THE PHONE WARS
Cable firms
strike backOceanic plans to offer digital telephone service in Hawaii,
pitting it against Verizon
The regional Bell phone companies, long dismissed as laggards stuck with a declining fixed-line businesses, are coming back into favor again.
The companies have gained the upper hand in their battle with the country's long-distance carriers, and are now stealing momentum from the cable industry in the fight for broadband customers.
What it costs
Broadband connections are getting faster, but also more expensive:>> A new package from Time Warner, at 6 megabits a second, will cost $64.95 or more.
>> Comcast's 4 megabit Internet connections will sell for $52.95 a month.
>> Verizon sells 1.5 megabit lines that, while slower, cost only $29.95 a month.
But the cable companies are fighting back, and both are locked in battle over broadband Internet access and, more recently on the Bells' home turf -- telephone service.
In Hawaii, Oceanic Time Warner Cable will introduce digital phone service in November, pending approval from the state Public Utilities Commission.
The technology, known as VoIP, or Voice-over-Internet-Protocol service, allows people with high-speed Internet connections to place phone calls over the Web using most existing telephone handsets through a special modem.
The move pits Oceanic in deeper competition with Verizon Hawaii, since the two already compete for subscribers to high-speed Internet access.
Oceanic's high-speed Internet customers who sign up for the new service would receive a replacement modem to handle both telephone and computer traffic, meaning a customer could receive cable-television programming, Internet connectivity and phone service from a single company.
"We're really designing it to be a transparent service," said Norman Santos, Oceanic vice president of operations. Oceanic will be assigning phone numbers, including the 808 area code and enhanced 911 service, which pinpoints the location of someone calling in an emergency.
Citing a new number portability law, Santos said Verizon local service customers who sign up for Oceanic's digital phone service can keep their phone number. "The difference is, we'll also be offering our own prefix to customers," he said.
Rates have not yet been decided.
The new service being offered by Verizon Hawaii, as part of Verizon nationwide, is called VoiceWing. It offers unlimited local and long-distance phone calls within the United States and certain territories.
The Hawaii area code is not available from VoiceWing but could be offered as the service expands, according to Ann Nishida, Verizon Hawaii spokeswoman. VoiceWing offers area codes from 139 markets in 33 states.
"Maybe somebody who's recently moved here and has friends and family in the Los Angeles area, and would like to allow those folks to call him or her, those incoming calls would be like a local call. Then your local and long-distance would be a flat rate," Nishida said.
However, local calls to that number would be subject to long-distance rates.
American Savings Bank switched over to Internet phone service months ago as part of parent Hawaiian Electric Co.'s tests of providing phone and Internet service over power lines.
"Our plans at HECO are to go VoIP within the next couple of quarters," said Karl Stahlkopf, chief technology officer. "If you stop to think about it from a corporate standpoint, instead of having to maintain switching systems, relay systems and microwave systems like a normal telephone company like Verizon does now, what you're really doing is you're taking that voice signal and sending it through the existing Internet, bypassing the cost of keeping up (all that equipment)."
While the cable industry still has the lead in the market over the phone companies, the Bells have battled back by slashing prices, raising their connection speeds and expanding their coverage. They have also started offering more diverse bundles of products to compete with the video, voice and data services that cable companies sell, including teaming up with satellite providers.
On Monday, Time Warner Cable, the country's second-biggest cable operator, said it would introduce a broadband service that is 6 megabits a second, or twice as fast as its current offering. Comcast, the industry leader, also plans to start selling 4 megabit Internet connections nationwide.
Speed comes at a cost, though. A new package from Time Warner will cost $64.95 or more, depending on whether other services are also purchased from the company. Comcast's faster connections will sell for $52.95 a month, $10 more a month than the 3 megabit lines it now offers.
Verizon, by contrast, sells 1.5 megabit lines that, while slower, cost only $29.95 a month. Verizon is planning on introducing 3 megabit lines in the coming months.
The New York Times and Star-Bulletin reporter Erika Engle contributed to this report.
