| Time Warner Cable to launch web phone | ||
| By Paul Taylor and Peter Thal Larsen in New York | ||
| Published: December 8 2003 19:37 | Last Updated: December 8 2003 19:37 | ||
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Time Warner Cable, the second-largest US cable group, will next year roll out a national internet-based telephone service, posing a significant additional challenge to US telecommunications operators already suffering from intense competition.
The company, a division of the Time Warner media empire, on Monday joined forces with two long-distance telephone groups, Sprint and MCI, as it prepared to offer telephone service to the 18m homes that have access to its cable systems. The move represents the most aggressive push to date by a cable group into the rapidly expanding internet telephony market and highlights the potential threat to local telephone companies that could find their local services bypassed by those with broadband internet connections. In the past few years, cable companies and other telecoms operators have been carefully testing internet-based telephone offerings. However, industry analysts believe the service will begin to take off in 2004. Separately, Richard Notebaert, Qwest's chief executive, said the local and long-distance telephone network operator would extend its trial of so-called Voice over IP (VoIP) services nationwide during the first quarter next year. Both Time Warner and Qwest's services will compete directly with Vonage, the New Jersey-based VoIP start-up which has garnered more than 50,000 customers by offering a flat-rate internet telephony service to broadband internet subscribers that costs from $30 a month. Industry estimates suggest there are between 100,000 and 200,000 internet telephony users in the US but the market is growing rapidly. Vonage is able to undercut traditional telecoms services partly because its service piggybacks on existing broadband internet connections, and because internet telephony is free from the regulations and fees that push up the price of traditional telephony. Together the two announcements signal the rapidly changing telecommunications landscape and the convergence of data-based internet communications and traditional voice telephony which has become a commodity market. Typically, internet telephony customers pay a fixed monthly fee and are then able to make and receive free local and long-distance calls using either a special IP phone or a regular handset plugged into a small 'black box' that routes calls over the internet. Cable TV companies that already provide subscribers with broadband internet access using cable modems view internet telephony as a way to boost revenues and increase customer loyalty, while telecommunications carriers believe they must enter the market in order to satisfy customer demand - even it means cannibalising their existing local and long distance revenues. Time Warner's internet telephony service is already available in Portland, Maine, and for certain customers in North Carolina. |
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