Comcast Outlines Plans for Digital Phone Service

Jan 10, 2005  •  Post A Comment

Cable giant Comcast on Monday outlined its plans to roll out a digital telephone service, saying it planned to market the service to up to 15 million households by the end of the year, and to its entire footprint within 24 months.

Phone service marks the final piece of the so-called “triple play” package of services–video, high-speed data and telephone–offered by the company and is viewed by Comcast officials as a major engine of growth at a time when the video business is maturing.

Comcast’s move to offer Voice over Internet protocol phone service comes two years after it inherited a troubled telephone business as part of its purchase of cable systems owned by AT&T Broadband. Comcast is the last of the big-name cable companies in the United States to offer phone service. Other cable operators, including Time Warner Cable and Cox Communications, have been offering a cable-based telephone service for at least several months.

Comcast will introduce the service in 20 markets initially and hopes to have it available to the 40 million households in the Comcast footprint within 24 months.

“We spent the last two years integrating the AT&T systems, improving margins from 20 percent to high-30-percent to 40 percent,” said Comcast Chairman and CEO Brian Roberts, who described the new service at a Smith Barney investors conference in Phoenix. “That was a huge priority that needed to be completed first.”

Comcast officials defended their last-to-market status, saying that they used the last two years to perfect the system, ensure its reliability and take advantage of next-generation gear, which is cheaper to buy and more reliable. Indeed, Comcast officials said a major selling point of the service, which will be offered for $39.95 a month, is the array of features available from day one, including enhanced 911, directory assistance and other services. What’s more, Comcast said it is pressing ahead with plans to integrate the phone service with the video service, enabling such features as caller identification that pops up on a television screen when a call comes through.

Comcast officials also boast that their VOIP solution differs from others in that it doesn’t use the Internet to route calls. Unlike services such as that from Internet phone provider Vonage Holdings, Comcast’s product uses the cable operator’s own network to start and end phone calls.