Voice over cable: hits its stride: the paths are varied, but MSOs have one common goal: add voice to the arsenal

Telecommunications Americas, Sept, 2003 by Sean Buckley

The paths are varied, but MSOs have one common goal: Add voice to the arsenal.

With cable companies aggressively making due on their promise to add voice to their arsenal, the beachhead is set for a battle between the RBOCs and MSOs. Certainly, cable operators of all sizes have chosen some form of voice service as the primary triple threat target. According to data gathered from the NCTA (National Cable Telecommunications Association) and Merrill Lynch, there were 2.6 million residential cable telephony subscribers as of Q1 2003, and that number is expected to boom.

Deployments are happening worldwide, and not just of plain vanilla voice, but also VoIP and other converged IP services. Time Warner Cable, for example, has just begun its deployment of Cisco's softswitch in its Portland, Maine, division for primary line residential service. Going forward, the MSO plans to expand its telephone service in both its Rochester, N.Y., and North Carolina territories. For TWC, which does have some existing TDM-based customers, the issue to move to a softswitch solution was really cost and real estate.

Similarly, Cablevision is rolling out its own VoIP service with completion in 2004, deploying a PacketCable network via Siemens. Cablevision's Optimum Voice service offers traditional Class features in its Long Island, N.Y. and New York City territories. As part of this rollout, Cablevision is basically operating a hybrid IP/TDM network, where it configures VolP in the cable plant distribution loop and utilizes call control via an existing Lucent 5E switch with plans to migrate customers over to a softswitch.

Since all major MSOs have made necessary plant upgrades, Aryeh Bourkoff, senior analyst with UBS Warburg, argues that MSOs have the ability to be the prime aggressor against the RBOCs. "Faced with DSL pricing pressure, cable MSOs can react in a number of ways: hold pricing steady, tier and discount their products, or further the bundle," he said. "Cablevision's tactic is one that I think other operators may emulate over time, which is combat the aggressive RBOC threat by offering a product central to the RBOC much cheaper than the RBOC offering. However, this awakens the sleeping giant and I think we're in for a long-term competitive environment between the RBOCs and MSOs for the full bundle."

While VoIP is certainly the future, other MSOs like Cox Communications have been offering a standard Class 5-based CBR (committed bit rate) voice service successfully for a few years now, in Cox's case reaching almost 750,000 customers. And although Cox is taking a prudent approach as to when it will adopt a full blown VoIP strategy, it's certainly not sitting still. Recently, the operator built out its own long-distance packet network via a Nortel softswiteh and Nuera gateways that leverage its OC-48 backbone. In addition, Cox is currently holding two softswitch trials utilizing a hybrid IPDT (IP digital terminal)-based architecture and a distributed PacketCable softswitch architecture in Oklahoma City and Roanoke, Va.

Of course, with Comcast merging with AT&T Broadband earlier this year, the opportunity is definirely ripe for Comcast to leverage that existing circuit-switched telephony base as a possible starting point to expand its VoIP-over-cable aspirations. Prior to the acquisition, Comcast was conducting two ongoing residential VoIP trials in Philadelphia, one with Syndeo and another with Derry, N.H.-based CedarPoint.

Even though the large MSOs will certainly be the dominant drivers of the VoCable bundle, regional MSOs and overbuilders are also aggressively adopting a voice path. While many overbuilders such as Grande Communications, Knology and RCN have developed some form of a FTTC (fiber-to-the-curb) or node architecture over which they deliver traditional TDM-based voice, other operators that just can't justify the build out of their own voice infrastructure have turned to virtual voice operators.

Virtual voice operators, which include a steady list of characters, including Vonage, Gemini Broadband, Net2Phone and Galaxy Telecom, take on the role of operating the voice network and selling it wholesale to a cable operator, who private labels the service.

Perhaps one of the loudest proponents of this of this offering is Vonage, which recently reported it signed up its 40,000th telephone line. In the Vonage model, subscribers are offered a Cisco self installed gateway that connects via a standard cable modem or DSL line to get unlimited local and long-distance calling over a SIP (Session Initiation Protocol)-based network. This option has proven to be the method of choice for regional operators such as Butler, Pa.-based Armstrong, which has deployed Syndeo's Syion 426 Call Management Server and is doing an outsourced deal with Vonage as a value added offering for its broadband cable customers.

Gemini Broadband, which has gained prominence with both regional and cable overbuild operators such as Wide Open West and Adams Cable, offers a hosted solution based on its in-house-built softswitch architecture. Unlike Vonage, the operator runs a PacketCable- and DOCSIS-compliant system that can enable an operator to take over the management of the voice service when it is ready.