Lull Before Cable VoIP Storm?


The year 2003 might go down as the lull before the voice-over-Internet-protocol storm.

The Federal Communications Commission released data Monday showing that cable claimed 3 million local phone customers as of June 30, 2003, up an anemic 1% in six months.

But cable's virtually no-growth performance might be about to change with the introduction of VoIP service by some of the industry's biggest players: Time Warner Cable, Cablevision Systems Corp. and Cox Communications Inc. (already a player in the circuit-switched market).

Comcast Corp. -- with the most to gain from VoIP as the largest broadband provider in the United States -- isn’t far behind.

The new FCC data did not include any VoIP-penetration figures. However, Vonage Holdings Corp. -- a VoIP provider with no last-mile facilities like cable -- claims to have 75,000 subscribers, up from 7,000 in just 11 months.

Cable static's phone situation, for now, compares favorable with that of the Baby Bells. From Dec. 31, 2002, through June 30, 2003, the Baby Bells lost 6.8 million connections, ending with 155.9 million access lines. Those customers were lost to people eliminating second lines, switching to alternative carriers, or cutting the cord and going strictly wireless -- and some, of course, to Vonage.

Unlike cable, phone companies are heavily regulated in their core business. Not surprisingly, with the change in the competitive landscape and all of the attention turning to VoIP, the United States Telecom Association -- which include three Baby Bells and hundreds of smaller carriers -- wants the FCC to cut the red tape.

"Twenty years ago, consumers had one company, one service and one choice. Two decades later, a communications revolution has occurred. E-mail, cell phones, Wi-Fi and, now, Internet telephony are changing the way the world communicates," USTA president Walter McCormick said in a prepared statement Monday marking next Thursday’s 20th anniversary of the breakup of the old Bell system.