FiOS to Raise Its Voice

Verizon Communications plans to widely roll out an Internet-based phone service for FiOS in early 2009, in the hopes that a more feature-rich offering will persuade customers to stay in the telco’s triple-play embrace.

While Verizon has not announced pricing, the new FiOS Digital Voice service is not designed to be a low-cost play: Executives said the new FiOS Digital Voice service will be priced comparably to the telco’s existing calling plans.

FiOS Digital Voice has been in limited deployment with customers in Virginia and Maryland markets since September. Starting early next year, Verizon will begin marketing the voice-over-IP service to new customers across the 14 states where it offers FiOS TV and Internet services.

“It’s a customer retention and a customer acquisition tool,” said Benigno Gonzalez, executive director of FiOS products.

The service transmits phone calls using Internet protocols, as cable telephone services do, and Verizon is using in-home copper wiring so customers can simply use their existing phone jacks.

FiOS Digital Voice includes standard features like caller ID and voicemail, and provides Web access to messages. It also has enhanced capabilities that aren’t available with traditional phone services, such as scheduled call-forwarding (also known as “follow me”), the ability to ring multiple phone numbers simultaneously (e.g., both home and mobile phone), phone-book synchronization and click-to-dial.

“These are voice services we have been lacking,” Gonzalez said. “We think this will be a real enhancement to voice service.”

It’s also Verizon’s attempt to slow the hemorrhaging in what historically has been its core business. As with other telcos, Verizon has lost millions of telephone customers in recent years.

As of Sept. 30, Verizon had 21.6 million switched residential access lines, down 12% from 24.6 million a year ago. Analysts attribute the steady erosion to customers replacing landlines with mobile phones or cable voice services.

Verizon is offering two calling plans with FiOS Digital Voice: one that provides unlimited direct-dialed, domestic calling (including calls to U.S. territories, Canada and Puerto Rico) for a flat monthly rate; and a per-minute plan with domestic calls 5 cents per minute.

Gonzalez said pricing for the service would be in line with Verizon’s current calling plans. The telco’s Freedom Essentials unlimited-calling plan is $44.99 to $49.99 per month, with bundled discounts available.

On the discussion site in September, a user who claimed to be a Verizon customer in an area where FiOS Digital Voice had become available posted an image of the service’s pricing, showing the unlimited-calling plan at $44.99 per month, and the per-minute plan at $14.99 per month plus calling charges.

Verizon spokeswoman Deidre Mulcahy declined to confirm those price points, calling them “speculative,” and noted that FiOS Digital Voice will be marketed primarily as part of multiservice bundles.

The company developed FiOS Digital Voice separately from its previous voice-over-broadband service, VoiceWing, which was launched in 2004 but is no longer being actively marketed.

With the new offering, Verizon also will pitch a few optional premium-priced services, such as virtual phone numbers. Those would allow someone living in, say, Pennsylvania to have a phone number with a 310 area code to appear as if he’s based in Los Angeles.

Existing FiOS customers are eligible to switch to Digital Voice, which Gonzalez said is enabled through a software update to the optical network terminal (ONT) device at the customer premises.