It's a circuit-switched world for now, but everyone's talking about IP
In a short span of a few months, telephony-over-cable has quickly moved from lady-in-waiting to center stage. This "marriage" of telephony and HFC was consummated this summer when the most sober of corporations, AT&T, announced its merger with Tele-Communications Inc. AT&T further drove home its commitment to telephony-over-HFC when, in October, it placed an initial order of $50 million worth of cable telephony equipment from Arris Interactive, a joint partnership between Nortel Networks and Antec. The contract could be worth up to $900 million.
Major telephony deployments across North America and beyond by Cox Communications, MediaOne and Cablevision Systems prove cable telephony is already, or will soon be, a significant component of most cable operators' business plans.
Mike Wearsch, vice president of Antec's digital systems group, says AT&T's commitment to telephony over HFC "brings it (cable telephony) to its next level." The fact that a prestigious company, that operates outside of the cable industry with a strong brand name, invested mightily in HFC telephony hasn't been lost on anyone. In fact, it's already causing MSOs to more strongly consider telephony, and Regional Bell Operating Companies to recognize the competition.
The games, as they say, have begun as the cable industry squares off with RBOCs to finally deliver on the promise of competing converged networks for voice and data.
But even as the honeymoon lingers with the AT&T/Arris deal, the sands are quickly shifting as the new frontier of communications infrastructure is being articulated. The driving force behind the new frontier is the now-ubiquitous technology known as IP or Internet Protocol.
Philips Broadband Networks, for one, reinforced the growing focus on IP by abruptly abandoning its Crystal Line product line of circuit switched-based telephony products, opting instead to jump into IP-based telephony research and development. Most major data and telecommunications equipment manufacturers are also catching the IP bug by developing and rolling out dozens of IP-based telephony products and services for HFC networks.
But as IP wins the hearts, and courts the wallets of network architects, full-featured IP-based telephony is still about 18 months to two years away from equaling the quality and feature set of traditional circuit-switched telephone service. Most in the industry forecast IP trials in 1999, with full-blown IP telephony coming to market in late 2000. "Circuit-switched is here today," says Wearsch, "it's technically viable, it's economically viable. IP telephony, as a primary line service, is not here today." If IP were available today, says Wearsch, AT&T would have chosen an IP-based solution.
Lack of interoperability and a true set of standards for IP telephony are two of the barriers to a wider deployment of IP telephony. PacketCable, a CableLabs' initiative aimed at standardizing methods of transporting packet-based services over a cable network, is expected to finalize draft specifications this year for, among other things, interface standards for the "last-mile implementation" of IP over HFC.
One sticking point, however, is whether or not to employ a version of the H.323 signaling, or Single Gateway Control Protocol, which some feel is a leaner, more efficient message set. However, Cisco, a major provider of IP-based routers, has an interest in both: its New World model employs SGCP, yet the company recently announced it will use the International Telecommunications Union H.323 v. 2 standard in conjunction with VocalTec Communications Ltd.
Mark Effington, executive director network management solutions for Bellcore, explains that it's not necessarily an either/or situation. Rather, H.323 is the best quality method for high-speed video and videoconferencing applications, while SGCP, says Effington, "brings telephony, video and data into one set of protocols," allowing signals sent between the home and headend to be recognized and understood. SGCP, added Effington, also facilitates call control management features such as touch-tone dialing, call waiting, etc.
Another standards issue enabling IP telephony involves the evolving Data-Over-Cable Service Interface Specification (DOCSIS). Cable modems will be (in one form or another, whether it be as an integrated set-top box or Internet phone configuration) the mechanism by which IP voice packets are sent and received across the network from the home. (These units have been christened Multimedia Terminal Adapters, or MTAs.) Forthcoming DOCSIS 1.1 specs with Quality of Service features will be needed to prioritize voice packets and allow for packet fragmentation. Consequently, as Rick Walsworth, director and general manager of Com21, explains, IP telephony today delivers only "plain old telephone service" or POTS, not the lifeline or enhanced voice feature set available in a circuit-switched architecture.
Despite these limitations, however, any cable operator that has built and deployed Internet access service is well down the road toward voice-over-IP. "The infrastructure that's been built for a data network," says Walsworth, "is obviously an IP network."
Layering voice services over the network takes advantage of the capital investment cable operators have already made for data. While most agree that circuit-switched telephony will clearly exist for some time, the economies of IP are difficult to ignore. Especially as HFC networks have been rebuilt and conditioned for Internet data service, IP telephony is a logical next step.
"The advantages of IP telephony and data, when ultimately matured and perfected" writes Chuck Kaplan, vice president and general manager of Philips Broadband Networks (who responded via e-mail to questions for this article), "will have clear advantages for cable operators: the cost of terminal equipment will come down as a result of standardization, volume and competition; the use of bandwidth will be more efficient as content-only packets replace digital streams; conversion costs at the headend will be reduced as more and more interconnnect carriers use the same IP format as the local HFC loop."
Becoming a circuit-switched telephony provider over an HFC network today involves investing in or leasing a Class 5 switch, which can cost between several hundred thousand and several million dollars. "That's a big barrier to entry," says Donald Lemley, manager of planning/advanced development in Tellabs' Broadband Media Group.
