Telcos staring into the VoIP chasm
Published: 04 Mar 2005 11:55 GMT
Also, while it can take years to install traditional phone equipment, VoIP expansion can be lightning-fast. To go into the VoIP business, a company doesn't actually need to own or operate its own network. So VoIP has allowed practically anyone with a modicum of venture capital to become a phone service provider in just a few months.
One such VoIP-only provider, Vonage, is the largest provider of Internet calling in the United States. But Vonage's lead might not last much longer against cable operators, which own their own networks and have huge existing customer bases. At Time Warner Cable's current pace of 11,000 new subscribers a week, it will pass Vonage by the end of the year.
Rousing the giants
At first, the nation's top two cable operators, Cox and Comcast, were hesitant to invest the time and money in VoIP service, pointing to its untested-in-combat experience. The companies preferred the more expensive, but proven, circuit-switched route used by traditional phone companies. Seven years ago, Cox became the first cable operator to offer voice service, but it used circuit-switch technology to put together its "triple play" offering of voice, television and Internet connectivity.
That move mostly earned Cox jeers -- critics said "Ma Cable" had no place in the phone business. But with the Bells only able to counter with a double-play bundle of voice and data, Cox began to draw customers. At present, the cable carrier has about 1.2 million phone customers using circuit switches.
And in the last several months, Cox has aimed to increase that success with a complete embrace of VoIP. After using VoIP services to expand into five new markets, Cox plans on blanketing the rest of its territory using the technology. At the same time, Comcast has made a similar commitment, with plans to use the software to reach 15 million or more homes this year.
Other cable providers are making similar moves. VoIP service suppliers such as Net2Phone have made it possible for even the smallest of cable operators to get into the phone business, forcing the Bells to brace for an assault on more of their turf.
"It's one thing when the big cable companies can do it; Cablevision, Time Warner Cable, Comcast, they all have the resources," said Sarah Hofstetter, a cable phone veteran at Net2Phone, which supplies cable operators with VoIP to resell. "But when even the small guys can go head-to-head with the Bells, then (their) competitive edge of even the last mile is lost."
CNET News.com's Jim Hu contributed to this report.
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