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Comcast Enters MD's Digital Voice Over Internet Protocol Market

Posted on: Tuesday, 11 January 2005, 21:00 CST

Comcast Corp. sees digital-telephone service as a component to its efforts to maintain its status as the world's largest cable- television operator.

The service, which is projected to gain 8 million subscribers over the next five years, will be offered to 15 million homes this year in 20 markets. Comcast's service area includes parts of Maryland, but company officials have not yet named the markets where the phone service will be offered.

The new service, Digital Voice, uses Voice over Internet Protocol (VoIP), an emerging digital technology that eliminates toll charges. It allows providers to charge a cheaper, flat rate for all domestic calls, including long distance.

Comcast's offer follows a national trend away from traditional circuit-based communications in favor of digital technology, said Gerry Kaufhol, an analyst with the Arizona market research firm In- Stat.

The traditional voice telephone market is shrinking, Kaufhol said, beginning with the advent of cellular telephones.

Beth Page, NY-based Cablevision Systems Corp. was the first cable operator to offer VoIP technology, and has so far signed up more than 250,000 customers to its Optimum Voice service. Other cable operators, such as Time Warner Inc., also offer digital phone services.

Mike Paxton, another In-Stat analyst, said 500,000 people nationwide currently use VOIP telephone services.

We are offering a full, competitive, primary-line service, said Comcast spokesman Robert Smith.

Comcast recently saw a downturn in cable subscribers, Smith said, although it did add customers to its premium video On Demand and Digital Video Recorder services. On Demand and Comcast's other services have been vying with the popularity of Verizon Communications Corp.'s high-speed Internet service and marketing tie- ins with DirecTV satellite television, among other offers.

Comcast has a responsibility to their shareholders to make sure they don't miss an opportunity, so it's absolutely correct for them to be offering telephone service, because that's just how business grows, Kaufhol said.

Other companies, such as the Edison, N.J.-based Vonage Corp. and Richmond, Va.-based Cavalier Telephone, use similar technology to transmit voice messages over an Internet connection.

Spokeswoman Brooke Schulz said Vonage does not see Comcast as a threat because Digital Voice is more expensive for those who do not already subscribe to Comcast internet and cable services.

We do believe that they will be a welcome addition to the marketplace. They're actually going to be a complement, Schulz said.

For the VoIP service, Comcast will charge $39.95 a month for Comcast Internet and cable subscribers, and $54.95 for limited users. Digital Voice includes other traditional phone services, such as call waiting and direct access to emergency 911 - a feature, Smith said, that Vonage and other Internet-voice systems lack.

Comcast already has 1.3 million traditional phone customers, 6.5 million Internet customers and 21.5 million cable customers, Smith said. He sees those numbers rising in the months to come.

We're not the same, plain-old vanilla cable company that people had a few years ago, Smith said.

Source: The Daily Record (Baltimore)

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