Dialing Over Cable Lines

Frustrated with poor service from his local phone provider, Ken Drachnik decided to go elsewhere: to a cable company.

Drachnik is among more than 100,000 consumers conversing with friends and family over a cable line, the same one that provides his TV shows, rather than the traditional copper phone wire.

Â"There has been no change in sound quality,Â" said Drachnik, who lives in Fremont, Calif., and works for a company that sells semiconductor equipment. He's even saving some money on his monthly bill.

In growing numbers, cable companies are offering phone service, spurring new competition in a market dominated by the Bells. As many as 7 million customers could get their phone service from cable companies within five years, up from about 130 thousand who are expected to have it at year's end, according to telecommunications consultants.

To offer phone service, cable companies must upgrade their cable lines and add certain devices found in a traditional phone network. These improvements benefit all cable customers, even those who aren't phone subscribers, says Mike Luftman of Time Warner Cable.

The tricky part is getting people to trust their phone lines to a cable company, particularly if they have had poor cable television service in the past.

While people may be able to handle their cable TV going off for a few hours or even days, they don't want that kind of uncertainty with their phone lines, says telecommunications consultant Carol Mann.

Â"People want to pick up the phone and have a dial tone, period,Â" Mann said.

Cable companies say they are working to overcome the public perception about lackluster reliability and service in the industry.

Â"One of the big barriers to cable telephony was the poor reputation of cable television service as a whole,Â" said Ellen East of Cox Communications. She said her own company's strong service record has enabled it to bring in 80,000 local phone customers, half of whom buy more than one phone line, she said.

And while the systems have had some outages, East says they are no worse than those of traditional telephone companies. Â"I think the difference is we're under a lot more scrutiny because we're the new guy,Â" she said.

Some competitors say cable telephone service is technically feasible, but it could pose challenges as more customers are added to the network.

Â"There is a serious question of deciding how many customers you want to have on every neighborhood node, said BellSouth spokesman Bill McCloskey. Too many people on the same system means they could all be at risk of losing service if te system becomes overloaded, he said.

But cable companies are plunging money into research and testing to bolster their networks. The investment could pay off, with cable companies usurping 15 percent of the market now held by the regional Bell companies in the next decade, according to Howard Anderson, managing director of the Yankee Group research irm in Boston.

So far, cable companies have targeted just a few markets. Cable operator MediaOne offers its local telephone service in metropolitan areas, like Atlanta and Boston, with about 40,000 phone customers.

AT&T, which is poised to offer local phone service over its newly acquired cable lines to millions of customers in a few years, has the benefit of a name customers already associate with telecommunication. Using telemarketing alone, the company has signed up 15 percent to 30 percent of customers called in its test markets, said AT&T spokesman Mark Siegel.

  • CBSNews.com staff CBSNews.com staff

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