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Integra5 Rolls the Dice

Now that Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), Cox Communications Inc. , and Bright House Networks are rolling out their new wireless convergence services with Sprint Corp. (NYSE: S), the big question is whether consumers will actually pay something extra for these products.

Put Integra5 Communications Inc. CEO Meredith Flynn-Ripley down for a strong yes vote. She says her company's early commercial experience with Caller ID on TV shows that cable and telco subscribers are willing to pay a little bit more each month for phone features on their precious TV screens.

Of course, Flynn-Ripley's firm has a big stake in the matter because it helped launch the TV Caller ID application more than two years ago. In fact, Integra5, which announced its largest deployment yet with WOW last week, now offers its TV Caller ID service to nearly 1 million cable and telco homes throughout the U.S.

Among Integra5's customers, WOW and Knology Inc. (Nasdaq: KNOL) both charge a small, monthly à la carte fee for the service while a third broadband provider, Everest Broadband Networks , charges a slightly higher price for a bundle that includes TV Caller ID. As a result, Flynn-Ripley estimates that up to two-thirds of her firm's TV Caller ID users are paying for the privilege.

"Surveys show that this is a service that people are willing to pay for," she says. "Our customers are seeing the value."

Fine. But will consumers continue to pay extra as Integra5 and its customers branch out to other incremental convergence products, such as PC Caller ID, TV message waiting, text messaging to TV screens, and even voice mail on the TV?

Integra5 and cable operators certainly hope so. The jury, however, is still out. Stay tuned.

— Alan Breznick, Senior Analyst, Heavy Reading

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