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Cox: VoIP Not Ready Yet, But It'll Help Slash Costs

3/09/2003 7:00 PM Eastern

Voice over Internet-protocol telephony is edging closer to reality, but cable-voice pioneer Cox Communications Inc. isn't quite ready to deploy the new technology, its chief technician said last week.

"Can I put a soft switch in San Diego as the next switch and not miss a beat?" Cox senior vice president of engineering and chief technology officer Chris Bowick asked rhetorically at a Bear Sterns & Co.-sponsored media conference. "So far, the answer is no. But it's very, very close.

"We have been working with VoIP vendors for a number of months on fixing bugs, interoperability tests and load-testing soft switches," he added. "We know as much on VoIP as anyone out there in the business."

Perhaps the most interesting question for Bowick: Which cost model will Cox pursue once VoIP is ready for primetime?

If Cox opts for network-powered VoIP technology using a PacketCable soft switch and a two-line network interface unit, the cost won't be that much different from circuit-switched telephony, he said.

Premise power — a battery inside the in-home media terminal adapter that the homeowner must replace — would cut VoIP costs to two-thirds of the expense of circuit-switched service, he said.

That cost could drop to well below half of circuit-switched service if customers buy their own phone equipment.

Since cable operators face immense pressure to curb capital expenditures, the latter scenario could prove alluring for Cox, especially if it can expand its retail strategy to sell HDTV, set-tops, modems and digital video recorders in stores.

Bowick stressed that VoIP would work well with Cox's existing telephony platform, because it would utilize the back-office infrastructure set up for circuit-switched service.

In fact, the MSO's first VoIP deployments would likely extend the geographic reach of existing services by linking IP technology back to the circuit-switched system, Bowick said.

Cox now sells telephony in nine markets and has 718,000 subscribers, said Bowick. It will launch service in a 10th system — Wichita, Kan. — by the end of the second quarter.

Cox has deployed 16 circuit switches to date, Bowick said, and will add several more in 2003.

"We see a VoIP opportunity," he said. "It's a complementary technology."

In addition to the Wichita launch, Cox will likely add several new call features to its telephony service bundle in 2003.

One is caller ID via the television. When the phone rings in a Cox bundled home, a subscriber watching TV will see information on who is calling on their TV set, Bowick said.

Also coming this year: unified messaging, which will integrate Cox's e-mail and voice mail products.

Bowick also said Cox is dreaming up new uses for its national IP backbone, assembled in the wake of the bankruptcy that shuttered data-over-cable backbone provider Excite@Home Corp.

Cox plans to put some phone and data traffic on that nationwide IP network, enhancing stability and quality. It's also looking to put some office-to-office calls on the national IP network.

Some residential and commercial long-distance phone calls also could travel through the network, as well as IP video.

Cox's nationwide network also will help the company expand services to its business customers. In 2002, Cox generated $217 million in revenue from commercial customers, up 45 percent from 2001. That's despite the fact that many businesses have cut back on telephony and data services, Bowick said.

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