AT&T halts CallVantage VoIP - is this the end of stand-alone consumer VoIP?

* AT&T stops offering CallVantage VoIP to new subscribers

AT&T recently stopped offering its CallVantage VoIP service to new subscribers. With no official announcement, online shoppers for the service were greeted with a message thanking would-be customers for their interest and noting that the company is not currently accepting new orders for the VoIP service. The decision affects both the consumer and SMB versions of the service. AT&T will continue to provide CallVantage to existing customers, although it has not disclosed what will happen when an existing customer wants to move or change their current service.

AT&T had already stopped actively marketing CallVantage within its local footprint about a year ago, but in January this year it launched AT&T U-verse Voice. Available in more than 20 metro areas, AT&T U-verse Voice is the first commercial product in the United States to be based on an IMS platform.

The decision to stop selling CallVantage provides insights on AT&T’s overall out-of-region voice services strategy for consumers and the SMB market. When SBC and AT&T merged in November 2005, the “old AT&T” portfolio included nationwide local and long-distance calling plans. CallVantage was also part of the “old AT&T” portfolio, and it used any carrier's broadband connection to provide unlimited domestic voice for $24.99 a month (unlimited domestic calling) or $19.99 (metered long-distance calls), similar in price and features to the service Vonage still offers. As the new AT&T rationalized its consumer voice services, new in-region sales were focused on existing traditional SBC (and BellSouth) unlimited plans, facilitating the demise of the old AT&T plans.

According to the company’s Web site, AT&T will “continue to evaluate” its CallVantage service and said that it remains “committed to providing leading, next generation voice services for today's consumer and business customers.” 

Our observations: Judging by the sales results of the first half of 2008 from Vonage and Packet8, the stand-alone consumer VoIP market has peaked and may be headed for a gradual decline, so AT&T’s decision to suspend new CallVantage sales will not have a large affect on the consumer VoIP market. For example, in the first half of this year, Vonage eked out only 32,000 net additions and Packet8 reported that its consumer VoIP revenue declined for the same six-month period. With customers increasingly buying double- or triple-play bundles, the stand-alone consumer VoIP industry has a bleak future. However, when bundled with a broadband connection or as part of a triple-play, VoIP has proven to be very successful - in 2007 the top five U. S cable companies collectively added more than 4.8 million VoIP subscribers and another 2.2 million VoIP customers in the first half of 2008. The future of “bring your own broadband” VoIP in the SMB market remains to be seen.

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