Comcast Corp., the cable giant that merged in November with AT&T Broadband, is not quite ready to take telephony to the Big Leagues.
Comcast, the No. 1 cable company with 21.4 million customers, is diverting from an AT&T Broadband strategy to aggressively market local phone service.
Comcast is conducting voice over IP (VoIP) trials to prepare for a widespread launch at an undisclosed date, but telephony will not be its main priority this year. Instead, the cable leviathan will focus on improving systems providing video and high-speed Internet access.
"We won't aggressively be marketing the service but we will continue to be connecting customers in the areas that we have already upgraded for phone service," Comcast spokeswoman Sarah Eder says.
Prior to its November merger with Comcast, AT&T Broadband was acquiring local and long-distance phone customers at a rapid clip. It picked up about 1.3 million local phone customers, achieving 14 percent penetration out of eight million homes the AT&T Broadband network could serve.
Other cable operators, such as Cox Communications Inc., have aggressively marketed local and long-distance telephone service over the last year as part of a strategy to bundle phone, Internet and video services. Telephone and cable operators say a bundle proves integral in curbing churn rates and improving margins, though the Bells have done little to include TV services in their bundles.
But Tom White, Comcast's vice president of marketing for telephony, says "When you grow very fast there is the chance that you are going to take in a much broader group of customers and customers that just take you for phone service and not for your other products. You may in fact not be bringing in as many bundled customers."
Meanwhile, Cox, the country's fourth largest cable operator, reports that one of out three customers in its nine telephony markets subscribes to another service such as Internet access or cable TV. The company had about 651,000 telephone subscribers at the end of the third quarter, and the average revenue per telephone subscriber is $50. More than three out of four local phone customers subscribes to Cox long distance, according to the company.
Comcast has not disclosed when it will begin to aggressively market telephone services across the country. "I am hopeful it is in the next 12 to 18 months but that is just my opinion," White says. In the meantime, Comcast is conducting a trial in Detroit where it is using a combination of circuit-switched equipment and IP technology, and plans a VoIP trial in Philadelphia in the second quarter, where it will use a softswitch to route calls, White says.
"There is a belief and hope [voice over IP] is going to bring improved economics to getting into the voice business and increase scalability," he says.
