Videophone service was developed and marketed by AT&T in the late 1960s and early 1970s. The market did not respond to the service offering, and the service was withdrawn. However, Videophone returned in the late 1980s and early 1990s. Due to the technological advance, establishment of ITU standards and fall of videophone price, many analysts are very optimistic about videophone market. But on the other hand, some analysts anticipate that recent videophone will only replicate the past with the same results: namely, market failure. First, this article reviews the history of videophone service, the recent development trend and reasons for its market failure. Second, this article reviews prospects for videophone service. Finally authors examine some of the technological and service features that might shift the value of videophone service.