June 10, 2003 9:02 AM PDT

Vonage inks deal with cable company

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Internet telephony, service provider Vonage DigitalVoice has inked its first resale pact with a cable provider.

Armstrong Cable plans to resell Vonage's unlimited local and long-distance calling plans, which cost $40 a month, Vonage announced Monday. Armstrong sells broadband to customers in Pennsylvania, Ohio, Maryland, West Virginia and Kentucky.

The agreement marks the first time that a cable provider using fiber-optic networks has begun reselling Vonage's calling plans. Up until Monday, only telephone companies and others offering broadband over digital subscriber lines were reselling Vonage's service.

Along with Net2Phone, Vonage is one of the better-known companies that are trying to sell voice over Internet Protocol (VoIP), which uses the Web to ferry telephone calls. The technology is cheaper than traditional calling, because the calls avoid the toll roads of long distance. But Internet telephony has had several drawbacks, such as not being able to dial 911 until just recently.

Worldwide, there were about 2.93 million cable telephony subscribers in 2001, more than the 2.5 million that most analysts were predicting, according to a study last year by Allied Business Intelligence, an Oyster Bay, N.Y.-based research firm. That number doubled by the end of 2002, reaching 5.2 million subscribers, the study said.


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