Comcast to Offer Web-Based Phone Service

PHILADELPHIA — Comcast Corp. is joining the crowd of major cable TV and telephone companies venturing into Internet-based phone service, but with a higher price and extra features which the nation’s largest cable provider hopes will set its product apart.

The company – which plans to charge $40 per month, or $5 to $20 more than most of Internet phone services – said Monday it believes customers will pay more for features such as battery backup to keep the phone line running during power outages.

The new Digital Voice service won’t be immediately available beyond the three markets where Comcast has been testing it. The company plans to offer the service in 20 of its markets by the end of this year, and the rest of its territory during 2006.

That delay that could prove costly in a young market already marred by price wars among AT&T Corp., Verizon Communications Inc., Vonage Holdings Co., and a growing list of no-name rivals.

But despite the apparent disadvantage, Comcast said it hopes to sign up about 8 million phone customers, or a 20 percent share of the markets it serves, within five years.

For existing Comcast cable subscribers, part of the appeal may be the ability to get phone, cable and Internet service from a single provider and pay for them on a single bill.

And unlike other Internet phone providers, Comcast promises battery backup that would maintain service for at least 16 hours in the event of a power failure.

Comcast tested the technology, known as Voice over Internet Protocol or VoIP, in its home base of Philadelphia as well as Indianapolis and Springfield, Mass.

VoIP transmits a phone call by converting a person’s voice into packets of computer data not unlike an e-mail or a Web page, scattering them across the Internet, and then reassembling them back into the sound of a voice on the other end. The service generally requires a high-speed Internet connection to avoid poor sound quality.

Like many telecommunications companies, Comcast is looking to new products such as VoIP to generate new revenues and to fend off competition from new providers of cable TV service.

For Comcast, digital cable, video-on-demand and other new services have helped push the average customer’s bill from $42 a month in 1998 to $75 in the last quarter.

"We really do believe that this is the next engine of growth," chief executive officer Brian Roberts told investors Monday at a conference in Phoenix.

The monthly charge for Digital Voice includes unlimited local and domestic calls, as well as caller ID, voice mail and call waiting service.

But several rivals offer many of the same features at cheaper prices.

Vonage, which offers unlimited calls for $25 a month, has parlayed its headstart into a customer base of 400,000 subscribers. Verizon is charging $35 for its Voice Wing service. AT&T charges $30 per month for CallVantage, and some smaller rivals sell VoIP service for $20 per month and less.

Consumers Union, the consumer watchdog group, has been pushing for more competition for local telephone service, but isn’t sure Digital Voice is the answer.

Internet-based telephone service requires a computer and broadband hookup, and thereby remains off-limits to many lower-income consumers or technophobes, said Susanna Montezemolo, a telecom policy analyst with the group.

Montezemolo also asserted that Internet phone users should be made to pay the same universal service fees and other taxes as traditional phone customers. Those fees are used to ensure phone service to poor and rural areas, and a decrease in the number of people paying the surcharges might force an increase in the fees to make up the difference.

—

On the Net:

Comcast: http://www.comcast.com  

Consumers Union: http://www.consumersunion.org/