Verizon Announces Pricing for the VoIP Hub

January 31, 2009

Recently, Verizon has been making headlines in the VoIP area. There are two primary reasons: 1) Verizon announced it intends to shut down its VoiceWing home phone service, and 2) the company introduced a new home phone service that complements its wireless service. The new service uses a device called the "Verizon Hub" that is essentially VoIP phone with a lot more features than just voice.

For $200 (after a $50 mail-in rebate), customers who agree to sign a new two-year contract can get the new Verizon Hub so they can make unlimited calls anywhere in the nation. While Vonage and other VoIP carriers have offered this service for a number of years, one would assume that Verizon thought it could probably get more business than its competitors, since the service was associated with a customer's mobile phone service. In theory, that sounded good.

In reality, the potential success of this business is very questionable. Most customers do not want to spend $200 on a home phone. How many of you have a $200 home phone? And, if you have a home phone, how much would you be willing to spend on a second or third phone in the house? Apparently, the pricing for the Verizon Hub is $80 for each additional phone associated with the Hub.

What makes this whole business plan even more questionable is the price charged for the VoIP service. Since Vonage charges about $25/month for unlimited nation-wide calling, one would think that Verizon would match that price or charge even less. They should charge less, since the phone is under a two-year contract and coupled with one's mobile phone service. But, you would be wrong in that assumption. Apparently, Verizon plans to charge $35/month for the Verizon Hub. Clearly, Vonage and the cable companies offering competitive services are not going to be too nervous about this fairly expensive offering.