Name-your-price pioneer priceline.com (Nasdaq: PCLN) announced today that it will add long distance telephone calls to its offerings by the beginning of next year and will eventually offer a name-your-price business-to-business long distance service.
The Stamford, Connecticut-based company said that it signed a three-year, $18 million (US$) deal with Internet protocol telephony company Net2Phone (Nasdaq: NTOP) to be the anchor provider for the long distance service.
In addition to the revenue generated from the agreement with Net2Phone, priceline said it expects to generate revenue from its customers’ use of the service. The company said that a survey it commissioned with Opinion Research projected that 27 million adult Americans — or some 43 percent of its survey respondents — expressed interest in the long distance service.
“Internet protocol is the future of communications and will continue to reduce the cost structure of providing this service,” said priceline.com President Daniel Schulman. “Given this trend, priceline.com’s unique demand collection system offers a win/win solution for customers and telecommunications companies.”
Domestic, International, Anywhere
The company said it will offer customers blocks of time of 60 minutes, 120 minutes, or more for domestic and international calls. The telecommunications companies will be able to accept lower price offers from consumers because its pricing system is based on carrier network capacity and the company can decline to accept an offer.
Priceline also said that Net2Phone will offer a per-call service that allows its customers to open an account and make an offer on each long-distance phone call. Users type in a PIN number and make an offer, which priceline scans and puts through if it is accepted.
The new product offering means that priceline now allows consumers to make a bid on airline tickets, hotel rooms, new cars, mortgages and, by early next year, long distance phone calls.
Late last month, priceline released third quarter revenue figures of $152 million, up a staggering 1,550 percent from the corresponding quarter in 1998. Of course, the 1998 figures preceded the hiring of Star Trek actor William Shatner to be its spokesman in a multi-million dollar ad blitz.
Priceline booked a net loss of $11.9 million for the quarter, down from $19.8 million in the third quarter of 1998. The company said it attracted 908,000 new customers in the quarter, sold 624,000 airline tickets and 180,000 hotel room nights and became the most recognizable e-commerce name to the American public behind only Amazon.com.