T-Mobile USA's announcement this week that it will launch a $10 per month home phone service nationwide sent shock waves through the Internet voice industry, experts say.

“This is another indication that VoIP as a standalone business is getting tougher,” said Moe Tanabian, a principal with IBB Consulting. “It remains a very valuable application but the VoIP business is changing.”

The T-Mobile service sets a jarring new price floor in an industry that has long depended on landline service prices remaining artificially high. (see T-Mobile At Home with $10 Phone Service)

But a $10 per month price leaves little room to maneuver for VoIP providers whose profits depend on thin margins derived from telecom arbitrage. Their revenue must stay ahead of the hard costs of voice transport and termination.

There are also equipment costs and the high costs of constant innovation, marketing, customer acquisition, and customer retention.

Just offering a raw service does not seem like a sustainable business proposition so a number of Internet voice providers are seeking alternative revenue generating strategies.

"VoIP is sustainable as a piece of a larger puzzle so for instance the cable companies are successful because VoIP allows them to reduce customer churn," Mr. Tanabian said.

Many VoIP firms have focused on offering cheap international calls particularly international calls made from mobile phones which tend to be costly. Others seek to integrate Internet voice in lifestyle, entertainment, and business applications.

Vonage for instance is getting ready to launch VonagePro, a "prosumer" service that allows consumers to pick features that fit their lifestyles from a menu of options including visual voice mail and international calling plans.

"Low prices don't drive customer loyalty because customers rotate between the cheapest offers," said Charles Sahner, a spokesman for Vonage. "Customers come for the price but stay for the features."

Vonage which has faced tough financial times in large part because of its high customer acquisition and retention costs hopes to become such an integral part its customers' lives that they will not switch solely on the basis of price.

"We envision a future where customers will be loyal to us because we're helping people to communicate without boundaries enabling their lifestyle choices and helping them share their dreams," Mr. Sahner said.

VoIP firms such as Jaxtr are adding elements of social networking to improve the "stickiness" of their services, while firms such as Jajah have sought out partnerships with social networking and other lifestyle firms to embed voice in their applications.

Jajah has also sought out carrier partnerships to add its services as part of a menu of landline, mobile, and VoIP services.

"VoIP is valuable as a plug-in service so the VC investments being made in VoIP are being done with an eye towards eventual acquisition,” Mr. Tanabian said.