Priceline Dials Long Distance for More Business

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Priceline.com's foray into the long-distance telephone market -- the ninth market Priceline has allowed consumers to name their prices for -- is designed to do exactly one thing: increase repeat traffic on its site by banking on a high-frequency, short-purchase product cycle.


Through partnerships with Internet telephony providers Net2Phone, deltathree.com and ZeroPlus.com, Priceline promises savings of up to 40 percent off most standard base rates on monthly long-distance calling bills. Such savings should make regular visitors of cost-conscious consumers and small businesses, Priceline reasons.


"It's one of the fastest repeat categories we have, which, we think, is key," said Michael McCadden, Priceline's chief marketing officer, "because every time someone comes back to the Priceline site, they will see a new product category, new promotions, new partners and news of the brand."


In fact, the importance of long-distance calling in Priceline's scheme of things is highlighted by the way it has introduced the service to consumers. This is the first product that Priceline launched with a dedicated national television campaign, starring spokesman William Shatner.


For all its other offerings -- airline tickets, hotel rooms, home mortgages, new cars or groceries -- Priceline has used radio or print or a combination of both. Even airline tickets, the product that launched Priceline three years ago, made a radio debut.


"We think it's a very important category for us," McCadden said at the service's launch last week.


The Priceline long distance service itself is a creature of the Internet, hence its flexible price structure. Net2Phone, deltathree.com and ZeroPlus.com, Priceline's three partners in this venture, account for most of the Internet telephony calls made from the United States.


Unlike regular long distance phone calls that are wireless or travel over mostly copper wires, Priceline's service is through the Internet via fiber-optic cables that have a greater capacity to carry calls with the same clarity, the Norwalk, CT-based company said.


All calls are carried over a caller's local telephone network to the Priceline partner's access point. The caller's voice then is translated into a digital signal online and sent to the Priceline partner's access point near the recipient. This digital signal is converted back to the caller's voice, and the call transferred to the local telephone network for delivery to the recipient.


So far, more than 10,000 customers have signed up for the beta test that commenced just over a month ago. These consumers can call across all 50 states and 250 markets worldwide.


Priceline says its service has no hidden fees, surcharges, membership fees or minimum call times. Consumers log onto the site and set the price they are willing to pay per-minute for a block of calling time. Priceline then searches its database to see if a consumer's offer can be accepted.


If an offer is accepted, Priceline e-mails the consumer with the name of the participating Internet telephony provider who will supply the service. To place a call using the minutes bought, the customer dials an access number from home or office, enters a four-digit personal identification number and completes the call.


Consumers don't need a computer or Internet service provider to place these calls using Priceline Long Distance minutes. Also, they don't need to switch their current long distance service providers.


Priceline's McCadden wants consumers to examine their total long distance phone bill, check the minutes they actually are using and see if they are paying what they think they are paying. With Priceline's service, there are no strings attached, he said.


"That's why we encourage consumers to look at their current phone bill and see what they're paying now, and that helps them determine what they really should be paying," McCadden said. "Consumers are pretty knowledgeable."
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