Cox looks to tap Internet-calling technology
pbn.com
By Mike Colias
8/4/2003
Cox Communications – already the U.S. cable operator with the second-biggest presence in the phone business – now is leading the charge into a new frontier: Internet calling.
Voice-over Internet Protocol, commonly called VoIP, routes phone calls over broadband lines, rather than relying on traditional, circuit-switching technology. With Cox and other cable companies vying to deploy VoIP, analysts say the technology has the potential to shake up the telecommunications market.
Routing calls over its broadband network should help Cox penetrate the local-telephone business in smaller markets, because it’s cheaper to deploy than traditional phone circuits.
And because Cox would use its own lines to deliver long distance calls, instead of leasing lines from the phone company, Internet calling should save Cox several million dollars each year, company officials say.
VoIP will “enable Cox Communications to transport some of our residential long distance phone calls over our IP backbone – helping to reduce operational costs,” said Jay Rollis, Cox’s vice president of telephone and data engineering, in a recent company statement.
In June, Cox signed a deal with Nortel Networks and Nuera Communications to provide VoIP switches and software. Cox is testing the service in Roanoke, Va., and last year tested the service in Oklahoma City.
Cox won’t disclose how or when it plans to roll out VoIP. But a Cox spokesman said that the company hopes to use its IP network to penetrate smaller markets where Cox does not yet offer its digital phone service.
“Our paramount strategy at Cox is to replicate what we’re doing in cities like Providence, where we bundle telephone, Internet and video services,” said Bobby Amirshahi, a spokesman at Cox’s Atlanta headquarters.
Rhode Island is one of 11 markets where Cox now offers its digital telephone product. The company began offering phone service in 1997 and now has 783,000 phone customers nationwide, making it the country’s 12th largest phone company. (Cox does not provide figures for individual markets.)
Cable companies already have used their IP backbones to carry some long distance traffic. For example, Cox uses its IP network to transport roughly 20 percent of its long distance calls, Amirshahi said, which has trimmed operating costs.
Deployment of Internet calling for local phone service, though, has been slow to materialize because of poor voice quality, according to Telecom Markets, an industry trade publication.
But the technology has rapidly improved over the last two years, and now several cable companies – including Comcast, AOL Time Warner, Cablevision and Cox – are readying the launch of VoIP services.
The number of U.S. households that make Internet calls is expected to mushroom from 100,000 today to four million by 2007, according to In-Stat/MDR, a technology market researcher.
A Merrill Lynch report on the VoIP market, released in late June and cited Cable World magazine, says that the residential phone market could “face potentially dramatic changes from VoIP technology.”
Phone carriers are not oblivious to the potential competitive threat. A number of regional carriers have pressed the Federal Communications Commission to closely regulate VoIP services. And some phone carriers, including Verizon, are looking to offer VoIP services of their own, using their existing DSL Internet lines.
Cable companies in recent years have used their leverage as video and Internet providers to make strong headway into local telephone markets. By bundling telephone, video and Internet services, Cox is able to consolidate three bills in one. It also offers a $10 monthly discount to customers who sign up for all three services.
“Bundling allows us to become so convenient that customers would rather stay with us than leave and have to change their phone number or e-mail address,” Amirshahi said.
Cox initially will focus its VoIP efforts on markets where it now does not offer phone service, Amirshahi said.
But Internet calling eventually could be deployed in Cox’s existing phone markets like Rhode Island, allowing for the delivery of advanced features not available with traditional, circuit-switch technology.
“Down the road, (VoIP) offers exciting growth potential, because we’ll be able to use the protocol to offer enhanced calling features,” said Leigh Ann Woisard, a spokeswoman for Cox in Rhode Island.
For example, VoIP could allow caller-identification messages to pop up on a subscriber’s TV screen, Amirshahi said.
Those sort of possibilities, however, still are a long way off. And while Cox will market those new services when they become available, customers likely won’t even know that their calls are being routed over Internet lines.
“At this point we don’t view marketing this technology any differently than we do the digital phone service today,” Amirshahi said.
“I don’t think customers are really going to be concerned about what telephone lines are being used as long as it works.” |
