Cablevision gets cocky

For a company still relatively new in the voice market, Cablevision is already talking big. The company’s recent rollout of Optimum Voice service in the New York City metro market was just the first shot in what will be an increasingly competitive offering, Tom Rutledge, president of Cablevision’s cable and communications unit, said at the UBS Warburg Media Week conference. Initially, the company is competing on price, bundling its voice-over-IP service with its high-speed access for a combined price of $79.90 per month. Of that, $34.95 is attributable to the voice service.

“When you compare our billed price vs. what is billed by our competitors, it’s even more competitive,” Rutledge said, noting that a comparable package from Verizon would run $10 more per month and have slower access speeds.

The company plans to rollout several enhancements early next including enhanced voice mail, whole house wiring and potential voice over instant messaging. The company, which has a Siemens softswitch with 100,000 lines of capacity in place, also is looking at video telephony options.

“In my mind, cable is going to win this competition and there is no competition,” said James Dolan, president and CEO of Cablevision. “There is no platform that compares to this. “We’re not going to have to do anything more to these wires.”

Indeed, the rollout of VoIP was done significantly later than its high-speed access service in part because it can cover the entire metro area.

“It’s not an experiment,” Dolan said. “It’s available to all of our customers.”

In addition to being competitive, the voice service is expected to be highly profitable. Based on internal numbers, the incremental cost of providing voice is about $150 per subscriber. However, those costs include a $50 truck roll for installation, and $50 for the end user equipment, which is slightly inflated. About 85% of Cablevision’s data customers do self-installation, and the company is planning on moving to that model for voice soon.

“If we come anywhere near that in our voice business, our cost per installation will be significantly below $50,” said Rutledge. “And the incremental cost of a voice-enabled DOCSIS 1.1 modem, which differentiates us from a company like Vonage, is somewhere below $50, probably closer to $30.”

Even at the higher costs, the company expects to operate its voice business at a 40% margin and have a payback period of 10 months.