Skip to main content



phone push is starting to trample on some of



home turf.

Cablevision has been adding 3,700 telephone customers a week and expects that rate to increase now that customers can keep their phone numbers when they switch to its voice-over-the-Net calling plan.

It is not clear how much of a hindrance changing phone numbers was to Cablevision's efforts to win new subscribers. Still, removing the hurdle can't be good news for Verizon, the largest local phone company in the territory that Cablevision serves.

"Now, with number porting, we will open it up a bit," Cablevision COO Tom Rutledge told analysts on an earnings call Thursday. "We anticipate greater sales than we have had to date." Rutledge didn't offer a specific forecast.

Since the turn of the century, Verizon and its Bell peers






have been losing traditional phone customers at an alarming rate to cell phone services. Now, as cable companies add phone service to their lineup of TV and Internet offerings, the long-awaited clash of the telephone titans has begun.

The cable threat is doubly disturbing. Not only does it promise to speed up the 4% annual shrinkage rate for the Bells' local phone line counts, it threatens to siphon off higher-spending customers first.

So far, Verizon's strong wireless business has helped to offset the erosion.

Verizon Wireless

, a joint venture of Verizon and



, and


, jointly owned by SBC and BellSouth, have been successful growth stories for these companies.

But instead of abandoning the old-line phone systems, both Verizon and SBC have opted to spend billions on a massive network overhaul by extending fiber-optic cable further into various communities. The higher-capacity connections will allow Verizon and SBC to offer super-fast Net access, Internet calling and, later this year, hundreds of channels of video programming.

In fact, Verizon, a holding in David Peltier's Dividend Stock Advisor

, announced plans Thursday to expand its fiber optic network, called FiOS, to several additional communities including 10 on New York's suburban Long Island, where Cablevision is based.

Cablevision executives downplayed Verizon's fiber effort on the earnings call. "The impact has been almost completely insignificant," said Rutledge. In one community where Verizon has been marketing the FiOS service, Rutledge said he found 48 homes that had signed on. And of those only 20 were Cablevision cable modem customers.

"It makes you wonder why that kind of capital is being spent," says Rutledge.

A Verizon representative questioned the accuracy of Cablevision's research.

"At best, this is speculation and wishful thinking," says the Verizon rep. "These are comments from a company that simply doesn't want the competition."

Verizon says it has been selling the service for two months on Long Island and that demand is strong.

One investor who is long Cablevision says the cable threat will be a negative for Verizon on Wall Street for a while to come. The hedge fund manager says he has no Verizon position but was considering buying Vodafone to play the Verizon Wireless strength.

The investor likes Verizon's fiber plan, but says the implementation will be long and difficult. "I'll come back and start buying Verizon in a couple years when they have the killer bundle," he says.