- The Washington Times - Monday, January 10, 2005

Comcast Corp. will begin selling digital telephone service to its 40 million cable television subscribers this year, signaling a further erosion of the boundaries that once separated the communications technologies consumers use.

The world’s largest cable television provider will market its Internet-based telephone service to 15 million customers this year, including an unspecified number in the Washington area, a spokesman said.

The Philadelphia company expects to make the Comcast Voice service available to its remaining 25 million cable customers by the end of 2006.

“We really do believe that this is the next engine of growth,” Chief Executive Officer Brian Roberts told investors yesterday at a conference in Phoenix.

The company plans to use a technology called “voice over Internet protocol” to transmit telephone calls over its broadband cable networks. The service will include the features that customers of traditional telephone companies have come to expect, including caller ID, call waiting, call forwarding and speed dialing.

In addition, Comcast will offer voice mail with a twist: Customers will be able to check it over the Internet.

The company will offer unlimited local and long-distance telephone calls for $39.95 a month.

Vonage Holdings Corp., an Edison, N.J., company that offers a voice over Internet protocol service in more than 125 North American cities, sells it for $24.99 a month. However, Vonage requires its customers to have a high-speed Internet connection to use its service.

Comcast tested its voice service in Philadelphia, Indianapolis and Springfield, Mass., last year.

Its decision to enter the phone business could force other telephone service providers — such as Verizon Communications Inc., the nation’s largest telecommunications company — to lower their prices, analysts said.

But the company’s reputation for cable service is spotty, which could work against it as it attempts to persuade customers to trust it with their phone calls, said Gary Arlen, an independent analyst in Bethesda.

“[Consumers] may say, ‘I don’t know if I want to trust my phone service to the same company that knocks out my TV in the middle of the football game,’” Mr. Arlen said.

“On the other hand, they could say, ‘This company’s high-speed Internet service has been pretty reliable. Maybe I’ll give the voice service a try,’” he said.

Comcast is the largest cable television provider in the Washington area, with about 1 million customers in almost every jurisdiction except Fairfax County.

Cox Communications Inc., which has about 258,000 customers in Fairfax County, offers digital telephone service, according to its Web site. Spokesmen for the company did not return telephone calls yesterday.

Voice over Internet protocol allows consumers to use traditional phones to make calls.

It transmits a phone call by converting a person’s voice into packets of computer data, scattering them across the Internet, and reassembling them back into the sound of a voice on the other end.

The service generally requires a high-speed Internet connection to avoid poor sound quality.

One of the benefits of the technology is its cost effectiveness: In November, the Federal Communications Commission barred state regulators from taxing digital calling, ruling that relaxed oversight is needed for the technology to flourish.

Comcast’s push is designed to stem customer defections to competitors.

DirecTV Group Inc., the nation’s largest satellite TV operator, and Verizon recently joined forces to sell a similar bundle in a bid to lure Comcast’s subscribers.

Comcast hopes to have 8 million phone subscribers by 2010, or about 20 percent of the homes taking its cable lines.

Shares of Comcast closed at $33.23 on the Nasdaq Stock Market yesterday, up 2.03 percent from the previous day’s close of $32.57 per share.

Comcast joins other cable companies, including Time Warner Cable and Cox, that have started selling Internet phone service to U.S. subscribers.

There were an estimated 100,000 Internet phone customers in 2003, and that number is likely to grow to 17.4 million by 2008, according to the Yankee Group, a Boston technology research firm. Most of those are expected to subscribe to Internet calling through cable companies, analysts said.

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