Time Warner links with MCI, Sprint for voice over Internet calls

Tuesday, December 9th 2003, 12:00 am
By: News On 6

KANSAS CITY, Mo. (AP) _ A cable company will be offering Internet-based phone service to millions of homes across the country, a major assault on the local phone industry.

Time Warner Cable announced a deal Monday with Sprint Corp. and MCI Inc. to offer phone service using up-and-coming voice-over-Internet technology.

``We've moved out of the talking stages and into the reality,'' said Jeff Kagan, an independent industry analyst based in Atlanta. ``2004 is going to be the year cable and phone companies get into each other's business and start competing.''

While other cable companies sell phone service in selected markets, this is the first time ``voice-over-Internet Protocol'' technology will be offered by a cable company with a presence in many states. In September, New York-based cable TV operator Cablevision Systems said it would offer Internet phoning by year's end to all 3 million of its customers _ in New York, New Jersey and Connecticut.

Time Warner began offering the service in Portland, Ore., in May and in Raleigh, N.C., late last month. The company, which has 11 million customers, plans to gradually add other cities next year, eventually serving 31 markets in 27 states.

The technology will let Time Warner customers make calls with their regular phones, but the calls will travel as packets of data over the cable line that feeds into the house, rather than going through the phone wire.

At a switching station, the calls will be transferred to either the MCI or Sprint phone networks and into the traditional format that reaches most phone users.

Though the quality of voice-over-IP calls often aren't quite up to the standard of the traditional telephone networks, the technology is improving.

Meanwhile, telephone providers are increasingly going after the cable companies by cutting prices on digital subscriber line (DSL) high-speed Internet service and by bundling satellite TV service with local phone bills.

Overland Park, Kan.-based Sprint and Ashburn, Va.-based MCI, formerly known as WorldCom, said they were in talks to facilitate phone service for other cable providers but provided no other details.

``It's a whole new revenue stream for Sprint and MCI and it's a huge opportunity because Time Warner is just one of many cable companies they can work with,'' Kagan said. ``This is just what the long-distance industry needed.''

The companies provided no details about how much the deal was worth.

Time Warner's cable and high-speed data customers in Portland and Raleigh pay $39.95 for unlimited local, in-state and domestic long distance calling. Customers who don't receive other Time Warner services pay $49.95 a month for phone service.

Time Warner Cable spokesman Keith Cocozza said prices will remain similar when the program is expanded.