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Verizon Communications, the second-largest US telephone company, cut the cost of its VoiceWing broadband VoIP (voice over Internet Protocol) service which includes unlimited local and long distance calling by $5 to $24.95 a month ? the same price as rival Vonage Holdings, the VoIP pioneer that recently filed for an initial public offering.
The move signals a more aggressive response from Verizon to the challenge posed by cable TV operators and independent VoIP providers like Vonage that have been signing up traditional telephone customers with cut price telephony deals.
Just last week Comcast, the biggest US cable TV network operators, said its first-quarter profit tripled after it signed up more customers for its new telephone service than it did in all of last year .
Meanwhile traditional telecommunications companies, including Verizon, continue to report customer defections ? in the latest quarter Verizon reported a 6.9 per cent decline in total access lines to 48m.
In order to compete, all the major US telecommunications companies have announced their own cut-price VoIP offering, but have spent little marketing or promoting these services, perhaps because they compete directly with their higher-priced regular voice services.
Indeed, some consumers have reported that they have only become aware of the telecoms company VoIP offerings when they call up to cancel their traditional phone service.
Like the other leading US telecommunications carriers, Verizon?s senior management, led by Ivan Seidenberg, chief executive, has focused on selling bundles of services built around a broadband DSL or high speed Fios fibre optic connection.