Cablevision Launches Residential VoIP in New York

Cablevision, which provides cable TV service to some 3 million households in the New York metropolitan area, launched a residential VoIP service offering unlimited local, regional and long distance calls throughout the U.S. and Canada for $34.95 per month. The "Optimum Voice" service includes five premium calling features: call waiting, caller ID, call return, three-way calling and call forwarding. Optimum Voice works over a cable modem with household electricity as its power source (no back-up). International calling must be made via prepaid phone cards as there is no other billing other than the monthly flat rate fee. E911 service is provided.


Cablevision said its goal is to create an IP voice application that when used with its cable modem service would be superior and differentiated from Verizon's services. Free professional installation is provided. The bundled price for Cablevision's "Optimum Voice" + cable modem service (3Mbps/1Mbps) is $79.90, compared to $89.90 Verizon's Freedom plan (unlimited local/LD calling) + DSL (1.5Mbps/128Kbps).


Cablevision currently serves about 921,000 cable modem customers. There is a churn rate of about 2% per month. Penetration of Cablevision's cable modem service is highest on Long Island at greater than 30%. Company-wide the cable modem penetration rate is 22.8%, compared to about 14% for Comcast.


Cablevision's "Optimum Voice" is being delivered using a Siemens' softswitch. Capacity for 100,000 lines has been installed and the company said it is ready to scale as demand requires. Cablevision is also preparing to add a number of additional bells-and-whistles to the service, including a customer Web portal with call detail records, enhanced voicemail, advanced operator assistance, optional number portability, credit card billing, voice-over-instant messaging, and conference calling. Cablevision estimates a total incremental capital cost of $150 per subscriber, covering $50 for the modem (incremental, $50 per port on the softswitch, and $50 for a truck roll. The company predicts a margin of about 40-45% for the voice service, which would mean a payback period of about 10 months for each new customer.


Among the early trial users of its VoIP residential service, Cablevision found that 33% were buying it as additional line, 37% were buying it as a replacement for all existing phone service, and 29% were buying it as a second line replacement.


In September, Cablevision began to offer high-definition programming as a VOD service. Cablevision's HD library includes popular theatrical films as well as unique titles originally seen in IMAX theaters. Cablevision is offering its digital customers with high-definition television sets HD-capable converter boxes at no additional cost over the standard box rental fee. More than 20% of all Cablevision cable customers today are digital customers, up from 1.4% penetration a year ago. More than 90% of homes in its territory are eligible for digital. The company expects to have 875,000 to 900,000 digital customers by year's end. Cablevision is providing an average of 2 digital boxes per home.


Recently, Cablevision also decided to remove certain sports programming, notably the YES Network (Yankees), from their Expanded Basic tier and to make it an a-la-carte offering. Some 647,000 had the programming removed.
http://www.cablevision.com