Cable VoIP Use Soars

Cable VoIP Use Soars

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Written By Eric Sandler

By Colin C. Haley

February 02, 2005

The number of cable IP telephony users soared to nearly 500,000 last year, according to new research.

The number of cable Voice over IP subscribers exploded in 2004, giving cable companies much to smile about as they compete against upstart VoIP vendors. According to a report released by Infonetics Research today, usage jumped from 50,000 in 2003 to nearly 500,000 in 2004, or 900 percent.

More than 90 percent of cable VoIP users last year were Cablevision or Time Warner customers. But that will change as a number of providers, including Comcast , roll out VoIP in 2005.

“In 2004 Comcast was in trials in three markets,” Kevin Mitchell, an Infonetics analyst, told “It is going to ramp up to 20 markets.”

Last month, the nation’s largest cable operator said it would market VoIP to 15 million homes by year’s end, and the remainder of its homes by the end of 2007. Comcast’s goal is to have 8 million phone subscribers by 2010.

Others, including Cox and Adelphia in the United States, and Shaw and Rogers in Canada, are also expanding VoIP service to more markets this year.

With a half-million subscribers, about 2 percent of North American cable broadband users were subscribing to VoIP. Mitchell expects that figure to climb to 15 percent in 2007.

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Infonetics’ report only counts VoIP service from the cable companies. Other offerings, from companies like Net2Phone and Vonage, that work with either cable modems or DSL, were not included in the research.

In the long run, Mitchell believes cable companies will have an edge over upstart VoIP players because they control the speeds and quality of the broadband service.

The expansion of cable VoIP services also boosted network equipment spending. Cable providers nearly doubled their investment in VoIP gear last year, spending $123 million on media gateways, media servers, softswitches, voice application servers and other gear, Infonetics said.

“You’re going to see double-digit growth [through 2007],” Mitchell said. That’s good news for vendors like Cisco , Nortel , Lucent and others.

Infonetics estimates on cable VoIP equipment come a day after the Telecommunications Industry Association (TIA) published its own encouraging forecast for the industry as a whole.

The TIA said the 7.9 percent growth the network equipment industry experienced in 2004 ($785 billion) marked the first year of spending increases since 2000.

One of the reasons spending is up is because of the move by enterprises and carriers to IP networks to carry VoIP traffic, as well as allow companies to outsource call centers to remote regions and run unified messaging systems, the TIA said.

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