Time Warner Cable plans to introduce a national Internet-based telephone service in 2004, joining forces Dec. 8 with Sprint and MCI in preparing to offer the service to the estimated 18 million homes with access to Time Warner Cable systems.
"The move represents the most aggressive push to date by a cable group into the rapidly expanding Internet telephony market," said the Financial Times, "and highlights the potential threat to local telephone companies that could find their local services bypassed by those with broadband Internet connections."
The newspaper called the Time Warner move "a significant additional challenge to U.S. telecommunications operators already suffering from intense competition." Time Warner now has Internet telephony in Portland, Maine and for some North Carolina customers.
Industry analysts have believed that Internet telephony would take off in earnest in 2004, after several years of cable companies and other telecommunications operators testing it "carefully," the Financial Times said.
The Time Warner announcement came at a time when Qwest planned to extend its Voice-over Internet Protocol (VoIP) services nationwide during 2004's first quarter. Both Time Warner and Qwest, the Times said, would compete with New Jersey-based VoIP startup Vonage, which already has over 50,000 customers with a flat-rate service for broadband Net subscribers costing from $30 a month.
"Industry estimates suggest there are between 100,000 and 200,000 Internet telephony users in the U.S.," the paper added, "but the market is growing rapidly ... 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 if it means cannibalising their existing local and long distance revenues."
