x
Cable Tech

Cable Gets a Vault from VOIP

This week there's more good and bad news for pure-play VOIP providers and CLECs. The good news is that residential VOIP services are still seen as a booming business. One industry forecaster -- JupiterResearch -- says as much as 10 percent of the U.S. population could be using VOIP phone services by the year 2009. The bad news? The cable companies look to be the ones positioned to benefit most of all, for all the usual reasons that big companies win in the communications world: the ability to bundle and bill for multiple services and the big budgets to afford aggressive marketing (see Report: VOIP Growth Won't Benefit All and Report: MSOs Scoring With VOIP). The JupiterResearch report, “Broadband Telephony: Leveraging Voice Over IP to Facilitate Competitive Voice Services,” states that about 1 million U.S. households will be using VOIP services by the end of next year, more than double the current total. That group will swell to 12.1 million by 2009.

”Next year will be important for continuing VOIP momentum as far as building customer awareness,” says Joe Laszlo, senior analyst at JupiterResearch. And he says cable companies are in the driver’s seat for dominating VOIP services:

“It’s the cable companies’ game for the next few years. That’s not to say that specialized VOIP companies like Vonage Holdings Corp. and Packet8 won’t compete, just that they don’t have the marketing muscle the cable companies do and must use a more focused approach. The cable companies are well-positioned for offering VOIP as a bundle with their existing video services.”

For wireline carriers, VOIP is a lower revenue service than a regular landline phone connection, but the services will be helpful when selling service bundles that include high-speed data connections. “Their pressing issue is not to have VOIP, but to add video services," Laszlo says. "They look at it that the customer doesn’t care if telephony services are IP-based or not but that they must have a bundle that competes with the cable guys.”

As noted at last week's UBS Investment Research media conference, VOIP services are gaining a fast following and often this comes at the expense of incumbent phone company access lines:
  • Cablevision Systems Corp. (NYSE: CVC) announced it had surpassed 250,000 VOIP customers after reporting just under 200,000 at the end of the third quarter. It is currently adding 1,000 customers a day, despite not offering local number portability. The company expects to add number portability next year, which should cause an increase in customers.
  • Vonage stated that it had 276,000 customers at the end of the third quarter, having added customers at a rate of about 27,000 per month.
  • Time Warner Cable estimates it will have more than 200,000 telephony customers by year-end and is adding roughly 10,000 customers per week. The UBS report notes that Time Warner Cable is now fully deployed in all its territories and has said that 75 percent of its new customers were porting numbers, indicating a switch of primary lines. UBS predicts that Time Warner Cable, which has 10.9 million basic cable subscribers, and a roughly 72 percent overlap with the Bells, will get more aggressive with marketing its VOIP bundle next year.


Of course, many of the wireline incumbent carriers are hedging the revenue they're losing to VOIP players with gains from increasing numbers of wireless subscribers. The JupiterResearch report found that younger consumers were least likely to turn to traditional carriers for service and the least likely to use landline telephony at all. Twelve percent of 18- to 24-year-olds say their wireless phone is their only phone. "For attracting young adults, VOIP’s biggest competitor may prove to be mobile operators, not the Bell companies," Laszlo says.

— Chris Somerville, Senior Editor, Next-Generation Services

HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE