AT & T and Yahoo have come up with a co branded version of Yahoo Messenger with Voice for AT&T Yahoo High Speed Internet subscribers and Yahoo users in AT&T's traditional thirteen state local service area in America. The companies have also expanded their long term association with an agreement that AT&T companies globally would be Yahoo's preferred network termination provider for the PC based calling services in the Yahoo Messenger with Voice service.

This is what my friend at VoIP Watch, Andy had to say about the deal:

There is no difference with the Yahoo Messenger client except that it would be picking up some co-branding with AT&T's new logo and the Yahoo routing engine gets used to determine how to handle the calls. This deal is a win- win situation for Yahoo as by setting up a least cost routing engine at Yahoo and plugging multiple carriers into it Yahoo ID becomes more valuable over time as compared to a phone number therefore a SIP address linked to it becomes the person's real phone number as a result.

The termination costs are so low that AT&T would never see the face of profits and as the adoption of the Yahoo Messenger with Voice product rises, AT&T would be on the losing side as Yahoo would be keeping all the voice revenue ad revenue and breakage from the unused minutes on prepaid accounts.

This certainly is a better deal than what Microsoft had with MSN whose new messenger exclusively uses MCI.