Comcast Corp. (Nasdaq: CMCSA, CMCSK) announced its voice-over-IP (VOIP) plans yesterday, and – if you didn't read the fine print – the effort sounded like a world beater.
But the hard numbers tell another story.
Comcast announced that, by year's end, the company plans to be able to offer VOIP service to half of the 40 million homes its cables pass. By the end of next year, it plans to be able to offer the service to 95 percent of those 40 million homes (or 38 million homes).
Several papers, including The Wall Street Journal, ran broad descriptions of the announcement, each noting that Comcast plans to offer VOIP service to all the 40 million households served by its cable systems by the end of 2006. Comcast shares climbed 12 cents to $29.69 on the news (see Comcast Directors Re-Elected).
However, the difference between "offer" and "provide" is mighty big.
Comcast does provide cable TV service to 40 million potential customers – that is, its cables pass 40 million homes. Of those 40 million homes, it actually sells basic cable TV service to 21 million customers and digital cable TV service to 7.9 million customers.
Its high-speed Internet service is still in training pants: Of the 36.2 million homes that qualify, only 5.5 million Comcast customers are buying the service.
The company won't say how many of those 38 million homes it expects to sign up for VOIP service by 2006. But, assuming Comcast doesn't offer VOIP on other carriers' access lines, customers will have to subscribe to Comcast's high-speed Internet service to get its VOIP service. So Comcast's real VOIP penetration could very likely be a single-digit percentage of its 5.5 million Internet users.
"A high percentage of people with dial-up are interested in high-speed data but haven't reached that point where they're ready to commit to a higher price," says Kate Griffin, an analyst at Yankee Group. "But if they can get VOIP bundled in with the high-speed data, that will spur the decision. It won't necessarily be, first you get the high-speed data and then you're a candidate for VOIP. We'll see people doing both at once" (see Broadband Growth Is Brisk).
"Comcast has been trialing VOIP for some time and has had probably everybody through their labs," says Kevin Mitchell, an analyst at Infonetics Research Inc. "I would guess they'll select a vendor that has PacketCable compliance, which narrows the field."
Comcast is conducting VOIP trials in Coatesville, Pa., and Indianapolis and will start a third trial next month in Springfield, Mass. The company has not yet announced a date or a market for its first commercial offering of the service.
Bye Bye Flame boy from Seal Village. Your Calgary Flames go out tonight. You blew it by an inch last game. Next time remember the puck has to cross the line to score. It will be a loooong cold winter to remember what ifs in Seal Village this year A ?
GET READY TO BE HIT BY LIGHTNING as TAMPA BAY WILL LIFT LORD STANLEY'S CHALICE TONIGHT !!!
Bye Bye Flame boy from Seal Village. Your Calgary Flames go out tonight. You blew it by an inch last game. Next time remember the puck has to cross the line to score. It will be a loooong cold winter to remember what ifs in Seal Village this year A ?
GET READY TO BE HIT BY LIGHTNING as TAMPA BAY WILL LIFT LORD STANLEY'S CHALICE TONIGHT !!!
I have a Vonage line: POOR BASTARD QOS S*CKS > cost: they just lowered my bill by almost $5 per month - after no action or request on my part - to $35! BIG DEAL IT's A JOKE, I CAN SPEAK CLEARER BETWEEN TO CANS AND A STRING > Verizon offers similar all you can eat calling in US for what ends up being about $70 per month after taxes - this is a pretty good savings for my family. WOW ! YOU CAN GET ALL THREE SERVICES, VOICE, VIDEO and HSD FOR LESS (DID I MENTION HSD?)
> HSD is cable's most profitable service, (better than video even), but, it is a NEW service to consumers, so take rates follow a typical new services ramp up > VOIP is NOT a new service - it's just phone. Everyone knows what it is and what it's used for, and why they want it, therefore, it is much easier to market > VOIP is not as profitable as HSD, but it is certainly not been a financial drain for operators like Cox - see their annual report - their telephony numbers are quite good AGAIN THE PACKAGE ROCKS ! > Vonage is doing very, very well - the mso's are going after VOIP fast in part because if they don't, Vonage will. THEY ARE NOT DOING WELL AT ALL. AND SOON THEY WILL BE SHUT DOWN OR WORK WITH EVEN LESS QOS OVER OTHER COMPANIES NETWORKS. BYE BYE VONAGE........
Its not that VoIP is more profitable than HSD its all about the package ! You mention Cox right ? Well no one sells the package better than Cox. Voice, Video & Data !!
I have a Vonage line > quality, after 2 months: not great, but seems to be getting better - I use it for my primary line, which is personal and business - quality is good enough not to go back > cost: they just lowered my bill by almost $5 per month - after no action or request on my part - to $35! > Verizon offers similar all you can eat calling in US for what ends up being about $70 per month after taxes - this is a pretty good savings for my family.
Interesting thread now regarding business aspects of VOIP, but, Justin, I'm having a hard time understanding what insight you think you provided by this article. Everyone knows that homes passed is different than subscribers. Sherlock Holmes you are not. It was not fine print, and anyone who follows cable with even a passing interest knows this.
The announcement is meaningful, though not even slightly surprising news. Time Warner announced the end of last year that it would offer VOIP in all of it's systems. Of course Comcast will do the same thing. Again, no scoop here.
VOIP is interesting because of the following: > HSD is cable's most profitable service, (better than video even), but, it is a NEW service to consumers, so take rates follow a typical new services ramp up > VOIP is NOT a new service - it's just phone. Everyone knows what it is and what it's used for, and why they want it, therefore, it is much easier to market > VOIP is not as profitable as HSD, but it is certainly not been a financial drain for operators like Cox - see their annual report - their telephony numbers are quite good > Vonage is doing very, very well - the mso's are going after VOIP fast in part because if they don't, Vonage will.
VOIP will be the nail in the coffin for the Bells in the residential market. Even if they committed to FTTx full bore, they would be too late by the time it is deployed.
There is plenty to report here, Justin, if you bothered to do a little research...
nigel2k2003 notes that: "VoIP Voice Ports called EMTA's are being sold to Comcast that offer 2 lines of Data and 2 lines of voice (pots lines). In addition the MTA offers 2 lithium batteries, each battery rated for 10 hours each. That's 20 hours off of hook time to you and me."
My neighborhood lost power last winter for 48 hours. I have UPS and a generator, so my house had power for my computer and all my network gear.
After about 2 hours, my cable connection failed. This occurred because certain equipment in the neighborhood and between the neighborhood and the head-end needs power, and its UPSs drained. My POTS and cell phones continued to work.
This in is the Virginia suburbs of Washington, DC. the provider is Cox.
So yes, the cable system is somewhat less reliable than the phone system.
So what? it's still cheaper to use VoIP except for those rare tiems when it is not available.
On the other hand, I really do not understand what value is added by a VoIP provider. I'll just make direct SIP calls to my friends, for a monthly cost of zero. For friends who don't have VoIP, I'll use cell.
VoIP Voice Ports called EMTA's are being sold to Comcast that offer 2 lines of Data and 2 lines of voice (pots lines). In addition the MTA offers 2 lithium batteries, each battery rated for 10 hours each. That's 20 hours off of hook time to you and me.
Even your village of seal hunters will have power restored by then. GO TAMPA BAY !!
Re Post 3 I guess you shouldnt by a VOIP service then.
Conversely I have not had a cable modem problem in over two years. However, our county E-911 system was down 20 minutes this past week. Where is Technonerd when you need him?
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