the cable voip scorecard

AFTER TALKING ABOUT VOIP FOR MORE THAN five years, U.S. cable operators suddenly have enthusiastically deployed the service. More importantly, they are getting enthusiastic reception from customers for these VoIP services.

The cable industry took its time developing a framework for real-time services, eventually ending up with PacketCable. The technology provides a centrally controlled service using a protocol that is a variant of MGCP. Meanwhile many other kinds of service providers have deployed SIP, which has a more peer-to-peer orientation and permits customers to use their services anywhere they have access to broadband. PacketCable VoIP can be used only in its local area.

That technological wrinkle aside, cable deployments have begun in earnest, with the largest cableco, Comcast Corp., having recently reported at least 7,000 VoIP subscribers. Comcast has acknowledged testing SIP widely, officially in its Detroit systems and unofficially in Florida and elsewhere.

Click to Enlarge

According to a study released in February by market research firm Infonetics Research Inc., the number of cable VoIP subscribers increased from 50,000 to nearly half a million from 2003 to 2004, a 900 percent increase. Meanwhile, cable broadband subscribers grew 26 percent, from 17.7 million to 22.4 million.

According to Infonetics, just two cable companies (which they did not name) accounted for 90 percent of those 500,000. One of those almost certainly is Cablevision Systems Corp., the New York City metropolitan-area cable operator whose Optimum Voice has been making headlines for taking substantial numbers of subscribers away from Verizon Communications Inc. Cablevision claimed to have 350,000 VoIP subscribers by the middle of March 2005 and to have a sign-up rate of 10,000 new subs per week.

The other is likely Time Warner Cable, which launched cautiously in Portland, Maine, in 2003. According to figures from financial analysis firm UBS, Time Warner now has taken 18 percent of the phone subscribers in that area. The company claimed more than 220,000 VoIP subscribers at the end of 2004. At the pace of 10,000 new subs a week, which it claimed at the time, it now could have as many as 300,000. It also reportedly plans to expand service from 15 to more than 25 markets.

Click to Enlarge

Newer to VoIP, though not to telephony, is Cox Communications Inc., which has marketed traditional circuit-switched voice aggressively in several territories, including Southern California. It claims to have as much as 50 percent of the market in its target areas in Orange County and Omaha, Neb., and now has launched VoIP services in five locations.

Adelphia Communications Corp. is well along in plans to launch a service based on MGCP. Now that the company is to be acquired, with Comcast and Time Warner dividing the spoils, those plans may change, but likely some service will be rolled out in 2005.

Charter Communications, suffering from weak financial performance and slow gains for high-speed data subscriptions, reported just 5,200 VoIP subscribers at the end of 2004. The company plans to continue rollouts of the service, which is now accessible by about 15 percent of its subscribers.