Comcast move highlights fight for voice customers

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Comcast's plan to offer telephone services to its cable customers highlights the emerging battle between cable and telecommunications companies to provide ?triple-play? services and control the flow of digital content into the home.

Monday's announcement by the largest US cable operator follows similar moves by rival operators including Time Warner and Cox Communications and signals the determination of the big cable groups not to be outflanked by three of the regional telecoms operators. Verizon, SBC Communications and BellSouth have all announced ambitious plans to launch video services over fibre-optic networks.

Underscoring this, In-Stat, a telecoms consultancy, predicted on Monday that, as more cable providers turned to internet telephony using VoIP (Voice over Internet Protocol) technology over the next few years, total worldwide cable telephony subscribers would pass the 14m mark by late 2005, and grow to more than 22m by year-end 2008.

?The buzz surrounding VoIP telephony services has been constant during the past year, and virtually all leading North American cable operators are either investing resources to further explore VoIP's viability, or have actually deployed the service,? said Mike Paxton, In-Stat analyst.

In a recent report, In-Stat found that more than 11m households and businesses worldwide used cable telephony services. ?The long-anticipated ?VoIP spike' in worldwide subscribers will actually be more of a steady rise, particularly during the 2005/2006 period,? the report said.

But while there is much excitement surrounding cable-based VoIP services, In-Stat cautioned that the vast majority of cable telephony subscribers still relied on traditional circuit switched technology. Of the 11.8m worldwide cable telephony subscribers at the end of 2004, less than 500,000 were using VoIP technology.

This suggests that subscribers are reluctant to rely on internet telephone services alone. If individuals cannot get access to emergency 911 services, for example, they may not want to part with their traditional telephone service.

Comcast is planning to provide everything customers can get from their traditional telephone, and more. There are signs that improved technology is encouraging customers to switch. For example, Time Warner has found that 85 per cent of its new telephone customers are transferring their old phone number to the internet service.

Over the past two years a handful of start-ups such as Vonage, Net2Phone and Packet8 have begun to offer broadband VoIP services to consumers. Their main attraction has been price, with subscribers typically paying $20-$30 a month for unlimited local and long-distance US calls, about half the price of standard phone services.

However, cable operators are charging more. Both Comcast and Time Warner charge $39.95 per month for local and long-distance unlimited phone use. Comcast said it was undercutting telecoms companies by 10-15 per cent, a relatively modest amount that indicates it is not just price they are competing on.

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