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VoIP price war

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Voice over IP calls are getting cheaper - Vonage and AT&T both announced lower monthly charges late last week.

AT&T said it would reduce its monthly charge by five dollars to $30 a month for unlimited local and long distance calls in Canada and the US. In response competitor Vonage announced it would also knock five dollars off its monthly charge. Its package for unlimited calls falls to $25 a month. The firm is also simplifying its other call packages.

The news is the first sign of a price war in the market for broadband phone services.

VoIP services use internet protocols to route calls and so should be able to provide services for far less than a traditional telco using its own network. A spokesman for Vonage said prices could continue to fall as the firm takes advantage of benefits of scale.

Vonage claims 200,000 customers out of a total residential market of 1m subscribers. ®

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