Internet telecom blossomed, but payoff was elusive in '06

Bruce Meyerson (12.28.06)
http://www.azcentral.com/arizonarepublic/business/articles/1228biz-telecom1228.html

While 2006 showed less than stellar returns for IP telephone services like Skype. With Skype and similar innovators cable companies are prepared to strike back at in 2007.

No doubt the main event for 2007 will be the impending smackdown between the traditional phone and cable TV industries. The regional Bell companies, after losing millions of customers to rival phone services from cable providers in 2006, are just starting to ramp up their risky push into TV.

Verizon Communications Inc. expects its FiOS TV service will be available to 1.8 million homes by January. AT&T Inc. finally appears to be pushing past technological holdups with U-verse, maintaining the IP-based service will be offered in parts of 15 markets by the close of December.

The competitive response couldn't come a minute too soon, as cable companies have had a field day in the phone business thus far. Just over 6 million homes will have switched to cable phone service by the end of 2006, a gain of 2.5 million for the year, the industry research company TeleGeography estimates.

TeleGeography estimates that Skype users are on track to make over 27 billion minutes of computer-to-computer calls this year, with about half of them used for international long distance (all free).

While that sounds like a lot, it still represents just 4.4 percent of total international traffic in 2006, up from 2.9 percent in 2005.