Will Enterprises Take to AOLs VOIP Phone Service?

The move into VOIP may help delay the erosion of AOLs market position for a time, but its unlikely to reverse the gradual decline in AOLs position that has been under way since the wide availability of broadband Internet access, said Ed Sassone, development director at eTalk Corp., a provider of contact-center systems based in Irving, Texas.

"I think that broadband technology has really marginalized" AOL, with the result that it is "getting squeezed, and at both ends of the market," Sassone said.

It must compete with multiple broadband providers at the top end of the market, while watching its remaining dial-up service evaporate, he said.

Executives at Level3 Communications Inc., AOLs phone network infrastructure partner, expressed confidence that AOLs VOIP venture would meet with great success.

AOL will succeed because it is coming into the 100-year-old telephone market as a market disruptor by "making a new technology simple to use," said Cynthia F. Carpenter, vice president of marketing for consumer voice services at Level3.

AOL is vying for a piece of the residential phone market that is estimated to be worth $100 billion in North America, Carpenter said. The company will do that by appealing to the kind of technically savvy consumer who will be eager to give VOIP a try, she said.

This is also the type of consumer who will be willing to switch to a different service provider that offers the most attractive deal, she said. AOL is going to appeal to these users by offering features beyond simple price discounts, such as "cellular service, broadband, video, and by adding feature that their phones cant do right now," Carpenter said.

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