Ken Harrison spent most of his life getting telephone service from Ma Bell.
But in the past decade, the 70-year-old Tyner home-owner has taken advantage of new regulations and technologies to get increasingly cheaper service by switching phone providers from AT&T to Comcast cable to Covista Communications.
Last month, Mr. Harrison tried out yet another new service that he thinks delivers even more phone options for less money.
The new service, billed as 1phone, is a new voice over Internet protocol, or VoIP, service from the Chattanooga-based Covista Communications.
"I've tried most everybody, and I've found 1phone to be cheaper than any other plan I've ever had with even more features," Mr. Harrison said.
Covista officials are eager to lure more customers like Mr. Harrison into their new Internet-based phone service.
The 1phone product provides local and long-distance service at what Covista officials claim can be up to 80 percent below standard landline prices.
If successful, 1Phone could help Covista regain or even surpass the revenues the company lost from its initial long-distance service following the loss of one of its key switching stations in the 9/11 attack on New York city.
vying against vonage
The 1phone technology is similar to that offered by Vonage, which has attracted 2.6 million subscribers since it launched its Internet-based digital phone service in 2002. Vonage is projected to generate nearly $1 billion in revenues this year from phone users willing to turn their broadband computer links into a digital phone service to replace their conventional landline from Ma Bell.
Covista officials are eager to get a piece of the VoIP market Vonage and others have built up over the past seven years.
"This is, in essence, a legal replica of what Vonage is doing, but it is less expensive," Henry Luken, the telecommunications pioneer who bought and brought Covista's headquarters and call center to Chattanooga in 2000. "For people who don't use their phone much, they'll pay only about $10 a month and it will have a $22.95 cap for those that use it more."
Vonage, which brags about its savings over traditional landline or mobile phones, collects an average $28.86 per customer, according to the company's most recent financial report.
1phone follows user
As its name implies, the 1phone service allows subscribers to use the phone most anywhere there is a broadband Internet link and can be set up to automatically forward calls to other lines or cell phone connections to help consolidate voice mail messages to a single line, even from multiple locations.
The 1Phone "Find-Me-Follow-Me feature can set up all predefined numbers to allow those calls to be automatically forwarded to your office or mobile phone.
The 1Phone is priced with a low introductory rate of $3.95 and a standard rate of $9.95, plus a per-minute charge or some calls. The maximum charge for unlimited calling is $22.95 -- $2 a month below the standard charge for Vonage.
"What we've done is to take the price down to the unbundled side so that if you don't use the phone a great amount, we'll sell you great service for $9.95 a month after the promotional rate," Covista Sales Vice President John Lapham said. "But if you are pounding the phone all the time, the most you are going to pay is capped. It's the best of both worlds so we think we have a great product to sell."
For the 1phone to work at your home, you must have high-speed Internet provided by a cable company like Comcast or DSL service from a telephone company like AT&T. Customers also must have a valid credit card or bank account to purchase this product.
covista comeback
Although new smart phones from Apple, Blackberry, Motorola and others are gaining the most consumer attention and highest monthly fees this summer, there are still millions of Americans looking for lower cost land line phone options.
Mr. Luken said the new 1Phone product has the potential to attract 1 million customers which, even with cheaper rates than Vonage, would more than triple Covista's current $35 million-a-year business.
Covista's long-distance business plunged after its New Jersey switch and operations were hurt following the terrorist attack on New York City on Sept. 11, 2001 -- just a year after Mr. Luken acquired the company. The company lost more than half its revenues and, despite new local phone and wholesale telecom services added in recent years, still remains less than a third the size it once was across the country.
Mr. Luken, who initially made his fortune starting and building a dial-around long distance business known as Telco Communications, has sustained Covista and its national network while pursuing other businesses. Since selling his interest in Telco in 1997, Mr. Luken has invested in everything from Chattanooga real estate, to Christensen yachts to Jewelry TV.
But his latest venture into Retro TV (RTV) is what excites him most these days.
As television stations convert to digital formats and pick up the ability to offer more than one channel, Mr. Luken's RTV network is quickly expanded to more than 100 TV channels across the country. The network of old TV classics like Leave it to Beaver, Magnum P.I. and Ironside is likely to be available in 80 million U.S. homes by the end of the summer and Mr. Luken is already preparing for similar, other networks of old shows.
RTV to sell 1phone
Such networks give Mr. Luken plenty of advertising time to fill and he expects to use some of it to promote the 1Phone.
"We believe we can very cost-effectively get the word out about our service, and the way we have developed our plans will help ensure we remain the low-cost provider," Mr. Luken said. "We think we can be successful if we can get people to try out the service, and the spread the word."
Mr. Lapham, who returned to Covista in February after getting a call about the new service, said the television ads on RTV programming should immediately generated thousands of calls and many sales of the new service.
"We've got our old band back together to promote this product and make it work." he said.
Covista has the advantage of 26 years of customer phone service and its own nationwide network, in many instances, offers a lower-cost phone connection than most other phone companies.
1phone is being debuted as a residential service, but Covista plans to eventually also launch a commercial service.
Covista is offering an introductory rate as $3.95 for three months, but subscribers must buy an adapter box to connect the broadband line into a phone connection. Those devices sell for $35, plus $6.96 for shipping.
People can pay that upfront or may over four payments," Covista President Kevin Alward said.
With phone switches in New York, Los Angeles, Dallas, Minneapolis and Chattanooga., Mr. Lapham said Covista "has an extensive backbone and network and we've been doing this since 1983. Covista's Chattanooga call center also is equipped to handle the new business, Mr. Lapham said.
"We've been known for years for our customer service and its very important to us to give live voices to our end users," he said.
Company at a glance
Headquarters: Chattanooga
Established: 1983
No. of customers: About 60,000
No. of employees: 80 employees
Annual sales: About $35 million
Chairman: Henry Luken
CEO: Kevin Alward
Switches: New York, Los Angeles, Dallas, Minneapolis, Chattanooga
Main products: KISS Local and KISS Long Distance
New product: 1Phone
Web site: Covista.com
