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For Insight, VoIP's the Next Wave

12/14/2003 7:00 PM Eastern

Insight Communications Co. said it is planning to roll out voice-over-Internet protocol telephony service next year, a move that might spell the end of its telephony relationship with Comcast Corp.

At the Credit Suisse First Boston Media & Telecom Week conference here last Wednesday, Insight chief operating officer Dinni Jain wouldn't give specifics about the VoIP launch, but noted Insight already has circuit-switched service in four markets.

That service is through a deal Insight reached with AT&T Broadband [since acquired by Comcast Corp.] in 2000, in which the MSO agreed to foot the bill for switching equipment and serve as the local-exchange carrier.

In exchange for providing access to its cable network, Insight receives a monthly access fee plus fees for marketing and billing support. At the time, the deal was perceived as extremely favorable to Insight.

Jain said telephony remains an important part of Insight's business — now with about 49,000 circuit-switched customers — but the MSO is currently in negotiations with Comcast concerning their telephony deal.

"From our perspective, the deal is not working for either side," Jain said in an interview after the conference.

The Insight deal was the first and only telephony agreement AT&T was able to execute with an MSO outside of its own AT&T Broadband.

When AT&T purchased Tele-Communications Inc. in 1999 for about $48 billion, it had planned to extend its local telephone reach across the country by striking deals with MSOs. While it had a preliminary agreement with Time Warner Cable, prior to completing the TCI merger back in February 1999, those negotiations quickly fell apart.

Since Comcast acquired AT&T Broadband last year, the Philadelphia-based MSO has concentrated on increasing video and high-speed data customers and has decreased its emphasis on telephony.

That first showed up in the second quarter, when Insight added 4,300 telephony subscribers — short of analysts' expectations of 6,500 adds — largely due to Comcast's decision to slow down the telephone-install rate in Insight markets.

 

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