Microsoft Corp.'s MSN and MCI Inc. said they are teaming up to extend the reach of MSN's instant-messaging service into the crowded global computer-to-phone call market.
The companies are the latest to enter the market for calling using personal computers. Those in the market include Skype, recently purchased by eBay, along with Google and Yahoo.
But the service will permit only outbound calls at first, even as rivals Yahoo Inc. and America Online Inc. allow instant messaging users to receive calls from conventional phones as well as to call out.
The deal will allow consumers to place calls for as little as 2.3 cents a minute -- undercutting rates MCI offers existing customers -- and highlighting the challenge Web-based calling poses to voice-based telephone businesses.
The new service to be known as MCI Web Calling for Windows Live Call will be available through Windows Live Messenger, the upcoming successor to MSN Messenger, the instant messaging service which has more than 185 million active accounts around the world, MCI and Microsoft said in a joint statement.
For Microsoft, the partnership puts it in competition with a growing field of major Internet companies offering free or low-cost Web-based calling services -- from international Web-calling Company Skype, a unit of eBay Inc., to Time Warner Inc.'s America Online and Yahoo Messenger.
Microsoft, the world's largest software maker, and MCI, the telecommunications provider being acquired by Verizon Communications Inc., said they will begin a test run of the service in the United States this week. Broader availability is set for the first half of next year.
The service will use technology from Teleo Inc., a small startup Microsoft acquired in August. Teleo's Internet telephony software lets people make voice calls by clicking on phone numbers appearing on Web pages.
The intent is to be very price competitive with who is out there, Patty Proferes, senior vice president of Mass Markets and Corporate Advertising for MCI, said in a phone interview.
MCI and Microsoft said they are testing the Windows Live Messenger service in the United States, and expect to deliver the PC-to-phone calling capabilities to France, Germany, Spain and the Britain in the coming weeks. The service will be made available to subscribers in countries worldwide within a year. Further details can be found at http://ideas.live.com/.
It is the latest offering to use Voice over Internet Protocol, or VoIP, technology. Calls are broken into data packets that get routed over the Internet, an approach that is cheaper and more efficient than the traditional circuit-switched phone system.
Of late, Yahoo announced it would add computer-to-phone calling capabilities to its instant-messaging service, after a similar retooling of the rival AOL Instant Messenger service from Time Warner Inc. earlier this fall.
Microsoft and MCI's new service, which the companies have dubbed "MCI Web Calling for Windows Live Call," will allow users of MSN Messenger, Microsoft's instant messaging service, to call land lines or cell phones. Microsoft said it was working to add additional capabilities, including inbound calls.
Subscribers will be able to place calls to and from more than 220 countries with rates starting at 2.3 cents per minute to the US, Canada, Britain and Western Europe during the beta testing period. Prepaid calling time can be purchased from MCI in $5, $10 or $25 increments. MCI will handle account management, customer service and billing.
Pricing for the final version will be set when the service launches next year.
Our new Windows Live PC-to-phone voice feature requires a partner that shares our vision for connecting people globally, said Blake Irving, corporate vice president of the MSN Communication Services.
We are thrilled to work with a proven global technology provider like MCI to provide the bridge between PCs and phones with high-quality voice services that enable people to communicate more easily, conveniently and inexpensively. Our customers are going to love this.
The companies did not disclose the value of what they called a "multi-year agreement," or specify how many years the deal will last.
Patty Proferes, senior vice president at MCI, added, "This is a terrific example of the expanded MCI and Microsoft strategic relationship as the two companies continue to develop and deliver next-generation services for our customers."
Separately, Yahoo Inc., the world's biggest Internet media company, confirmed it had begun offering its new computer-to-phone service that it had announced shortly.
The Yahoo Messenger service which is commercially available at http://messenger.yahoo.com/, features calling rates from computers to fixed-line or mobile phones in the United States for about one cent a minute, and rates to more than 30 other countries for less than two U.S. cents per minute.
There are also low-cost Internet phone providers like Skype Technologies SA, acquired by Internet auction house eBay Inc. in October, which give away software that lets people talk for free over the Internet using computers and microphones.
The service relies on a variety of backbone telecommunications suppliers operating in countries around the globe, officials said.
The latest versions of MSN Messenger and other instant messaging programs already let people talk to each other from computer to computer.