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Comcast poised to debut business phone service: Cable giant, already a player in residential market, plans to use low prices to win customers from AT&T

April 30, 2007

The turf war between what used to be clearly defined as phone and cable companies will heat up this summer, when Comcast Corp. plans to launch phone service to businesses in the metro area.

Philadelphia-based Comcast already offers residential phone service and highspeed Internet to most of its Indiana customers. Those have long been the bread and butter of phone giants such as AT&T.

In the tit-for-tat nature of the blurring product offerings between cable and phone, AT&T late last year began offering a television product known as U-verse to a handful of Indianapolis neighborhoods and in towns like Muncie and Anderson.

Now, Comcast wants to strike at the heart of traditionally what's been a lucrative segment of the land-line phone market for AT&T: the business customer.

"That's the last cash cow. That's the last group they're gouging," said Tim Oakes, executive director of the Indiana Cable Telecommunications Association, which represents cable firms in what's become an ever-more incendiary phone/cable rivalry.

Cable firms have felt a direct assault over the last several years from satellite TV providers, such as Dish and DirecTV.

"What's different about this competitive situation is, you have a phone company with very deep pockets that's going to compete against you head to head," said Mark Apple, regional vice president of communications for Comcast.

The cable company plans to aim its business phone service at small to medium-size companies. Comcast plans to offer advanced features for business phone service along with packages that combine Internet and cable TV service-known in the trade as the "triple play."

Comcast plans to compete principally on the prospect of cost savings, however.

"I think there's going to be a huge demand for it because the phone companies have had a monopoly in this sector for so long," Apple said.

AT&T counters that it is not about to cede its 4 million small and medium-size business customers in 22 states.

"The small-business segment is very important to AT&T, and we think this is an area that has sales growth potential," said spokeswoman Molly Cornbleet. She said AT&T has a jump on cable providers in the business phone service realm by being able to bundle wireless products. AT&T now owns Cingular.

Despite trials in a number of markets through a partnership with Sprint Nextel Corp., Comcast has yet to offer wireless with its triple play of TV, Internet and land-line phone service here.

"Triple plays are good, but home runs are better," said Hardmon Williams, vice president and general manager of AT&T in Indiana, noting that AT&T now offers all four services-the so-called quadruple play.

Nuts, says Apple.

"AT&T can claim to offer the quadruple play, but the reality is that they don't have video rolled out to more than a handful of [local] neighborhoods. Ask them how many homes passed can subscribe to Uverse. The rollout is so limited that they aren't even marketing the product."

Neither AT&T nor Comcast will elaborate on the number of customers in each segment. For example, although Comcast last month added residential phone capabilities in 30 more Indiana towns, it won't say how many signed up-only that it's available to 70,000 additional homes in places such as Columbus and Shelbyville.

Nor will Williams elaborate on U-verse subscribers. He said AT&T plans to have U-verse available to at least half its customer base within three years.

Williams said the ultimate winner would be the company that most effectively packages and interconnects TV, phone, computer and wireless services. Already, a Cingular customer with U-verse can do things such as use his wireless phone to remotely program the home DVR to record a TV show.

The battleground, as Williams sees it, is really in the living room.

"Consumers want to see [products] not in isolation, but in integration," he said.

The competition between cable and phone ratcheted up last year when AT&T used its lobbying clout to get statewide video franchising. Now, as it enters the video realm, it needn't strike potentially hundreds of separate franchise agreements with municipalities-as cable firms were forced to do over the years.

AT&T used as a carrot a promise to expand Internet service in rural areas if the legislation was approved. Cable firms are still sore.

"When the phone companies were holding the state of Indiana hostage, demanding favorable legislation before they introduced antiquated DSL service in rural areas, Comcast quietly went about its business," Comcast's senior regional vice president, Rusty Robertson, said last month.
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