Time Warner Cable In VoIP Push

The VoIP market suddenly has its very own 800-pound gorilla, as Time Warner Cable announced that it will offer Internet telephone service (voice over IP) in the 27 states it currently serves.

The second largest cable company--Comcast is the largest--also revealed that it has worked out deals with MCI and Sprint to cover telephone service in the regions not served by the cable company. With 11 million subscribers and another seven million potential household subscribers in major cities--including Los Angeles and New York City--Time Warner dramatically ratchets up the competition in Web phoning.

Its biggest competitors will be the four regional telephone companies, which have all recently announced that they, too, will enter the VoIP market. In its trial area in Portland, Me., Time Warner signed 8,000 of its 40,000 high-speed-Internet subscribers to its Digital Phone service in a few months. Subscribers there pay between $40 and $50 a month for the Web phone service.

Time Warner has been in the vanguard of the VoIP phenomenon, first with its Portland service, then last month when it announced it would offer the Web phone service in California sometime next year. The latest announcement had all the earmarks of a rush-to-implement and came in the wake of a flurry of announcements by the regional Bell companies, other cable companies, and independent providers to join the VoIP movement.

The entire telephony industry is currently undergoing massive and rapid change--some might call it an upheaval--as VoIP takes hold and as mobile phones rapidly take market share from the landline operators. And, looming in the ominously background, is the free Web phoning service of Skype, a Swedish company that distributes VoIP software for downloading over the Internet.Time Warner's Digital Phone service has already received regulatory approval in New York. In California, which is insisting that VoIP service be regulated, the company has agreed to be regulated by the state. The whole issue of VoIP regulation is in limbo while the FCC and Congress decide what to do about Web phoning. Cable companies have an advantage over the regional phone companies because broadband cable is not regulated and taxed, while DSL is.

Other cable companies have taken a variety of stances on VoIP. Cablevision, for instance, has announced that it will offer the technology to its subscribers, while Comcast, which is still digesting its acquisition of AT&T's cable network, is testing it.

In another VoIP development, independent VoIP provider Vonage said it is replacing Cisco Systems as its exclusive ATA supplier with Motorola, which supplies its VT1000v for subscribers. Vonage Chief Executive Jeffrey Citron indicated he was unhappy with the Cisco offering.