By Jeremy Pelofsky
SAN FRANCISCO (Reuters) - After years of promises, U.S. cable
companies will finally launch telephone service on a large scale this
year, executives at the National Cable & Telecommunications Industry's
annual convention this week said.
Cable companies like Time Warner Inc. and Cox Communications Inc.
see offering telephone service as a key area for growth in the $57.6
billion industry -- and plenty of other companies were at the
convention to offer revenue-enhancing options like on-screen caller
identification and messaging.
Already the cable industry has about 3 million telephone customers but
that is expected to explode with the advance of service via high-speed
Internet as well as regulations making it easier for customers to take
their phone numbers with them while switching providers.
Time Warner Cable, the No. 2 U.S. cable operator, at the end of 2004
had 220,000 voice customers and was adding 10,000 a week.
"This year is the year that we're now starting to ramp up," Time
Warner Cable Chief Executive Glenn Britt said in an interview this
week. "At the moment, we're just learning how to sell it, how to
service it, how to install it and how to bundle it with other
A.G. Edwards analysts forecast that cable operators would benefit from
a large jump in customers buying Internet-based phone service, known
as voice over Internet protocol (VOIP).
"The number of available homes passed by VOIP service
should grow substantially in 2005," the report said. "Average
revenue per user for the service trends in the $40 area, adding
meaningful incremental revenue potential."
The big local carriers, known as the Baby Bells, last year lost almost
8 million residential landlines because of competition from cable,
wireless and the Internet. But the Bells are not standing idle,
looking to expand into cable's turf of video service.
Additionally, No. 3 wireless carrier Sprint Corp. president and chief
operating officer Len Lauer showed up at the show since cable
operators are looking to offer customers a complete bundle of
entertainment and communications services.
"It's convergence of devices, it's convergence of access, it's
convergence of workplace and also the homeplace," Lauer said in an
interview. "We don't think any one company can do it alone ... we
think it's really going to take a new approach to partnering."
As attendees walked the 190,000 square feet of the show, they saw not
only the latest cable television offerings, but also displays from
companies like Siemens offering telecommunications services like
on-screen caller ID.
That company has deals with cable operators such as Cablevision
Systems Corp. and Time Warner to help roll out Internet-based phone
services and expects them to expand their client base.
"They started with the residential play because the cable goes into
your TV. The next step to take is business customers," Harald Braun,
president of Siemens' carrier network division, said in an interview.
He also said Siemens is working on features such as call blocking and
tracking mobile-phone or e-mail messages on television screens.
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