A recent Red Herring article suggests that Vonage and rival start-up VoIP companies are facing stiff competition from cable companies like Comcast and Time Warner Cable who are poised to dominate the market with digital phone service. While VoIP companies continue to struggle with consumer perception and patent disputes involving Vonage, cable companies control a combined 71 percent of the U.S. VoIP market, nearly 10 million customers.

According to the article, Time Warner Cable digital phone has 21.1 percent of the U.S. VoIP market, while Comcast Digital Voice® owns 19.9 percent, putting them well within the range of Vonage. Cable companies now provide service to 80 million U.S. homes, up from 33 million just two years ago, according to Bruce Leichtman of Leichtman Research. He estimates that Comcast will reach 10 million more homes in 2007, while Time Warner Cable will add 6.4 million customers.