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Comcast Challenges Telcos With Plans for Internet Phone Service

Comcast said on Wednesday that it plans to offer Internet-based telephone service to about 40 million households by 2006, heating up the competition between cable and telephone companies that are

Comcast said on Wednesday that it plans to offer Internet-based telephone service to about 40 million households by 2006, heating up the competition between cable and telephone companies that are moving into each other's markets in search of new revenue.

The Philadelphia-based giant is not the first cable company to enter the market for voice over Internet protocol or VoIP, but its size is certain to speed-up the pace in which competitors roll-out services to grab market share.

Comcast, the nation's largest cable operator, expects to offer phone service to half of the households its cable operation reaches by the end of 2005, reaching the remaining half a year later.

Comcast's plans continue a trend that has seen cable and telephone companies moving into each other's markets. Cablevision Systems and Time Warner's cable division have started offering VoIP service, while phone company SBC Communications is offering satellite-TV service under an agreement with EchoStar Communications. Verizon Communications has announced plans to roll out a high-speed fiber network that is expected to eventually carry television programming.

Among the driving forces behind the trend is the potential expansion of the companies' businesses. Telephone companies, for example, have little growth potential in traditional long distance and regional phone services. For Comcast, the move is particularly important, given it's decision in April to drop its take-over bid for Walt Disney, which would have brought cable networks, film libraries and other programming.

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