<<I think it's a dumb idea.>>
William any dumber than this? The street appears to like this news. Are you going to hold Pcln much longer?
<<
STAMFORD, Conn.--(BUSINESS WIRE)--Nov. 8, 1999--
Name your own price for long distance communications to almost
anywhere in the world
No surcharges, hidden fees, membership costs or minimum call time
As Internet telephony continues to reduce communications costs,
priceline.com offers a win/win solution for customers and
telecommunications providers
Net2Phone signs $18 million-plus agreement to become anchor provider
for IP-based, phone-to-phone service through priceline.com
Priceline.com (Nasdaq: PCLN), the Internet pricing system that has already enabled consumers to save millions of dollars on leisure airline tickets, hotel rooms, home mortgages and new cars, announced today that it will bring its cost-saving solution to yet another industry - telecommunications.
Beginning in the first quarter of 2000, priceline.com will offer name-your-own-price long distance service. The service will make it possible for U.S.-based consumers to name their own price for IP-based communications to almost anywhere in the world with no strings attached. Later on in the year, priceline.com said it plans to expand its telecommunications services further to offer a name-your-own-price business-to-business long distance service.
The first telecommunications company to join priceline.com's upcoming service is Net2Phone Inc. (Nasdaq: NTOP), the nation's leading provider of voice-enhanced Internet protocol (IP) telephony. Priceline.com customers will be able to name their own price for phone-to-phone international and domestic long distance calls over Net2Phone's high quality IP network.
Priceline.com said it has signed a three-year, multi-million-dollar agreement with Net2Phone. Priceline.com will receive an $18 million participation fee from Net2Phone spread over three years, in addition to ongoing revenue from long distance service purchased by priceline.com customers. Priceline.com said it is in discussions with several IP and traditional long distance vendors, but plans to make Net2Phone an anchor provider of long distance services. The two companies plan to engage in a number of cross-promotional activities in the future.
"Internet protocol is the future of communications and will continue to reduce the cost structure of providing this service," said Daniel H. Schulman, president and COO of priceline.com. "Given this trend, priceline.com's unique demand collection system offers a win/win solution for customers and telecommunications companies. For the first time, customers can use the Net to price their calls. Telecommunications companies can use priceline.com to selectively accept customer offers and route the calls in ways that utilize unused capacity and generate incremental revenue."
Priceline.com said it decided to offer name-your-own-price long distance service in response to its own customers and the general public. Opinion Research Corporation International of Princeton, NJ, surveyed consumers and found that a projected 27 million U.S. adults, or 43% of its survey respondents aware of priceline.com, expressed interest in priceline.com offering long distance service.
Priceline.com makes these savings possible because its Internet pricing system creates network efficiencies for telecommunications providers. For the first time, customers submit guaranteed purchase offers for long distance calls before those calls are made. On a real-time basis, carriers can see each guaranteed offer, check their capacity for originating and terminating network gateways, and then determine whether or not to accept the offer. The lower the current gateway utilization, the lower the offer they can accept for the call.
In this way priceline.com's Internet pricing system, which is already generating incremental revenues in the travel, automotive and banking industries, has the potential to give carriers a new, Internet-centric way to see guaranteed traffic and purchase offers in advance, then decide whether to accept and route that traffic in ways that takes advantage of unused "fiber," generating incremental revenue they would not otherwise have had.
Priceline.com's pricing system is set up to allow carriers to accept lower price offers and still protect their retail call-price structure. Because each purchase offer is evaluated based on carrier network capacity, consumers know that their lower offer may or may not be accepted. Also, in all of its services where multiple providers are involved, priceline.com "brand-shields" its providers by never identifying a provider until a consumer's offer is accepted.
Priceline.com's highly leverageable business model is particularly attractive to data traffic telecommunications providers, whose larger, business-oriented networks have significantly more "fiber" to devote to incremental traffic. Like their traditional copper-wire networks, data traffic networks can support ordinary telephone-to-telephone conversations at virtually the same quality levels.