On the other hand, IP telephony can be a "pay as you grow" proposition, Lemley points out, because of the "distributed intelligence" that an IP network employs to process telephone calls.
This distributed model can also extend to the enhanced voice services, such as caller ID, conferencing and other enhanced voice features that can be managed by servers on an IP network instead of a Class 5 type switch.
Lemley says that by distributing the ability to provide features across a network with strategically placed servers, one would avoid employing two full Class 5 switches, which would represent "a tremendous amount of horsepower," to serve two geographic areas, for example.
A Class 5 switch, the device that, among other things, supplies dial tone and digit collection, as well as providing CLASS (custom local area signaling service) features, is extensible to up to several hundred thousand lines, says Lemley, which may be overkill for cable operators seeking to establish a market for telephony. "The circuit-switched call," says Ham Mathews, director of IP telephony business development for ADC Telecommunications, "is built around a network designed in the last century." Circuit switching, by definition, is a method of routing traffic through a switching center whereby a connection is established between the calling and called stations until the connection is released.
Despite its age, circuit-switching will not soon fade away. "Circuit-switched service will continue to flourish for many years," says Lemley. "If you keep the pipes full," Lemley adds, "circuit-switched will be more efficient."
Nevertheless, IP is capturing more than just headlines. Effington cites two big "wins" for IP telephony that Bellcore is part of: Sprint's announced ION IP-based network, and Videotron's recent decision to build an IP network for voice and data with the help of Cisco and Bellcore. Videotron, Canada's second-largest cable operator, has targeted service trials for the middle of next year.
Videotron's network will be a good example of how IP and circuit-switched networks will interact. While calls made within Quebec on its network will be IP-based, the network will interface with the public signaling network through an SS7 gateway (with the help of a Bellcore call agent) to place calls outside of Quebec. Also, although the system will utilize a "virtual" Class 5 central office switch, actual Class 5 switches that Videotron has purchased will be utilized in the network, according to Effington. The virtual switch, says Effington, is essentially a combination of Cisco IP routers and Bellcore call agent software.
A key distinction between the Sprint and Videotron IP networks is that Sprint will utilize Asynchronous Transfer Mode to manage packet transfer, while Videotron will run IP directly over Sonet.
Given the inevitability of IP, why should a cable operator even consider circuit-switched at this point? According to Wearsch, becoming a telephony provider today lets an operator develop price points, establish customer service and back office functions for telephony and generally "iron out the kinks."
Circuit-switched telephony, adds Mathews, lets cable operators develop a revenue stream and provide multiple line service more cheaply than the incumbent local exchange carrier, all the while learning about billing, ordering, provisioning and maintenance issues, while waiting to migrate to IP.
Outside of the operational level, Walsworth perceives a "window of opportunity" for cable operators to take a serious look at telephony. Cable ops, he says, successfully captured "mindshare" over telcos and DSL by deploying proprietary cable modems, despite the absence of standards-based product. "If cable operators would have waited for DOCSIS to mature and not deployed existing systems, they would've lost" in the battle for mindshare over DSL, says Walsworth. With an installed base of cable modem subscribers, cable operators are positioning themselves in the minds of consumers as something more than entertainment providers. Telephony is the next step.
Whether or not "time to market" becomes becomes a priority, as it obviously has with AT&T, will determine whether or not cable operators invest in circuit-switched technology now and offer the same full suite of voice services the RBOCs offer. If they do, vendors such as Antec, Tellabs and ADC are offering migration paths from circuit-switched platforms to IP telephony- ADC through its DualTech Homeworx system, which includes an IP gateway router; Antec/Arris through a Cornerstone IP product it will demonstrate at the Western Cable Show early this month; and Tellabs through its various configurations.
Clearly, cable operators with an eye on telephony have a few viable options, with several vendors ready to capitalize on those options. In addition to the Cisco/Bellcore, Cisco/VocalTec and Antec/Nortel Networks collaborations, Com21 has been working with Vienna Systems, and Motorola Inc. and Netspeak Corp. announced a joint development agreement to allow interoperability between their products.
However, as Wearsch asks, why swap an existing circuit-switched customer for IP unless IP delivers a "killer application" that has yet to be developed?
Philips Broadband Networks, having cast aside its circuit-switched past, will introduce an advanced digital access platform next year, according to Kaplan.
Importantly, "lower cost," says David Sokolic, marketing director for VocalTec, "is not quite as good at bringing in new subscribers as is something that's new . . . if you just offer lower cost, you don't have a very defensible position." Therefore, cable system marketing departments will be eager to offer multiple lines, videoconferencing, other voice/IP enhancements, and perhaps that "killer application." And because "any device with an IP address is an individually addressable terminal," Sokolic points out, PCs, IP phones, network computers and set-top boxes will all factor into the voice-over-IP mix.
"IP allows you to support a much richer set of applications," agrees Jeff Walker, director of product marketing for Motorola Multimedia Group. While the cost savings of IP on the long distance backbone is very compelling, the mix of voice and data functions, including universal messaging, will help lure subscribers to HFC IP telephony, he argues.
Whether or not the "dial tone" channel will become the most popular channel in cable TV remains to be seen, but there are enough forces at play to make telephony a significant application, and revenue generator, for two-way HFC networks.
"It's not a question of if, but when," writes Kaplan, "IP-based platforms deliver a large majority of telephony and data services."