Sanford Nowlin
Express-News Business Writer

Let the phone wars begin.

Time Warner Cable today begins selling phone service in the San Antonio area, becoming the latest — and, some analysts argue, the most formidable — competitor for hometown telecommunications giant SBC Communications Inc.

The service, called Digital Phone, uses a technology called Voice-over-Internet Protocol — or VoIP — that allows Time Warner to provide local and long-distance service over the same fiber optic network it uses to deliver cable television.

The company already has signed up several hundred test customers, mostly employees and subscribers who called early to request the service. It begins a formal marketing push next week.

«We haven’t officially launched yet, and our phones are already ringing about it,» said Kevin Kidd, Time Warner’s San Antonio president. «The pent-up demand is just incredible. I don’t know how else to describe it.»

Digital Phone includes local calling, unlimited long distance and features such as caller ID and call waiting for a flat rate of $39.95 a month to customers who also have Time Warner cable television and Internet service.

Those who receive either television or Internet will pay $44.95 a month, and those who subscribe only to phone service will pay $49.95 a month.

Early subscribers will get a better price, however. Time Warner is launching the service with an introductory offer of $19.95 a month for the first three months.

For all three packages, customers who want voice-mail service must pay an additional $3.95 a month.

Customers don’t need to buy a new phone or change numbers to use Time Warner’s service. The company supplies them with a free cable modem that allows their phones to connect to its network.

Although it uses VoIP technology, Digital Phone differs from services such as Vonage that offer low-cost, but sometimes poor-quality, calling over the public Internet. Digital Phone uses Time Warner’s fiber optic lines and partner Sprint Corp.’s phone network to route all calls.

Regional Bell company SBC sells a comparable unlimited local and long-distance package for $48.95 a month and discounts it to customers who «bundle» it with other services. Unlike Digital Phone, the SBC package includes voice mail at no extra cost.

«No one is more competitive than we are,» SBC spokesman Andy Shaw said. «We’re being seen by analysts, people in the industry and by consumers as one of the most competitive companies out there.»

SBC already has lost millions of lines to carriers such as AT&T that offer local service by leasing space on the Bell networks and to upstart fiber-optic firms like Grande Communications Inc., a Texas company that offers phone and cable here.

But cable companies such as Time Warner may shape up to be the most serious challenge for SBC and the other Bells, analysts said.

Time Warner’s network has access to more than 660,000 San Antonio-area homes, compared to Grande, which serves only a few pockets of the city. And unlike AT&T, the company doesn’t have to pay to use pieces of SBC’s network.

As a result, cable firms including Time Warner stand to take as much as a quarter of SBC’s local service market over the next three years, said Pat Comack, analyst for Guzman & Co. in Miami.

«The cable companies are getting into voice, and they’re going to take their share,» Comack said. «They’re going to hurt the phone companies on the voice side. There’s no doubt about it.»

Time Warner launched its first phone push in Portland, Maine, about 10 months ago. It now serves 10 percent of households in that city.

But the Bells are fighting back.

To provide a service bundle more competitive with those offered by cable companies, SBC last month said it will spend up to $6 billion to upgrade its network so it can offer digital television and other new services.

«The cable companies definitely have an attractive offer,» said Kate Griffin, analyst for Yankee Group in Boston. «It’s one of the reasons you’re seeing the (regional Bells) going ahead into video.»

Cable companies are expected to provide phone service to about 10 percent of U.S. households by 2008, she added.

Time Warner officials wouldn’t say how many San Antonio subscribers they expect to pick up in coming months, but they said there appears to be a simmering interest from local consumers looking for more phone-service options.

The company’s launch today will allow it to serve customers across San Antonio and Seguin. Markets such as New Braunfels and Bulverde will go online later this summer.

As a Time Warner technician worked through the two-hour process of wiring her new Northwest San Antonio home for Time Warner phone service, Debbie Buenrostro said she was eager to give Digital Phone a try.

A longtime cable subscriber, Buenrostro turned off her SBC phone service a year ago, frustrated with the fees on her bill. She’s been using a mobile phone since then but wanted to get a landline again.

«I’m always willing to try a new product or service,» she said. «And this is a company that’s always given good service. It was worth a try.»