Comcast Offers a Gaze Into Its Telephony Future

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Don't look for Comcast Corp. to plunge headlong into the telephony business after it completes its merger with AT&T Broadband, now expected later this month.

Although Comcast will inherit 1.3 million telephony subscribers — and has tested a hybrid Internet-protocol and circuit-switched operation in suburban Detroit — AT&T Comcast Corp.'s post-merger focus will be on selling the core video product, officials said.

"This [telephony] business, long-term, will be a profitable part of the company," said Comcast Corp. president Brian Roberts — especially as technology improvements make IP telephony more cost efficient. But "keeping our eye on basic is job one," he said.

The MSO has installed IP-gateway equipment between the home and its circuit-switched plant in suburban Detroit, said cable unit president Steve Burke.

"We have a huge vested interest in making hybrid IP phone work," Burke said. "The initial results are good."

There are about 20,000 subscribers in Comcast's Detroit market, said Burke, but the MSO is largely in a marketing-maintenance mode.

"The goal hasn't been to aggressively ramp subscribers," he said.

Nonetheless, the phone operation is generating $3 million to $4 million a year in cash flow, according to Burke. Comcast is set to launch an IP-telephony trial in Philadelphia next April.

AT&T Broadband has been losing basic subscribers at a rapid clip — more than 500,000 over the past 12 months. As a result, there's a sense of urgency around stanching the basic bleeding at the Broadband systems, Roberts said.

"Cash flow will be job one," Burke said. "We will focus on video, not phone."

Comcast might not be spending heavily on telephony, but it will plow money into capital projects to finish rebuilds over the next two years, Burke said.

Burke said Comcast will roll out DOCSIS 1.1 modems and has started to identify a product road map for add-on services it could sell with DOCSIS 1.1 or 2.0 technology.

The cable-unit president also ticked off a number of initiatives that AT&T Comcast will take on once the merger is finalized. They include: a 100-day plan to turn around basic-subscriber performance; repackaging digital cable and premium services; bringing customer-service call-center functions back in-house; and moves toward "right-sized field staffing."

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