Cablevision Quiet On VoIP Rollout

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Cablevision Systems Corp. has quietly rolled out voice-over Internet-protocol phone service in its greater New York City cluster, well ahead of its stated late-2003 timeline, a Wall Street analyst disclosed last week.

Cablevision is not confirming that information, saying only that it is progressing with development of a VoIP service rollout, as planned.

Merrill Lynch analyst Jessica Reif Cohen issued a report March 14 indicating the Bethpage, N.Y.-based MSO had soft-launched Optimum Voice in select areas of its New York cluster for a flat $34.95 monthly rate to customers who also take high-speed Internet service.

Her report indicates the service is aimed as a second-line competitor, with no network powering or support for 911 emergency systems should there be a power failure in the customer's home.

The service has several popular calling features, including caller ID, call waiting, call return, call forwarding and three-way calling, according to Reif Cohen.

By avoiding the expense of a network-powered VoIP system, it could be one of the lowest-cost entries into cable telephony attempted thus far. Reif Cohen estimated that if customers buy their own voice-enabled cable modems, Cablevision's capital-expenditure requirements could fall to $150 per subscriber — roughly 25 percent of a similar circuit-switched offering, which tends to cost about $600 per subscriber.

While it may promise a lucrative future in telephony services, VoIP technology is still solidly in test-only mode within the U.S. cable industry.

Thus far, the two MSOs that have rolled out substantial cable telephony service — Cox Communications Inc. and the former AT&T Broadband (now part of Comcast Corp.) — have both opted for a circuit-switched approach.

Comcast's pre-merger systems, Charter Communications Inc., Time Warner Cable and other operators have IP-voice trials underway, but nagging issues surrounding integration and back-office support have prompted delays in full service rollouts.

Most cable-telephony equipment vendors say it will likely be 2004 before there are any major IP telephony rollouts.

Cablevision declined to comment on the details of the report, but did issue a statement that residential voice service is indeed in its market battle plan.

"We are currently testing a residential voice product, which we believe will be an excellent addition to Cablevision's growing bundle of products and services. We expect high-quality, dependable and affordable voice service, carried over our advanced broadband network, to be extremely popular with both new and existing Cablevision customers," said Tom Rutledge, president of Cablevision's cable and communication division.

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