Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now


Cable Companies Enjoy VoIP Growth Spurt

New York — Cable companies witnessed enormous growth in the number of residential VoIP subscribers in 2004, according to a report released yesterday by Infonetics Research.

From less than 50,000 North American subscribers in 2003, Cable MSOs gobbled up nearly 500,000 subs by the end of the 2004, a growth of 900 percent.

The field of cable-delivered VoIP telephony is dominated by two MSOs, Time Warner Cable and Cablevision, which accounted for 90 percent of all cable VoIP subscribers, according to the report’s author and Infonetics Research directing analyst, Kevin Mitchell.

The report, titled “Cable VoIP Equipment Market Outlook” also noted that cable companies pumped more investment capital into VoIP equipment last year, raising their investment from $63 million to $123 million, a growth Infonetics expects to continue.

According to Mitchell, the universe of cable MSO-delivered VoIP is still small, comprising just 2 percent of the total number of cable broadband subscribers. Broadband subscriptions also racked up double-digital gains last year, the report noted, growing 26 percent from 17.7 million to 22.4 million. Mitchell estimated the percentage of cable users employing VoIP from an MSO would grow to 15 percent of all cable broadband subscribers in 2007.

Unlike start-ups like Vonage, which do not own a network and as such don’t have as high an operating cost, cable companies are not pursuing aggressive pricing to lure consumers, Mitchell said.

“Cable companies aren’t looking for an all-you-can-dial price war,” he said.

Instead, they are using the appeal of the triple play (voice, video and telephone on one bill) and their control of the network to “blend entertainment and communications” to attract VoIP subscribers, Mitchell said.

Cable still occupies a small slice of the VoIP subscriber pie, the majority of which is owned by start-ups, such as Vonage which alone has 400,000 subscribers and AT&T’s CallVantage. There is an overlap in these numbers, however, as Vonage provides private label VoIP telephony service to several smaller cable companies.