Cable operators, which have pummeled telephone companies in recent years by luring away more than eight million residential phone customers, are now going after their rivals' business subscribers as they seek to shore up their growth prospects.

Cable's move into business services cuts to the heart of one of the biggest questions Wall Street has for the cable industry: What is its new growth engine after residential voice service?

Some cable-industry executives predict there are billions of dollars of new revenue to be made from serving business clients. Indeed, it was a factor that may have influenced a special committee of Cablevision Systems Corp.'s board which Tuesday night rejected an $8.9 billion privatization plan advocated by the company's controlling Dolan family.

Backers of the buyout argued their price was fair partly because growth prospects for cable are dimming, especially for companies such as Cablevision that have completed their rollout of residential phone service. But some investors argued the Dolans were trying to grab the Bethpage, N.Y., company at a bargain price. They predicted the company will sustain high growth rates by selling business services, among other things, and Tuesday night the board's special committee apparently agreed.

Operators such as Cablevision and Time Warner Inc., using networks originally designed for transmitting television signals, are making major pushes to offer packages of phone, TV and high-speed Internet service to small and midsize businesses, often undercutting local phone companies' prices. Comcast Corp., the country's largest cable operator by number of subscribers, says offering services geared to small and midsize businesses will be its top new priority of 2007 and 2008.

Telecom companies sell all business customers about $115 billion of services annually, but most cable operators have their eye on businesses with one to 100 employees, currently a $25 billion market, cable executives say. Cable operators are hopeful they can carve out as much as a 20 percent market share partly by convincing business owners who take broadband service at home that it will work just as well, and for less money, at their offices.

They claim they can do this with discount pricing and better service, although phone company executives have started to improve their own offerings to counter the threat.

For many small-business owners, the cable offer represents the first time they have had an alternative to the local phone company, analysts say. Various types of new carriers sprouted after telecom laws were overhauled in the late 1990s, but most of these went after larger businesses and many of them folded, they add.

"If you're a pizza parlor or a small law firm, you're not going to get special service from the phone company," Comcast Chief Executive Brian Roberts said in an interview Tuesday. "But they're going to be our most important business customers."

Telephone companies deny they don't serve small businesses well. They have responded to the competition by improving service, offerings and -- in some cases -- prices for smaller customers. AT&T Inc. recently began offering small businesses that subscribed to multiple services a discount of as much as 20 percent on wireless. The San Antonio company also has started offering small firms features that had been reserved for larger business customers, such as a remote backup service for computers.

Cable and phone companies once operated in distinctly different markets, and for decades didn't compete. The current war began in the late 1990s as they wrestled over the fledgling high-speed Internet business. More recently, they invaded each other's home turf, with cable companies rolling out voice services and phone companies entering the TV business.

In going after the business market, cable companies are clearly pressing their early lead in the fight, which is now over who can offer the most attractive packages of telecom services. In the residential market, cable companies are adding hundreds of thousands of phone subscribers each quarter while companies such as AT&T and New York's Verizon Communications Inc. are in the early stages of launching TV service.

Tom Rutledge, Cablevision's chief operating officer, has been very bullish on business services for months. Last summer, he pointed out that there are 600,000 businesses in Cablevision's service area that spend roughly $6 billion on telecom services. That's $2 billion more than Cablevision's entire cable business.

Cable operators also are positioned to pick up market share because some of them, including Cablevision, have started to undercut prices charged by incumbent phone companies. For example, Rolling Thunder Cycles, a motorcycle parts and repair shop in Hempstead, N.Y., had been paying $90 a month for a broadband line from a reseller of Verizon service. For $59.95, it purchased a broadband hookup and phone line from Cablevision.

"It's a great deal," says Gerard Cerniglia, one of Rolling Thunder's owners, who became familiar with Cablevision's service by using it at home.

Cable operators say they are able to charge less because phone companies traditionally have marked up their services for business customers more than for residential ones. Many phone companies charge business customers roughly $300 a month for so-called T1 data lines, which typically deliver data at rates of 1.5 megabits per second. When workers go home, many use cable broadband services that offer five megabits per second but cost only $45 a month.

Eric Rabe, a Verizon spokesman, says T1 service is more reliable than cable broadband service, offers faster speeds for uploading and doesn't slow down at times of heavy traffic like cable does. "They may suggest they're going to come in and eat our lunch," he says. "We'll see what they do."

But phone companies aren't taking any chances. Verizon has started an advertising campaign aimed at smaller businesses in areas in which it is competing with Cablevision. Most phone companies also now offer small businesses less expensive broadband service on so-called digital subscriber lines -- dubbed DSL -- even though that has cannibalized their T1 service. But some companies have been more reluctant to slash their business-phone fees, which typically are at least 20 percent more than what they charge residential customers, analysts say.

Cable companies have made forays into the business telecom market in the past. Cablevision's Lightpath subsidiary has been selling telecom services mostly to large businesses for close to 20 years over a separate network. Most cable operators haven't aggressively pursued business customers until recently, however, because they could offer only TV and broadband but not phone.

What's different now is that Cablevision and others are repackaging the phone and other cable services they sell to households and tailoring them to small and midsize firms. They can do this partly because they have begun to extend networks further into business districts. Cable operators initially targeted businesses as potential broadband customers. But now that they have rolled out residential voice service, cable companies can meet all the telecom needs of small businesses.

Cablevision, for example, offers most of the businesses in its service area numerous phone lines, a range of features including call waiting and call forwarding, and special services such as a 24-hour service center dedicated to business customers. Time Warner Cable is testing business-phone service in two New York markets, Binghamton and Syracuse, and plans to roll out numerous others this year.

Cable companies are focusing on smaller businesses partly because many of their networks couldn't handle the high bandwidth demands of major corporations. Also the competition among telecom carriers for larger businesses is more intense.

Early cable entrants into the phone business have proved it can be lucrative. Cox Communications Inc. of Atlanta got into the residential phone business in the late 1990s using traditional circuit-switch technology and soon expanded into business services. Cox is expected to report it sold businesses $600 million of services last year.

A price war with phone companies isn't the only approach that has worked, though. Cox executives say they have been able to build market share simply by being one of the few alternatives in the market and focusing on customer service.

"Cutthroat pricing to get traction in this business was not in the thinking early on," says Kristine Faulkner, a vice president of Cox Business Services. "There was so much pent-up demand for an alternative provider."