, making any apples-to-apples comparison difficult.
Further complicating the VoIP pricing picture is the advent over the past year of IM-based Internet voice applications, which frequently straddle the fence between monthly subscription services and free-over-the-net novelty calling options. AOL, for example, introduced in May its AIMPhone service, which offers a free web-based local phone number that works for only incoming calls. However, for $14.95/month, AIMPhone users can make unlimited outgoing calls, including calls to over 30 countries.
Finally, free web-based calling options, particularly Skype, are clearly competitors to the more traditional type of voice service offered by cable operators, phone companies, independent VoIP providers and resellers. Yet, despite the gains made by these PC-to-PC (or PC-to-PSTN or PC-to-Mobile) services, it’s unlikely that customers will soon ditch their subscription phone services – be they circuit-switched or VoIP – for these more complicated and less-trusted services.
With these caveats in mind, the point still remains: VoIP service prices are relatively stable, with only modest price reductions over the past year. |
