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The banner in the window of the Verizon Wireless (NYSE:VZ) store in Montpelier was a declaration of war on local landline providers. "Save on your home phone service," it said; "Unlimited [nb. U.S.] calling for $19.99/month." This is particularly interesting here in Northern New England where Verizon (VZ) (55% owner of VZW) sold its landline business to FairPoint Communications in 2007 after years of underinvestment in infrastructure. FairPoint (NASDAQ:FRP) went bankrupt not too long afterwards and has since reemerged; now FairPoint and other local landline carriers face a very serious threat to their already shrinking landline business from VZW.

FairPoint charges $58.99/month for unlimited U.S. calling in Vermont and that price does not include features like voice mail, which are part of the VZW Home Phone Connect service. (You actually pay more than the headline price monthly for both plans once the "additional charges" are added on). You can keep your existing landline number if you switch.

One reason you wouldn't switch your service is if you don't get a good VZW signal at your house. The service works through your existing home phones – not through mobile phones – but it connects from your house to the world over Verizon's cellular network. VZW supplies a device into which you plug your existing phones; the device is free with a two year contract or $129.99 with month-to-month service. If you have only a single phone (but who has that?), you would just plug it into the device. If you have cordless phones, you plug the base station into the device. If you have multiple phones connected with internal wiring, you either put the device at the point where your existing landline service enters the house or plug it into an unused jack after disconnecting your landline service. This is exactly the way that VoIP service like Vonage (NYSE:VG) utilizes your home phones.

VZW is very serious about having a successful competitor to landlines. The device has a battery so that, like existing landline services, it can survive a lengthy power outage. It has a GPS in it to assure that 911 calls have accurate location information (so long as the device is near a window). In fact, some users have discovered an interesting use for the device given these two features – they take it with them when they go on vacation or even out in a boat. As long as there is a phone plugged into it and you have a VZW signal, you are taking your home phone service including inbound and outbound calling with you. I doubt if the device will switch from cell tower to cell tower while you move, though.

There are limitations. This from the VZW site: "Home Phone Connect is not compatible with home security systems, fax machines, dial-up or DSL internet service, DVR services, medical alert services (e.g. Life Alert), or credit card machines." It does work with answering machines and most autodialers. But note, if you are getting DSL from your local landline provider, you may have to continue to buy at least their minimum phone plan in order to keep your DSL. For example, I pay FairPoint for $13.15/month plus another $7.71 in local charges for this part of my service. So this would erode but not eliminate your savings if you are switching from FairPoint unlimited to VZW unlimited.

Note also that you can get VoIP service from Vonage and other at a lower price than VZW Home Connect, assuming that you have reasonably good Internet access (not satellite!). AT&T (NYSE:T) also offers a device which lets you make unlimited U.S. calls from your cell phone when you're at home. That service also costs $19.99/month and connects to the Internet over your existing Internet connection. But the VZW service, as the company proudly promotes, doesn't require an Internet connection.

VZW is also going after the low end of the market and making the service attractive to those who already do the bulk of their calling on VZW cellphones. You can just add the device as an extra line to your existing Family Share Plan for $9.99/month plus "other charges". This does not give you unlimited calling but would be very useful for mainly receiving calls or as a very cheap way for children who aren't ready for their own cell phones to have the convenience of home phones at little incremental monthly cost.

Disclosure: None

Source: Verizon Wireless Heats Up Competition for Residential Land Lines