Comcast Moves Off the VoIP Fence
by Cynthia Brumfield
VoIP Monitor
5/26/04
Top U.S. cable operator Comcast is letting go of its doubts regarding the profitability of VoIP, and is moving forward with plans to launch IP telephony virtually company-wide, 40 mil. or about 95% of all homes passed, by year-end 2006.
In a big switch from the company’s earlier reluctance to fully embrace the new technology, Comcast confirmed during the company’s investor day conference 5/26 that it will move beyond the current VoIP trial deployments and offer the service to half of all homes passed by the end of 2005, expanding availability virtually all the way by the end of 2006.
“We believe that new products are what power the company’s growth,” CEO Brian Roberts told investors, a comment that comes on the heels of the company’s failed bid to buy the Walt Disney Co. in order to diversify into new video product distribution.
“We’re now building the next generation of broadband that includes VoIP and someday IP television. We’re using this time since the merger [with AT&T Broadband] to prepare to roll out the next generation of telephony that will include voice and video and other things you can’t do with circuit switched technology.”
Until recently, Roberts and other Comcast executives expressed skepticism regarding the financial advantages of entering a highly competitive market such as residential voice services, noting that other products, including high-speed data and subscription video services, for that matter, carry ample cash flow margins.
Comcast plans to ramp up its current trial markets in Philadelphia, Indianapolis and Springfield this year. The company, however, is still learning the VoIP ropes, and reserves the right to modify its gung-ho course if gremlins in the ground or unexpected financial results cause it to rethink its current plan.
“We’re optimistic but we’ll take it one step at a time,” Roberts said.
Comcast’s big push into VoIP ratchets up the competitive pressure on incumbent phone companies, which stand to lose already shrinking lucrative local phone accounts to cable rivals with few other growth products to compensate for that loss – with the marked exception of DSL. Cablevision Systems, Time Warner, Charter, Cox and other top cable companies are aggressively pursuing their own VoIP plans.
Comcast, however, does not plan to compete against the local phone companies on price, reluctant as it is to pursue low margin efforts. Instead, the operator plans to offer advanced features made available only via its integrated broadband-voice infrastructure. Among the add-on features Comcast hopes will lure customers to its voice option are video telephony and unified messaging (i.e. checking voice mail via high-speed Internet connections).
The Philadelphia-based giant is no stranger to telephony: Comcast is currently the leading cable telephony provider with 1.247 mil. traditional circuit-switched customers it inherited when it purchased AT&T Broadband. Comcast’s earlier reluctance to embrace IP telephony stemmed, in part, from the problematic AT&T Broadband telephone systems, which suffered from poor management and technological headaches.
Since acquiring those telephony-capable systems, Comcast has allowed the traditional voice service to drift, with little or no active marketing as it contemplated whether to launch a bigger, better telephony initiative. At the end of Q1 03, Comcast served 1.418 mil. traditional phone service customers, a figure that dropped by 172K by the end of Q1 04. |
