Cable Tech

Comcast's VOIP Feature Creature

Is Comcast Corp. (Nasdaq: CMCSA, CMCSK) starting a features war or a price war? That may be the big question following its announcement on Monday that it’s leaping into the VOIP market.

Comcast is running straight at incumbent regional phone companies, pricing its "digital voice" service at $39.95 a month when bundled with its television and broadband offerings (see Comcast Vaunts Its VOIP). The standalone price for the VOIP offering is in the $50 per month range.

Comcast also insists its product will compete as a fully featured bundled service that complements its cable and broadband data services, rather than competing on price alone. Skeptical experts still fear the VOIP boom means one thing and one thing only for the industry: price wars.

"I don’t understand the logic of throwing over the phone company and their five nines of reliability,” says Robert Rosenberg, president of Insight Research Corp. He says he doesn’t see a compelling case to switch to a VOIP offering based solely on features. “But that being said, we still believe that Comcast will take 20 to 30 percent of the market over time.”

Comcast's moves hike up the VOIP ante, and point to the shortcomings of many consumer VOIP services: They lack even basic features. Two advantages Comcast has going for it are enhanced emergency 911 service and battery backup for the cable modem, making Comcast’s VOIP service perform more like traditional phone service from an RBOC. Pure-play VOIP providers like Vonage Holdings Corp. offer optional 911 dialing which connects to a “Public Safety Answering Point,” which then must report your emergency. Most pure-play VOIP providers’ services don’t work during a power outage.

Brahm Eiley, president of The Convergence Consulting Group, says adding enhanced 911 services is a given for cable companies. ”The last thing they want is to hear a horror story about their product lacking service,” he says. “This is part of the negative hype that cable has gotten. They’re not going to risk their entire business by offering a second-rate service.”

Rosenberg says Comcast’s real advantage comes from the marketing power the company has. “They have a much stronger advertising vehicle which incumbents can’t match,” he says. “Anytime they have an open local advertising slot in their cable lineup, they can throw an ad in touting their voice service and three-way bundle offering.”

Comcast says adding Internet-based features and management -- such as a "Web portal" for controlling voicemail and call waiting -- will add value. But competitors could easily add such things, given the nature of IP VOIP as based on standard technology.

Eiley says that, initially, cable VOIP will get its share of customers, especially penny pinchers, who see an advantage from getting features like voicemail and call waiting included as part of the basic package. “A lot of customers will choose to switch,” he says. “And in some cases the total cost will end up being at least $10 cheaper than their circuit-switched product.”

But the question also cuts the other way. Many customers have had negative experiences dealing with cable companies and may be reluctant to put all their eggs in one basket.

One thing analysts appear to agree upon is that Comcast’s announcement puts the RBOCs on the defensive. “RBOCs can stave this off, but it means they will have to start offering VOIP services or lowering the price of their circuit-switched offering,” Eiley says.

— Chris Somerville, Senior Editor, Next-Generation Services

Sign In