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Summary:

Verizon launched a device this week that, much like a MagicJack or Ooma, will connect to your existing home phone and deliver voice calls for a fee. The move shows how Verizon is prepping for an all-IP future and could disrupt its competitors.

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Verizon has launched a device that, much like a MagicJack or Ooma, will connect to your existing home phone and deliver voice calls for a fee, only this service will use the Verizon Wireless network instead of a home broadband connection. The service, which costs $20 a month ($10 if you add it to an existing Verizon Family plan), is an encroachment by Verizon into the voice businesses of its copper-loving rivals and may even split the cable bundles by offering an alternative to a triple play.

A consumer would connect a home phone to this box, which has a power supply to keep the landline working in case of a power outage, as well as a cellular radio that provides the connection for the voice calls to go over the net. All 911 calls go over the cell network. Ironically, Verizon just received a letter from the FCC (PDF) about its failure to connect about 10,000 wireless 911 calls during a showstorm in the Washington, D.C., area this past January. At $20, the price is about what I pay for a stripped-down version of a land line provided by AT&T. I’ve asked for a trial unit to see how the Verizon service compares.

Here’s where the service gets interesting. Verizon is basically betting on wireless and fiber as the transport mechanisms for video, voice and data. It has sold off its copper assets in most areas, and with this offering, can expand its broadband and voice offering beyond its FiOS footprint via its wireless network. Scoring an extra $20 a month for voice traffic over its wireless network is a coup if subscribers sign up, because voice traffic isn’t bandwidth-intensive. Once the cost associated with the device is paid, Verizon will have a fairly high-margin service. In the last few months, I think I used my wireline phone for 10 minutes (actually to make a call to Verizon after I dropped my cell phone in a bathtub).

So now, Verizon can  not only take business away from AT&T and other old landline providers; it can also boost its margins. In addition, it moves into new geographic markets and can split the bundled offerings from video and broadband providers. Consumers like bundled services because they get one bill and a manufactured discount. Now, Verizon can offer a mobile broadband and mobile and home phone service, creating a compelling bundle and taking customers of voice bundles from cable and other telcos. Given that Comcast managed to add 257,000 voice subscribers in the fourth quarter of 2010 and is the nation’s third-largest phone company, this isn’t an insignificant attack.

As voice and video services become all-IP and as mobile networks get faster, it’s possible consumers may only distinguish between mobile and wireline broadband. Obviously, video is still going to take some work. But if that happens, Verizon has set itself up for the future pretty neatly with this offering.

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  1. Maybe I am a bit dull but what is the value of this, versus using just a cell phone with unlimited minutes? What am I missing? TIA

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    1. some people like to share a phone that stays in a single location. you can do that with a cell phone, but few people are likely to consider that an option.

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  2. In three years or so, Verizon’s LTE voice will be HD and probably better than any landline

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  3. how are they able to justify such a large pricing difference between this and a basic voice only unlimited call phone agreement?

    as they move to LTE and SIM cards will it become possible to get a SIM card for the future version of this device and than put it into a cell phone?

    to me this goes to show how outrageously overpriced cell phone service is in the US today when coming from the major carriers.

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  4. Excellent article. Now just combine this with a signal booster…

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  5. I’ve used Skype, Ooma, and MagicJack over a Verizon Broadband card.

    The call quality has been poor–especially when compared to my use of these three over my WiFi and FiOS connections.

    Like tom, I can’t see the value that justifies the premium pricing.

    Like puzzled, I can’t see the real value for the average consumer, who can get fixed wireline pricing (for basic telephony services) for half this price.

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    1. i think you misunderstood my pricing complaint. i was not complaining this new service was too expensive. my complaint was why is normal cellular so much more, they should cost the same. we should pay for a certain number of minutes, texts and/or data bucket size and the actual device we use should make no difference in the monthly bill.

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  6. Didn’t T-Mobile try this and fail?

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  7. My parents have a scenario for which this is perfect (in fact, I ordered this for them yesterday). Though currently Verizon Wireless customers, they prefer to maintain a home phone (their wireless plan with 450 mins between them is plenty for mobile use, but not nearly enough for home use).

    Their current landline bill is $36+ with all taxes — just for simple wireline & call waiting + taxes/fees. No long distance, no other features.

    Verizon Home Phone connect will be approx. $23 with taxes/fees. That is a 33%+ savings vs their landline — plus they gain additional features such as voicemail, 3way calling, and caller ID. Verizon signal strength and voice quality at their home is spectacular, so I don’t expect quality issues.

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  8. Does not work very well. Range is horrible and Verizon is probably the worst company to get technical help from. Will be returning.

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