Ops: VoIP Won’t Need Cheap Offers

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New York -- Telephone-service executives at Comcast Corp. and Mediacom Communications Corp. said their Internet-protocol-based launches are moving along aggressively and the service won’t be sold cheaply to consumers.

Rian Wren, Comcast’s senior vice president and general manager of telephony, challenged an analyst’s contention at a conference here Wednesday that voice-over-IP phone service should be sold at close to cost in order to add phone customers in a hurry and to defend high-margin, high-speed-Internet service.

“Why would you want to give anything away unless you are truly adding value to your business?” Wren asked rhetorically, saying that discounts in one area should only be done to boost cash flow in other parts of the business.

High-speed-data service, several years after launch, hasn’t had to be discounted much, and Comcast expects strong demand for a $39.95-per-month all-distance calling plan (as part of a bundle) to persist at least for several months, he said.

Comcast has gone commercial with prior trial VoIP services in its Pennsylvania, Indiana and Massachusetts areas, and the target remains 20 markets selling VoIP by year’s end, Wren said. Next up, as announced, are launches in the Boston and Hartford, Conn., areas in May.

Marco Rustici, senior director of telephony at Mediacom, said his MSO “will in fact be launching in this quarter,” and it expects to be marketing VoIP to about 1.5 million passed homes by year-end. “That’s a very aggressive schedule,” he added.

Rustici agreed that VoIP won’t need to be heavily discounted, saying that market research has indicated that a VoIP service priced at below $29.95 per month (as part of a bundle) would be received skeptically by consumers, who would raise questions about service quality. “For us, we’re looking at the mantra of applications, applications, applications,” to drive demand, not pricing, he added.

The call to drive VoIP penetration at the expense of initially high profit came from Rich Greenfield, an analyst at Fulcrum Global Partners LLC, who said cable should approach VoIP as a “land grab” to add and keep customers for higher-margin services, especially high-speed data. That could be cable’s most important platform going forward, he said.

All of the executives spoke on a panel Wednesday morning at the Kagan Cable VoIP Summit here.

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