Comcast Sets VoIP Deadline

By Craig McGuire

Comcast will offer Voice over IP telephone service to its customers in 2005 after testing in U.S. markets this year, Comcast spokesman Robert Smith said.

According to Smith, the cable operator has been maneuvering to debut a phone service based on VoIP using a cable modem over high-speed data lines.

Comcast has been gauging acceptance of its fledgling VoIP services in a test market in suburban Philadelphia this year, and will now expand the trial to include Indianapolis and Springfield, Mass, Smith said.

“These trials are not about pricing or popularity,” Smith said. “They are designed to hone order-taking, provisioning, installation, and overall service to ensure that when we do roll it out, we get it right from the launch.”

While subscribers in the areas currently being tested will likely be the first markets to move from trial to commercial launch, Comcast plans to offer the service to 50 percent of its footprint by the end of next year, and to its remaining customers by the end of 2005, Smith said.

With currently some 21 million cable television subscribers, and about 5.5 million broadband subscribers in that base, Comcast represents a formidable new entrant. It claims that 95 percent of its network will be able to accommodate the telephone calls by the end of 2005, Smith added.

Since merging with AT&T Broadband in 2002, Comcast pledged to spend $4 billion over two years to upgrade its facilities for digital cable, including $1.2 billion alone to build out more plants to deliver high speed Internet service and two-way services such as video on demand.

Comcast is not the only major cable television provider to throw its hat into the VoIP ring. Time Warner Cable, a subsidiary of Time Warner Corp., announced in December 2004 that it was rolling out a VoIP phone service in what it termed a “triple-play” bundle that includes unlimited local, in-state and domestic long distance for $39.95.

The pricing immediately grabbed competitors’ attention, such as number six cable provider Cablevision, whose own monthly VoIP service, at $34.95 a month, is slightly lower and offers unlimited local and long distance calls.

Smith declined to comment on what pricing scheme Comcast is contemplating.
As will be the case with Comcast, Time Warner was prompted to pull the trigger on VoIP nationwide following a survey of Time Warner Cable’s trial VoIP customers in Portland, Maine, who rated the phone service as “good to excellent.”

Although lower than traditional phone service satisfaction rates, the initial response was enough for Time Warner Cable to push ahead with its nationwide rollout.

Time Warner has enlisted Sprint and MCI for the push. The carriers will handle long-distance traffic and connect Time Warner lines to local phone systems. Additionally, Sprint and MCI will provide directory assistance, operator service and voice mail management.

Smith said Comcast will similarly forge a number of strategic relationships to shoulder some of the burden as it rolls the service out nationwide.

Meanwhile, Boyd Peterson, a telecom analyst with Yankee Group, said VoIP services from cable players such as Time Warner and Comcast will put more pressure on regional telecoms, such as Verizon, SBC, Qwest and Bellsouth.

Peterson expects local phone companies to try and prevent losses to cable VoIP offerings by aggressively marketing their own service bundles, including includes wireless, something most cable companies don’t offer. If that’s not effective however, look for the companies to launch their own VoIP initiatives, like Qwest’s project in Minnesota.

Comcast currently operates a traditional phone business, serving approximately 1.2 million customers over standard copper wire technology that it absorbed as part of the cable company’s acquisition of AT&T Broadband. Media sources say Comcast sources expect the company to “de-emphasize” that business as it toward VoIP technology during 2005.

In other Comcast news, the company announced that non-Executive Chairman C. Michael Armstrong has stepped down, to be replaced by CEO Roberts.
Armstrong had been chairman and CEO of AT&T Corp. and joined Comcast after its acquisition of AT&T Broadband in 2002.

Comcast is principally involved in the development, management and operation of broadband cable networks and programming content. With 21 million subscribers, it is the largest cable company in the U.S.

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