Ma Bell, take note: The cable industry is gunning for your phone business.

Long an insignificant source of revenue for cable operators, cable telephones — phones hooked up to cable lines — are becoming big business for cable companies.

Comcast Communications and Cox Communications have quietly climbed to the top rungs of telephone providers, helping the cable industry capture about $900 million in telephone revenue in the United States in 2003, or about 2.5 million residential customers, according to MRG, a digital media research firm. It projects cable operators could capture $8.1 billion in U.S. revenue, or 22 million subscribers, by 2007 — or roughly 10 percent of the U.S. residential telephone market.

“If the cable guys act fast enough, they have an opportunity to eat the telcos’ lunch,” said Gary Schultz, MRG president and principal analyst.

Monday afternoon, hundreds of cable executives crammed into a conference room to hear Comcast, Cox and Time Warner executives talk about their plans for telephone domination.

More here.