Comcast is the latest cable giant to jump into the local phone market. The nation's largest cable provide will start offering phone service via the Internet later this year to customers who subscribe to its high-speed Internet system.
Comcast's entry presents a stiff challenge to traditional telephone companies and to start-up the Voice over Internet Protocol (VoIP) providers.
Comcast customers will be able to sign up for unlimited local and long distance telephone service for a monthly cost of $39.95. While it might hurt phone companies, Comcast officials say their intention is to provide consumers with a richer variety of telephone services than is now available, including video calling and unified messaging.
Comcast Chairman and Chief Executive Officer Brian Roberts outlined some of the planned new services at the Citigroup Smith Barney Entertainment, Media and Telecommunications Conference in Phoenix. But he told his audience that there is no doubt in his mind that voice communications will become a huge part of Comcast's business, and that other cable operators will be quick to offer VoIP systems.
Comcast is currently running tests on its system in three markets -- Philadelphia, Indianapolis and Springfield, Massachusetts. Roberts says the comany expects VoIP service to be available across Comcast's entire network by the end of 2006.
How VoIP Works
While traditional telephone audio is analog, VoIP transmissions are fully digital, making them a much more efficient way to use fiber optic cable. That lowers the cost. Consumers will continue using handsets pretty much like standard telephones. Instead of plugging into a telephone jack, these IP phones will plug into an Ethernet jack.
Industry analyst Lori Wilkerson says the upshot of the VoIP revolution is that standard long distance services may become a thing of the past.
"As more and more consumers turn on to VoIP and broadband connections make it easy and inexpensive to make phone calls over the Internet, fewer individuals will be willing to pay high rates to make a telephone call they can make for free or next to nothing via their computer," she said.
