By Stephen Phillips
Priceline.com Inc, the name-your-own price internet commerce firm said on Monday it would launch IP-based international and domestic long-distance telephony services based on its patented reverse auction selling model. It said it would start offering the service from the first quarter of next year. Priceline touted a deal with Net2Phone under which the US-based provider of voice-enhanced IP telephony would pay it $18m over three years to participate in the service. Stamford, Connecticut-based Priceline said it is also in talks with other several IP and traditional long-distance vendors about carrying the service.
The service will make it possible for US-based consumers to name their own price for IP-based communications to almost anywhere in the world with no strings attached, Priceline said. It plans to offer a business-to-business long-distance service later next year.
Like our airline and hotel services, Priceline’s profits will be from the difference or the spread between the price our customers offer and what our seller partners offer to Priceline for those calls, said Dan Schulman, the company’s president and chief operating officer. The pricing system allows carriers to accept lower price offers but keep intact their retail call-price structure, according to Priceline. Because each purchase offer is evaluated based on carrier network capacity, consumers know that their lower offer may or may not be accepted, the company said. Priceline will offer what it calls brand-shields to withhold participating carrier’s names from consumers until an offer is accepted.
The thrust into long-distance telephony is part of a recent drive by Priceline to prove that its business model can be applied to services beyond its original business of selling airline tickets online, launched in April 1998. The company has since diversified into offering automobiles, hotel bookings and home mortgages, all based on the name-your-own price principle, and said on Monday it had claimed 15,000 grocery orders during the first week of operations of its WebHouse Club grocery service. Priceline recently announced it would sue Microsoft Corp for copyright infringement, accusing the software giant of copying the price- bidding model on its Expedia travel site.
Priceline said its business model was particularly attractive to data carriers whose larger, business-oriented networks have significantly more ‘fiber’ to devote to incremental traffic. Under the proposed service, customers will bid for hourly blocks of long-distance time for inter-state calls or international calls to a specified country, plus a premium Call Anywhere program offering calls to multiple designated locations.
