Time Warner to Add Phone Service to Cable Lines

Time Warner Cable has announced a deal with Sprint and MCI to add telephony services to its digital cable television systems. Using voice over Internet technology, the cable operator said it intends to offer telephone service by the end of next year in all or most of the 27 major markets it serves.

Time Warner joins Comcast, Cox Communications and Cablevision, all of whom have begun deploying Internet phone services in their markets. Major expansion of telephony services is expected from all the operators in 2004 as they compete with traditional telephone companies.

Subscribers, who can keep their existing phone number with the new service, will plug standard telephone instruments into modems connected to the cable system in their homes. Sprint and MCI will then carry the telephone calls from the cable network across the larger telephone network. The phone providers will also deliver incoming calls to the cable subscribers.

Time Warner Cable, the second-largest cable TV company in the nation, with 11 million subscribers, tested the phone service last May in Portland, Maine, signing up 8,000 subscribers, who pay $39.95 to $49.95 for unlimited local and domestic long-distance calling. The results were overwhelmingly positive.

However, earlier efforts by cable companies to deploy telephone service over cable lines have had mixed results. AT&T Cable Systems pursued cable telephony in the late 1990’s, but had limited success. AT&T’s cable operations was acquired last year by Comcast, now the nation’s largest cable company.

Comcast has taken a cautious approach to the new technology, noting that despite its promise, Internet telephony is in its early stages. Cablevision, the sixth-largest cable company, began offering Internet telephone services in late September, and by mid-November, it was available to more than four million homes in Connecticut, New York and parts of New Jersey.

Cox Digital Telephone, a division of Cox Communications, plans to begin its first test of Internet-based phone service in Roanoke, Va., in the next few weeks. Cox already sells phone services to around a million customers using an older circuit switch technology.

For more information, visit: www.timewarner.com

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