Burke's Buoyant on IP-Phone Outlook - Multichannel

Burke's Buoyant on IP-Phone Outlook

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Washington— Comcast Cable Communications Inc. president Stephen Burke, here last Thursday to accept an industry accolade, said cable-provided Internet phone calling could be as big a hit product as high-speed Internet access.

Although he noted that it was premature to make bold predictions, Burke said Comcast had the network in place to meet considerable customer demand for a phone service capable of doing novel things like routing e-mails and voicemails to the TV set.

"IP phone is the way to do that. It has a chance to be a big business," Burke said after accepting on Comcast's behalf the 14th "Bill Daniels Operator of the Year Award," selected and presented by Multichannel News.

Phasing In

Comcast is planning VoIP (voice-over-Internet protocol) market trials next year in three states, with an eye toward a broader rollout in 2005. The Philadelphia-based MSO is currently running a trial in Coatesville, Pa. The next phase will include Indianapolis; Hartford, Conn., and Springfield, Mass.

Comcast spokesman Tim Fitzpatrick said the company had not revealed price or packing options. Time Warner Cable and Cablevision Systems Corp., two cable companies that have launched VoIP, charge customers a flat $39.95 and $34.95, respectively, for monthly unlimited local and domestic long-distance plans.

Burke said there was no reason why VoIP couldn't someday match high-speed data's penetration, which he said could hit 50% of the company's 21 million subscribers in just a few more years.

"It has extremely exciting potential," Burke said, adding that the cable platform can blend services that phone companies can't "with the traditional telephone network."

Merrill Lynch cable analyst Jessica Reif Cohen said Burke's "bullish" VoIP comments indicated that Comcast was taking a more-aggressive approach to the service. Comcast has 1.4 million circuit-switched phone customers, inherited in its acquisition of AT&T Broadband.

"We believe Comcast is accelerating its plan for full-scale VoIP deployment, possibly rolling out in late 2004 in certain markets. Cable telephony may give a boost to cable-sector valuation," Reif Cohen said in a research note last Friday.

Burke's comments on the promise of VoIP came during a sit-down discussion on a range of issues with Multichannel News
editor-in-chief Marianne Paskowski.

Vivendi Look

Comcast took a hard, albeit brief, look at buying Vivendi Universal Entertainment, but in the end decided the timing wasn't right, he said.

"We were genuinely interested," Burke said. "I think it made more sense for NBC at the end of the day."

Burke said Comcast would remain on the acquisition prowl, especially for any promising programming deals.

"We would like to own more," he said.

Comcast is planning to roll out a digital sports-programming tier next year, Burke said, adding that the tier would not include any ESPN networks or regional services from Fox Sports Net.

Comcast spokespersons said they didn't have additional details about the new sports tier.

Comcast's aggressive deployment of HDTV would continue, providing a mix of local broadcast channels and local and national sports networks that direct-broadcast satellite carriers do not have the channel capacity to offer, he said.

"For a period, we can offer more high-def than satellite can," said Burke. "Competitively, it's a wonderful advantage."

On a hot-button public-policy issue, Burke said he opposed government action that would require cable companies to sell cable networks à la carte or in tiers by genre, like sports. He complained that such a proposal would threaten the industry's economic fundamentals and harm the ability of a network like C-SPAN to reach a vast cable audience.

"We are against government-mandated tiers," Burke said. "Ultimately, it would be a dangerous model."

The à la carte issue is expected to gather steam in the weeks ahead, after the General Accounting Office releases a long-awaited cable industry study ordered by Sen. John McCain (R-Ariz.).

McCain, chairman of the Senate Commerce Committee, has argued that à la carte programming would give consumers more choice and would more fairly distribute programming cost burdens within a pool of subscribers. He praised the initial agreement that allowed Cablevision to Yankees Entertainment & Sports Network, a New York Yankees-controlled regional sports channel, on a sports tier.

Report Coming

The GAO, which audits contracts and investigates agencies and industries for Congress, is planning to deliver the report, expected to be less than 100 pages, to McCain's office no later than Oct. 24. McCain has 30 days to review it before GAO makes it public.

Cable-industry sources have said McCain's staff has interviewed them in connection with the preparation of à la carte legislation.

But a McCain spokeswoman said the senator wanted to study the GAO report before deciding whether to introduce a bill.

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