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Cable operator to battle Ma Bell for downtown customers: Bright House to roll out telephone biz late this year

June 13, 2005

Bright House Networks plans a fourthquarter launch of residential phone service via its cable television system, bringing new competition to entrenched SBC Communications and to local exchange resellers in the heart of the city.

That area includes the downtown business district, where Bright House already provides cable TV and high-speed Internet. Phone service tailored for commercial use "is probably a year out," said Doug Murray, general manager of voice services in Indianapolis for the St. Petersburg-based company.

Such a product "will be raising the level of sophistication of the service quite a bit. When you start dealing with mission-critical needs, you want to make sure it's right."

While phone service initially will be targeted to residential customers, "We certainly anticipate there will be teleworkers" signing up this year, said Murray, noting the segment that works part of the time at home.

Following "very quickly" will be a rollout of phone service to Bright House's customers in Carmel and Zionsville.

Pricing of the phone product for Bright House's 120,000 customers hasn't been set, but is to be competitive with other cable systems offering phone service. Bright House already offers phone service over its Tampa Bay cable system, at $49.95 as a stand-alone service and at $39.95 when purchased with other product offerings, such as cable and Internet.

Locally, cable provider Comcast launched phone service in January at a stand-alone price of nearly $55, or $39.95 when bundled. It includes unlimited local and long-distance calls.

Comcast also plans to offer a phone package for businesses down the road, said Mark Apple, spokesman for the Philadelphia-based company's local operations. "We're still in the infancy of this product."

For now, Comcast is busy expanding its residential reach for the phone product.

"Within a month, we will be launching to our customers in Hendricks County," he said.

Apple won't disclose how many phone customers Comcast has signed up, only that the number has exceeded expectations. Customer service agents have been pitching the new phone offering to customers calling to order cable and Internet products, Apple said.

While it's possible to get basic phone service cheaper from SBC, Comcast boasts that its cable-based phone offering includes a dozen premium features that phone companies tend to charge extra for, including three-way calling and Caller ID.

"There's no question the competition and the cable companies are aggressively promoting and offering voice services in central Indiana," said SBC spokesman Mike Marker. "There's going to be more companies competing for business."

While Comcast and Bright House move onto its turf, SBC is becoming more like its competitors. Last year it offered satellite TV service, through a partnership with Dish Network. SBC is planning to supplement its broadband Internet service with a high-speed Internet product through Dish. SBC also is updating its existing phone network to be able to offer video services to residential customers.

Business versions of cable phone service are likely to be much more advanced. Bright House, for example, is looking at the capability of nine-way teleconferencing. Also, it would offer local businesses alternative phone numbers, such as those with the same area code of customers in distant cities-projecting a local flavor to those customers and eliminating a toll charge.

Making possible such features is Voice Over Internet Protocol, or VOIP, a technology that underpins the phone offerings of cable providers. It digitizes voice into packets, compresses them and sends the information over the Internet or privately managed data networks.

VOIP allows more than eight times the number of calls on the same line than traditional switched telephone technology.

VOIP is used in different ways. Firms such as Edison, N.J.-based Vonage, which has heavily advertised its phone product, require customers to have high-speed Internet service. Customers plug phones and fax machines into a special adapter.

Customers of Comcast's system, on the other hand, don't need an Internet connection. The phone service is hard-wired into a customer's existing phone junction box, so all the existing phone jacks in the building are enabled.

Whatever the flavor, the number of U.S. subscribers to residential VOIP services is likely to grow to 27 million by 2010 vs. 3 million today, according to Framingham, Mass.-based International Data Corp.

VOIP penetration also is growing in business applications. Local phone service provider SBC, for example, already offers VOIP packages that are integrated into business's overall communications network. Last fall, SBC announced it was developing for the University of Notre Dame a system that includes a single inbox for voice and e-mail messages. It is also developing a network for Ford Motor Co.

Such systems increasingly are replacing aging Centrex and other phone systems and merge voice with the functionality of the Internet. Some analysts forecast that business VOIP could become a nearly $8 billion market by 2008.
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