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TV, Internet -- and Now Phone

Posted on: Wednesday, 5 April 2006, 03:00 CDT

By Miriam Hill, The Philadelphia Inquirer

Apr. 5--There's a new phone company in town. Comcast Corp. is adding voice to its cable and Internet services in the Philadelphia area, hoping to increase its control over the consumer telecommunications dollar.

Already the largest cable company in the country, Comcast is ringing up phone customers to counter increased competition in its video business from satellite providers such as DirecTV and from phone companies such as Verizon Communications Inc.

"Comcast is gearing up for the biggest competitive battle of its life with companies like Verizon and AT&T," telecom industry analyst Jeff Kagan said.

The battle likely will mean lower prices and new services for customers who agree to buy more than one product from a company, but it may also increase prices for those who want just one service.

Many marketing studies say that customers who buy more than one service from the same company are less likely to switch providers. Eventually, Comcast will offer cell-phone service as part of the package.

"Offering voice is important for the cable-product offering because it really completes the bundle, and it usually comes with a discount for the consumer, and that starts to build loyalty with customers," said Aryeh Bourkoff, an analyst with UBS Investment Research.

Comcast will sell the three services in a bundle for $33 each to new customers for the first year of service. Comcast would not say by how much the price would increase after that.

Sold separately, cable costs about $50 monthly; telephone, $40; and high-speed Internet, $45. There is also a $29 activation fee for voice service. Customers can keep their current phone numbers.

In this area, Comcast began offering telephone services in Chester County in late 2004 and has since rolled it out in Delaware, Montgomery and Bucks Counties and in parts of South Jersey and Delaware. The service already is available in some parts of the city. All Philadelphia residents will be able to buy it by the end of May, the company said.

Comcast's voice service is aimed at an increasingly mobile market. Customers will be able to check voice mail from work or other computers outside their homes. Eventually, Comcast says, customers will be able to click a button on their television remote controls to see who is calling on the phone, and then choose to ignore the call or have a voice or video conversation over the television.

In other words, customers need never leave their recliners. The service also has 12 features, including call-waiting, call-screening, and blocking of anonymous calls.

For much of the last two decades, cable companies have had near-total monopolies. In many cities, they were the only way to get television. But as satellite television became more popular, consumers started getting more choices. Phone companies also went head to head with cable companies to provide Internet service.

Last year, Verizon started offering video service, too. Regulations are expected to slow phone companies' entry into television, but the threat remains. While it adds video service over fiber cable, Verizon has teamed up with satellite company DirecTV to offer a combined voice, television and Internet service via digital subscriber line for $98 monthly.

Comcast also faces phone competition from upstarts such as Vonage, which offers unlimited local and national calling over the Internet for $24.99 monthly.

Despite the potential for a price war, Michael A. Doyle, president of Comcast Cable's Eastern Division, said the company expected to capture many new homes. Even without the marketing the company is beginning this week, the service has been selling well.

"The bottom line is, we put 50,000 customers on without even going to market with it," he said.

Craig Eitl, a Collegeville home contractor, switched to the Comcast package late last year. Initially, some calls did not go through, but Comcast fixed that and credited his bill for one month. He estimated that he saves about $50 monthly by buying all three services from one company.

"I couldn't say no to it," he said. "It's the same service, and you get to pick your number. You're just saving money, that's all."

Contact staff writer Miriam Hill at 215-854-5520 or hillmb@phillynews.com.

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Copyright (c) 2006, The Philadelphia Inquirer

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Source: The Philadelphia Inquirer

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