On Hold: Comcast Delays VoIP Launch

BY ANTHONY CRUPI Wait ’til next year. As battle cries go, it’s a bit tepid, carrying with it an association with the world’s most lovable losers, the Brooklyn Dodgers. Still, the cable industry seems to have adopted it as an unofficial slogan whenever the topic of advanced services pops up. Video-on-demand? Wait ’til next year. High-definition television? Wait ’til next year. Carrier class, IP-based telephone service? Better make that two. Comcast cable unit president Steve Burke took the podium at last week’s Bear Stearns media conference and declared that the MSO’s telephony business — including its planned Philadelphia VoIP launch — would effectively be put on hold. Much of the delay stems from the pressing need to retool systems inherited from AT&T Broadband, Burke said. “We need to get our efficiency down so [we] can feel comfortable offering telephony service,” Burke said. “During the next 12 to 18 months we’re going to try to eliminate errors and work on profitability.” After Burke reiterated the good news from Comcast’s late-February earnings report — shares up, churn down — talk shifted to the proposed telephony delay. The Philadelphia launch, which was to be the industry’s first wide-scale VoIP offering, will continue as planned, although it is doubtful that service will be ready by the initial target date of summer 2003. “We’ll be putting a tremendous amount of energy and effort into it,” Burke confirmed. “But it’s too early in the process to know how long it will take to work out all the bugs.” (A Comcast spokesperson later echoed that sentiment, saying, “Philadelphia is still on, but we’re not really hyping the trial.”) The focus on fixing the mess left behind by AT&T — Burke estimated that 60% of the 1.3 million subscribers of the legacy CBR phone service experienced disruptions and errors — could delay deployment of VoIP services by up to two years. In the meantime, Comcast will continue to maintain the CBR customers, but won’t go hunting around for more. Stan Brovont, VP of marketing for Arris, which has supplied its cable modem termination systems and modems for the Philly trials, wasn’t put off by Burke’s announcement. “The 18-month time line wasn’t startling at all,” Brovont said. “Comcast has to assemble all the networks and pull all suppliers together to develop a robust, secure network. It’s a large-scale endeavor.” Another VoIP vendor insists that the revised time line won’t have any effect on its place in the Comcast picture. Syndeo director of marketing Maryling Yu said that it’s business as usual in the City of Brotherly Love. “We’re under constant pressure to make this work,” Yu said. “That’s one thing that hasn’t changed.” Although Burke stressed that the decision to stall VoIP was predicated on Comcast’s desire to minister to AT&T’s video services, readiness remains a compelling factor. Cedar Point Communications EVP of strategy and market development David Spear made it clear that there is still work to be done. “You need to make sure the implementation is simple,” Spear said. “The bottom line is, it’s not simple.” VoIP may be so difficult to manage that MSOs may want to offer scaled down, secondary line services, said Pulver analyst Daniel Berninger. “Voice could be something the cable guys can be excited about in terms of helping to drive broadband,” Berninger said. As for the likelihood of MSOs ever offering primary-line VoIP service on a grand scale, Berninger isn’t buying. “The business of deploying the infrastructure for toll-quality service will never pay off,” he said. Certainly that thought has crossed Burke’s mind. “At the end of the day, we like businesses that make money,” he said. Wait ’til next year.