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Comcast jumps on VoIP train

The top U.S. cable company says it will rely more heavily on the upstart technology for placing phone calls over the Net. But some analysts said it may be too late to do Comcast much good.

In a major turnaround, top U.S. cable company Comcast said Wednesday that it will rely more on VoIP, the upstart technology for placing phone calls over the Net.

The move could increase the cable industry's momentum toward unseating traditional phone companies, but some analysts said it may be too late to do Comcast much good.

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Comcast executives said during an annual meeting that the company now plans to outfit half its network with voice over Internet Protocol by year's end and have the entire network outfitted by the end of 2005. The executives said that the company will use the technology to sell phone services this year in Philadelphia, Indianapolis and Springfield, Mass. Comcast will begin selling phone service nationwide in 2006 to about 40 million households, the executives said.

With Comcast embracing the technology--a move that follows last month's VoIP endorsement from rival Cox Communications--some analysts said the cable industry is in its best position yet to challenge the Bell operating companies, which have dominated the local phone market for a century.

"It's their game to lose," Frost & Sullivan analyst Jon Arnold said of the cable companies. But Arnold suggested that Comcast's VoIP rollout schedule could indeed mean the company is fumbling at the goal line.

"2006 is really far away, so you can read that as a cynically cautious piece of news. The game will be over by then" because of ongoing aggressive moves into VoIP by

Still, the endorsements from Comcast and Cox will help to remove any remaining doubts cable companies might have about diving into VoIP. "We now know there's market acceptance from carriers," Arnold said.

VoIP, a less-expensive alternative than the traditional telephone circuit switches cable companies had been using, makes it possible for those companies to introduce cheaper phone services at a rapid pace, analysts said.

While other elite U.S. cable companies, including Time Warner Cable and Cablevision, embraced the technology and began selling phone services for $35 to $40 a month, both Comcast and Cox had initially hesitated because they felt VoIP hadn't yet proven to be a wise investment because of glitches and expense.

But last month Cox said it was shifting more emphasis to VoIP after finding that deploying the technology costs 40 percent less than dealing with the heavily regulated and taxed traditional phone network.

Comcast representatives didn't return calls Wednesday seeking additional comment.

AT&T and Verizon Communications were among the major phone companies that didn't have an immediate comment on the cable companies' embrace of VoIP.

Comcast also said Wednesday that C. Michael Armstrong has stepped down as chairman and will be replaced by Chief Executive Brian Roberts. Armstrong had been chairman and CEO of AT&T and joined Comcast after its acquisition of AT&T Broadband in 2002.

Reuters contributed to this report.