updated 1/10/2005 8:15:30 AM ET 2005-01-10T13:15:30

Comcast Corp., the nation's largest cable television company, plans to challenge local phone companies by offering Internet-based phone service in 20 markets this year, company officials said.

The Philadelphia-based company plans to offer its Digital Voice technology to all of its markets by 2006. Company officials said they expect to be serving about 20 percent of phone customers in those markets within five years.

"Our initial focus is on getting it right and successfully introducing the service," Comcast chief executive officer Brian Roberts said. "We've already worked out the kinks, and are going to take a very patient approach."

The service costs $39.95 a month for existing Comcast broadband customers for unlimited local and domestic calls. It also includes caller ID, voice mail and call waiting.

Rian J. Wren, the general manager of Comcast Voice Services, said he expects Digital Voice to make a profit within two years.

Some competitors are offering similar services at cheaper prices. For example, Edison, N.J.-based Vonage Holdings Co. is offering unlimited local and domestic long-distance calls for $24.99 a month, or $14.95 for 500 minutes of calls per month.

And traditional phone company Verizon Communications Inc. offered a service called Voice Wing in the Philadelphia area for $34.95 a month, with a discount of $10 a month for one year to customers who currently use its DSL service for high-speed Internet connections via phone lines.

Wren acknowledged that his company will have significant competition, but noted that Comcast is offering some features that its competitors aren't. For example, Verizon and Vonage don't promise that the phone service will work during a power failure, but Comcast provides a 16-hour battery backup.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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