Comcast Plans to Offer Internet Phone Service
May 27–The cold war between cable and telephone companies vying for telecommunications supremacy intensified Wednesday when Comcast Corp. announced that it would roll out an Internet telephone service.
During the Philadelphia-based company’s annual shareholders meeting, Comcast said it will offer voice-over-the-Internet protocol, or VoIP, to half of its subscribing households by the end of 2005 and to 40 million homes by the end of 2006.
The rollout will give Comcast’s North Texas customers a new telephone choice and will likely pressure competing phone companies to lower their prices to keep customers, analysts said.
VoIP uses a high-speed Internet connection, through a cable modem, to allow customers to make phone calls. The telecom company supplies the telephone handsets, which connect to the modem.
Comcast is testing the service in Philadelphia and Indianapolis and will begin testing it next month in Springfield, Mass., with the success of the trial dictating the pace of the rollout.
In the Metroplex, Comcast offers digital phone service that is carried over the company’s cable lines. Comcast began selling the service in March and offers it in all 26 cities and towns that Comcast serves in the region.
Angel Biasatti, a Comcast spokeswoman in Dallas, said the VoIP offering will include more features than the digital service, including video conferencing. Biasatti said she could not disclose planned pricing, because the offering is in its early stages. It also was not clear how soon North Texas would receive the service.
Repeated calls to Comcast’s national office for added detail on the rollout were not returned.
"Comcast is taking a steady and methodical approach to launching VoIP phone service like we did with our other products," Biasatti said.
The company also announced that Chairman C. Michael Armstrong was stepping down and handing over the chairmanship to Chief Executive Brian Roberts. Armstrong was chief executive of AT&T before Comcast bought AT&T Broadband.
Comcast is the largest cable company in the nation, with 21.5 million users, and is the leading broadband provider, with 5.7 million subscribers. No figures were available on the number of customers Comcast serves in North Texas.
The company is the last major cable operator to move forward with Internet telephone service. Time Warner has been working on an offering for about a year.
Charter Communications announced a partnership with Nortel Networks this month to help expand its service. Charter, which serves Fort Worth and several other cities and towns in Tarrant County, does not provide the service here yet.
Analysts say Comcast’s announcement will undoubtedly put phone companies like Verizon Communications and San Antonio-based SBC Communications on guard.
Both Verizon and SBC offer a limited VoIP service. AT&T announced last month a major initiative with the service, rolling it out to large markets in Texas, with the nation to follow.
"This is every worst nightmare, a scaled rollout of VoIP by the largest cable operator in North America," said Ford Cavallari, a media and broadband analyst for Adventis, a Boston-based telecom research firm.
Cavallari said the rollout will place enormous pressure on phone companies to lower their prices. Comcast’s enhanced bundle — it will offer voice, video and data — will tug at the pockets of the Baby Bells.
Verizon has already launched a pre-emptive strike against the cable companies. The company announced a few weeks ago that Keller will be the first city to have a "fiber to the premises" network, a technology that will allow voice, video and data to be transmitted to homes through fiber-optic lines.
"It is a visionary statement that Verizon is making, but it will be years before it comes through," Cavallari said.
Comcast shares were up 12 cents, at $29.69, on the Nasdaq exchange Wednesday.
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