Long distance service is a natural extension for priceline.com's horizontal business model. Customers have asked the Company to add other name-your-price services for more frequently purchased products and services, including long distance and retail goods. By building repeat Web site traffic through these products, priceline.com will have the continuing opportunity to introduce customers to other name-your-price services for leisure airline tickets, hotel rooms, new cars, home mortgages, groceries and more. For example, when the priceline WebHouse Club, a privately held affiliate licensee of priceline.com, launched its name-your-price grocery service on the priceline.com Web site, overall site traffic jumped 20%. (Since the WebHouse Club is a privately held priceline.com licensee, the results of WebHouse Club operations will not be included in priceline.com's financial statements).
Priceline.com said it plans to make it possible for consumers to choose from a variety of four different long distance service options, including:
- Domestic time blocks. Customers can name their own price for
blocks of 60 minutes, 120 minutes or more of long distance time
for interstate calls.
- International time blocks. Customers can name their own price for
blocks of long distance time for calls to a specified country.
- Priceline.com's "Call Anywhere" program. Customers can name their
own price for blocks of time that can be used to call multiple
designated locations. The actual amount of time purchased will
vary according to locations called. (Example: 60 minutes of time
for calls in the U.S. may equal 45 minutes of time if calls are
made to locations outside the U.S.).
Customers will use priceline.com's Web site (www.priceline.com) to make offers for all three of these plans. Once they choose their long distance provider and get their price, customers can use their home telephones to dial a special number, give their personal identification numbers (PINs) and make the call. Priceline.com will offer a fourth option that doesn't require use of the priceline.com Web site to name your price.
- Per-call service. This service will be exclusively offered
through Net2Phone. Customers obtain an "open" account for
Priceline.com Long Distance service. Each time they want to make
a call, they dial the service using their home telephone, type in
their PIN, and specify where they want to call. The service will
ask what they wish to pay. On a real-time basis, priceline.com
then checks network traffic. More unused capacity means consumers
are more likely to have their lower prices accepted. If their
offer is accepted, the call goes through and the cost of the call
is debited from their account.
About priceline.com
Priceline.com is the patented Internet pricing system that enables consumers to achieve significant savings by naming their own price for goods and services. Priceline.com takes consumer offers and then presents them to sellers who can fill as much of that guaranteed demand as they wish at price points determined by buyers. Priceline.com's "virtual" business model allows for rapid scaling using the Internet. Because the Company electronically collects consumer demand, it can fill this demand directly with sellers or by using proprietary databases. Priceline.com does not maintain or warehouse inventories in any of its product lines.
Priceline.com is currently selling multiple services to its sellers across three distinct product categories: a travel service that offers leisure airline tickets and hotel rooms, a personal finance service that offers home mortgages, refinancing and home equity loans, and an automotive service that offers new cars in nine states.
Recently, priceline.com announced that it would also offer a name-your-own-price service for rental cars. Priceline.com also licensed its business model to a privately owned company, Priceline WebHouse Club, which offers name-your-own-price retail goods, beginning with groceries in the New York metro area. The WebHouse Club launched this week. In return for the WebHouse Club license, priceline.com has received warrants allowing it to purchase a majority equity stake in the WebHouse Club under certain contingent conditions. Prior to the exercise of this warrant, the results of WebHouse Club operations will not be included in priceline.com's financial statements.
About Net2Phone
Net2Phone is a leading provider of voice-enhanced Internet communications services to individuals and businesses worldwide. Net2Phone enables people to place low-cost, high-quality calls from their computer, telephone or fax machine to any telephone or fax machine in the world. Net2Phone develops and markets technology and services for IP voice and e-commerce solutions for the Web and other IP networks.
NOTE TO EDITORS: Dan Schulman, priceline.com's president and COO, will discuss priceline.com's telecommunications strategy in a special briefing call for reporters today (Nov. 8) at 1:00 p.m. EST. To participate in the call, which is open to all accredited media, call 1-800-633-8757 approximately 5 to 10 minutes before 1:00 p.m. and ask to be connected to the priceline.com conference call.
This press release may contain forward-looking statements which are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Expressions of future goals and similar expressions including, without limitation, "may," "will," "believes," "should," "could," "hope," "expects," "expected," "does not currently expect," "anticipates," "predicts," "potential," and "forecast," reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements involve a number of risks and uncertainties, including the timely development and market acceptance of products and technologies and other factors described in the Company's filing with the Securities and Exchange Commission. The actual results may differ materially from any forward-looking statements due to such risks and uncertainties. The Company undertakes no obligations to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
CONTACT:
For press information, contact:
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